UK economy saw zero growth in July – BBC

Report on UK Economic Performance and Implications for Sustainable Development Goals

Executive Summary

This report analyses the United Kingdom’s economic performance in July, which recorded zero growth according to the Office for National Statistics (ONS). This stagnation, driven by a significant contraction in the manufacturing sector, presents considerable challenges to the nation’s progress towards key Sustainable Development Goals (SDGs), particularly SDG 8 (Decent Work and Economic Growth) and SDG 9 (Industry, Innovation and Infrastructure). Forthcoming fiscal policy, to be outlined in the November Budget, will be critical in navigating the tension between fiscal responsibility and the necessary investments to foster sustainable and inclusive growth.

Economic Performance Analysis

The latest data from the ONS indicates a slowdown in the UK economy. While growth was observed over a three-month period, the monthly figures highlight underlying weaknesses, particularly in the production sector.

• Monthly Growth (July): 0.0%
• Three-Month Growth (to July): 0.2% expansion
• Sectoral Performance (July):
  • Manufacturing Sector: 1.3% contraction (sharpest decline in a year)
  • Service Sector (three months to July): 0.4% growth

Assessment Against Sustainable Development Goal 8: Decent Work and Economic Growth

The lack of economic growth directly impedes the achievement of SDG 8, which aims to promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all.

1. Target 8.1 (Sustain Economic Growth): The zero-growth figure for July and the broader trend of economic slowing challenge the fundamental objective of sustaining per capita economic growth.
2. Target 8.2 (Economic Productivity): The sharp decline in manufacturing output signals a risk to achieving higher levels of economic productivity through diversification and technological upgrading.
3. Target 8.5 (Full and Productive Employment): Uncertainty surrounding future economic policy and potential tax rises is reportedly causing businesses to delay investment and hiring decisions, which could undermine efforts to achieve full and productive employment.

Assessment Against Sustainable Development Goal 9: Industry, Innovation and Infrastructure

The significant contraction in the UK’s manufacturing sector represents a direct setback for SDG 9, which focuses on building resilient infrastructure, promoting inclusive and sustainable industrialization, and fostering innovation.

• Target 9.2 (Promote Sustainable Industrialization): The 1.3% monthly fall in manufacturing output moves the UK away from the goal of raising industry’s share of employment and GDP.
• Investment and Innovation: Business leaders have warned that fiscal uncertainty and potential tax increases could hamper investment. This directly affects the capacity for industrial innovation and infrastructure upgrades essential for a resilient and sustainable industrial base.

Fiscal Policy and Alignment with SDG 17: Partnerships for the Goals

The government is under pressure to deliver economic growth while adhering to self-imposed fiscal rules, highlighting a core challenge related to SDG 17, which emphasizes strengthening the means of implementation and enhancing policy coherence for sustainable development.

Chancellor’s Fiscal Rules

• Day-to-day government costs to be funded by tax income, not borrowing, by 2029-30.
• National debt must be falling as a share of national income by 2029-30.

Meeting these rules, which align with SDG Target 17.1 (strengthen domestic resource mobilization), may require tax increases. However, this approach creates a potential conflict with SDG Target 17.14 (enhance policy coherence for sustainable development), as such measures could undermine the business confidence needed to achieve growth-oriented goals like SDG 8 and SDG 9.

Analysis of Sustainable Development Goals (SDGs) in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth
• SDG 9: Industry, Innovation and Infrastructure
• SDG 17: Partnerships for the Goals

2. What specific targets under those SDGs can be identified based on the article’s content?

• SDG 8: Decent Work and Economic Growth

  • Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries.

    The article is centered on the UK’s economic growth performance. It explicitly states that “The UK economy failed to grow in July,” reporting “zero growth in the month” and a modest “0.2%” expansion over a three-month period. The government’s key priority is “boosting economic growth,” directly aligning with this target’s focus on sustaining economic growth.

  • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors.

    The article discusses the performance of different economic sectors, which relates to diversification and productivity. It highlights that the service sector grew by 0.4%, driven by “computer programming and office support services,” while this was “offset by a fall in output from the production sector, which includes manufacturing.” The “biggest contraction in manufacturing output for a year” points directly to challenges in the productivity of key industrial sectors.

• SDG 9: Industry, Innovation and Infrastructure

  • Target 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product (GDP), in accordance with national circumstances, and double its share in least developed countries.

    This target is relevant due to the article’s focus on the manufacturing sector’s performance. The report of a “biggest contraction in manufacturing output for a year” and a 1.3% contraction in July indicates a decline in industrial output, which is the opposite of the goal to raise industry’s share of GDP.

• SDG 17: Partnerships for the Goals

  • Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection.

    The article discusses the government’s fiscal policy and its efforts to manage public finances, which is a core component of domestic resource mobilization. It mentions the Chancellor’s self-imposed fiscal rules, such as ensuring “day-to-day government costs will be paid for by tax income, rather than borrowing” and getting “debt falling as a share of national income.” The speculation that the Chancellor “will raise taxes to meet her self-imposed fiscal rules” directly addresses the theme of revenue collection.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• For SDG 8, Target 8.1

  • Indicator 8.1.1: Annual growth rate of real GDP per capita.

    The article provides several direct measures of economic growth that are components of this indicator. These include “zero growth in the month,” “a 0.4% expansion in June,” and a “0.2%” expansion “in the three months to July.” These figures are used to assess the health and trajectory of the economy.

• For SDG 8, Target 8.2 & SDG 9, Target 9.2

  • Indicator 9.2.1: Manufacturing value added as a proportion of GDP and per capita.

    The article provides data points that measure the performance of the manufacturing sector. The statement that “manufacturing contracted by 1.3% – the sharpest monthly decline since July last year” is a direct indicator of the change in manufacturing value added. Similarly, the growth of the “service sector… by 0.4%” provides a comparative measure of sectoral performance.

• For SDG 17, Target 17.1

  • Indicator 17.1.1: Total government revenue as a proportion of GDP, by source.

    The article implies this indicator through its discussion of fiscal policy. The need to fill a “black hole” in public finances, estimated “between £18bn and £50bn,” highlights the gap between government revenue and expenditure. The Chancellor’s rule to have “day-to-day government costs… paid for by tax income” and the debate over raising taxes on businesses directly relate to mobilizing government revenue.

  • Indicator 17.4.1: Debt service as a proportion of exports of goods and services.

    While not a direct quote, the goal “to get debt falling as a share of national income by the end of this parliament” is a direct reference to managing the national debt level, which is a key component of fiscal sustainability measured by this indicator.

4. Table of SDGs, Targets, and Indicators

Source: bbc.com