Key events
The ONS explained the impact of strikes on the economy:
The main contributor to the fall in monthly services output was the human health and social work activities sub-sector, which fell by 2.1% in July 2023. This was attributed entirely to a 3.4% fall in the human health activities industry.
Industrial action was held in July by NHS senior doctors (two days) and radiographers (two days) for the first time while industrial action by junior doctors increased (five days in July, compared with three in June).
Senior radiographers conduct an MRI scan at St Georges Hospital in Tooting. Photograph: Alicia Canter/The Guardian The chancellor of the exchequer, Jeremy Hunt, said:Only by halving inflation can we deliver the sustainable growth and pay rises that the country needs.
But there are many reasons to be confident about the future. We were among the fastest in the G7 to recover from the pandemic and the IMF have said we will grow faster than Germany, France, and Italy in the long term.
Rachel Reeves, shadow chancellor for the opposition Labour party, said:
Today is another dismal day for growth, and the British economy remains hostage to the Conservatives’ low growth trap that is leaving working people worse off.
After thirteen years of instability, the Conservatives have left the British economy weaker and families having to cope with higher taxes, higher mortgages and higher food and energy bills.
Labour’s plan for the economy is about boosting growth so we can improve wages, bring down bills and make working people in all parts of the country better off.
Introduction: UK economy contracts 0.5% in July; BP boss Looney quitsGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The UK economy shrank by 0.5% in July, with all the main sectors declining, partly due to strikes and poor weather.
This came after 0.5% growth in June, the Office for National Statistics said, and was worse than expected. Economists polled by Reuters had forecast a smaller contraction of 0.2%.
The services and construction sectors both declined by 0.5% while production fell 0.7%.
Darren Morgan, director of economic statistics at the ONS, explained:
In July, industrial action by healthcare workers and teachers negatively impacted services and it was a weaker month for construction and retail due to the poor weather. Manufacturing also fell back following its rebound from the effect of May’s extra Bank Holiday.
In the three months to July, the economy eked out growth of 0.2%, with all three main sectors expanding.
In a surprise move, the chief executive of BP quit last night, less than four years into his tenure, after admitting that he failed to fully detail relationships with colleagues.
Bernard Looney, who spent his entire career with BP, departed the £88bn company immediately. The company informed investors that Looney “did not provide details of all relationships and accepts he was obliged to make more complete disclosure”.
The company said that Looney disclosed “a small number of historical relationships with colleagues prior to becoming CEO” during a review last year, triggered by information from an anonymous source.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said:
BP is one of the biggest players in British business, missteps of this magnitude aren’t what investors expect from one of the country’s most influential C-suites. Strong governance and conduct controls are rightly non-negotiables, and the emergence of a second round of allegations relating to Looney’s improper disclosure of relationships has proved a bridge too far.
BP is now in a position where a permanent replacement needs to be found. A clear path forward needs to be forged sooner rather than later to limit negative sentiment. This of course all lands at a time when oil majors are already grappling to boost their ESG credentials, which adds weight to the problem. Looney has spearheaded an aggressive and green-thinking strategy during his tenure, and replacing him with someone that can convince the market they’re up for carrying the mantle and sprinting with it, isn’t going to be an overnight task.
The recent oil price spike only provides a limited cushion under BP’s valuation, with longer-term forecasters far more concerned about strategy and how well-prepared BP is for the energy transition. In comparison to peers, BP’s net zero targets have cast shadows on other oil players, and the group needs to reconfirm its commitment and ability to get this done if it wants to remain in a preferable position.
The Agenda
9am BST: International Energy Agency oil market report
10am BST: Eurozone industrial production for July
1.30pm BST: US inflation for August (forecast: 3.6%)