UK economy stalls, dealing blow to new government

LONDON

Britain's economy stalled again in July, official data showed yesterday, dealing a blow to the new Labour government that has put growth expansion at the top of its priority list.

Gross domestic product showed zero growth in the reported month compared with June, when output also flattened, the Office for National Statistics (ONS) said in a statement.

Analysts had predicted a slight uplift in growth for July, while previous data showed the U.K. economy grew at a slightly slower pace in the second quarter compared with the first.

Prime Minister Keir Starmer's Labour government won power at the start of July, ending 14 years of Conservative rule.

"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 in response to yesterday’s data.

"Two quarters of positive economic growth does not make up for fourteen years of stagnation.

"That is why we are taking the long-term decisions now to fix the foundations of our economy," she added.

The new government was boosted overnight, however, by news that U.S. tech giant Amazon is to invest 8 billion pounds ($10.5 billion) in Britain over the next five years, creating thousands of jobs via its web services arm. 

The investment -- to build, operate and maintain data centres in the U.K could contribute 14 billion pounds to the country's GDP and support more than 14,000 jobs annually across the supply chain, Amazon said.