UK economy stalls, setting back new government
3 Min Read
The UK's gross domestic product indicated zero growth in July compared to June, when output also remained stagnant.
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Britain’s Chancellor of the Exchequer Rachel Reeves announcing the first steps the new Labour Government will take to deliver economic growth, in London on July 8, 2024. (AFP)
The United Kingdom's economy stalled again in July, official data published Wednesday revealed, setting back the newly-elected Labour government that is prioritizing growth expansion.
The country's gross domestic product (GDP) indicated zero growth compared to June, when output was also flattened, according to a statement by the Office for National Statistics (ONS).
Analysts anticipated a slight boost in growth for July, and previous data depicted the British economy grew at a slightly slower rate in the second quarter compared with the first.
"I am under no illusion about the scale of the challenge we face and I will be honest with the British people that change will not happen overnight," Finance Minister Rachel Reeves said concerning Wednesday's data.
"Two quarters of positive economic growth does not make up for fourteen years of stagnation," she stated, adding, "That is why we are taking the long-term decisions now to fix the foundations of our economy."
Amazon to invest $10.5 billion in Britain
US tech giant Amazon boosted the UK government overnight due to its $10.5 billion investments in the country over the next five years, creating thousands of job opportunities through its web services.
"We are taking the long-term decisions now to fix the foundations of our economy, including today's announcement... from Amazon Web Services, that will help rebuild Britain and make every part of the country better off," Reeves said.
Amazon's investment, which aims to construct, operate, and maintain data centers in the UK, is expected to contribute $15.4 billion to Britain's GDP and annually support over 14,000 jobs across its supply network, according to the multi-national tech company.
UK debt raises 'big red flag' of unsustainability
The UK will need to resort to higher tax rates or reduce government spending to combat the risk of the national debt becoming unsustainable, a House of Lords committee warned.
The peers published a report suggesting essential tough decisions and new policies for public finances to decrease debt, which currently stands at just under 100% of the annual national income.
“This report highlights a grim reality: our national debt risks developing on an unsustainable path. This has not received the attention it deserves – partly because of a flawed debt rule, created by the last government, and adopted by the new government in a similar form,” chair of the House of Lords economic affairs committee, Lord Bridges, warned.
Bridges emphasized that peers were raising a "big red flag" on the crucial reduction of Britain's national debt amid pressures for the government to increase its spending on defense, the net zero transition, and care expenses for the aging population.
