UK economy posts surprise 0.4% growth in July as budget looms

The UK economy registered a surprise 0.4% uplift in July, largely thanks to growth the services sector over the month. However, whether this growth can be maintained is another question.

Businesses are facing a perfect storm of uncertainty. The Autumn Budget is looming, with many fearing that further tax hikes could be on the cards in an already high-cost environment. At the same time, the conflict in the Middle East shows little sign of resolution, as rising oil prices pile pressure on energy and input costs, while reigniting inflation concerns.

With the Bank of England keeping rates higher for longer and the labour market weakening, businesses are being squeezed from all sides. Tight financing conditions, rising costs and an uncertain outlook are weighing on investment and confidence, making it harder for the economy to gain any real momentum.

While the economic and geopolitical outlook remains unclear, businesses should focus on staying operationally efficient and resilient, while limiting their exposure to further volatility through ready access to finance and effective FX hedging.