The United Kingdom’s economy flatlined in July as industrial and manufacturing production contracted, increasing economic troubles for the ruling Labour government with widespread political and social unrest.

British GDP stalled in July after rising 0.4% in June, the Office for National Statistics said on Friday. Industrial and manufacturing output contracted by 0.9% and 1.3% respectively, declining more than forecasted for July.

Three-month GDP has slowed for three consecutive months, expanding just 0.2% in July, compared with the three months to April, the statistics office said. GDP for the three months ending in June grew 0.3% and 0.6% in May.

The Bank of England meets on Thursday to determine whether to make another rate cut to spur economic growth and support wage growth. Financial markets have priced a November cut at just 20% probability after inflation rose 3.8% in July.

"The stagnation in real GDP in July shows that the economy is still struggling to gain decent momentum," Paul Dales, chief UK economist at Capital Economics, said in a note on Friday. "The soft performance of the economy in July probably isn't enough to offset the Bank of England's growing inflation fears."

Immigration Tops British Public's Concerns

British Prime Minister Keir Starmer's Labour government will be hard-pressed to spur economic growth. His party faces an increasingly hostile public in response to the government's immigration and policing policies.

Forty-eight percent of the public named immigration as their biggest concern in August, Ipsos said on August 22. Three in ten people say their local area "is housing more than its fair share of asylum seekers," the global research and public opinion polling company said.

These concerns have had an impact on domestic politics in the country.

If UK held general elections today, the right-leaning Reform UK party would win. An Ipsos poll from June showed that 34% of those asked would vote for Reform, just 25% for Labour.

"The UK's economy, under Labour, has now ground to a halt," Matt Goodwin, a British academic, writer, pollster, and campaigner, wrote on X on Wednesday. "Economic growth flatlined at 0% in July. Labour's not working."

The yield on 30-year UK government gilts reached a high of around 5.68%–5.72% on September 2, marking the highest level since 1998. Investors are increasingly concerned about the UK’s fiscal health.

Public Frustration Spills onto London Streets

The public's frustration with Labour policies spilled out on the streets of London on Saturday. About 150,000 people, including families from diverse backgrounds, attended the "Unite the Kingdom" rally.

Tommy Robinson, a controversial anti-immigration advocate with a violent criminal record, organized the rally. He called Saturday’s event Britain's "largest free speech festival." About 5,000 took part in a counter-protest, coordinated by Stand Up To Racism.

Robinson has tapped into the growing frustration among the British public, who feel that mass immigration is eroding their culture and straining government budgets. He used the murder of US conservative activist Charlie Kirk on Wednesday to mobilize support in the run-up to the event.

"In honour of @charliekirk11 & in honour of freedom on the 13th we march," Robinson wrote in a post on X. Hundreds of people gathered at a vigil in London on Friday night to mourn Kirk, 31, a father of two, NBC News reported.

London streets overflowed with a sea of flag-waving and soccer-style chanting from large crowds. Central London deployed a massive policing operation for the protests, with around 1,000 officers deployed.

Robinson Taps Sense of ‘Disquiet and Grievance'

Business Secretary Peter Kyle told the BBC that marchers demonstrated freedom of association and freedom of speech.

“There are figures such as Tommy Robinson that are able to touch into a sense of disquiet and grievance in the community in our society,” he said. “A lot of it goes back to its roots in the financial crisis and the impact that had on communities around the country."

Mounted police officers used batons to push back the crowds, who clashed with them, the Metropolitan Police Service said. Twenty-six officers sustained injuries in the clashes, the police said.

"People have a right to peaceful protest," Starmer posted on X. "It is core to our country's values. But we will not stand for assaults on police officers doing their job or for people feeling intimidated on our streets because of their background or the color of their skin."

Musk’s Comments Spur Criticism

Billionaire and Chief Executive Officer of Tesla Inc., Elon Musk, attended the rally via video link. Musk called for a change of government in Britain and railed against the “woke mind virus” and “uncontrolled immigration.”

"My appeal is to British common sense, which is to look carefully around you and say: ‘If this continues, what world will you be living in?'”

Musk, who has previously spoken out in support of Robinson, said "Whether you choose violence or not, violence is coming to you. You either fight back or you die, that's the truth, I think."

His comments spurred a backlash from British politicians.

"Musk's statement at yesterday's London rally crosses the line from commentary into direct interference in our sovereign democracy," John Slinger, a Labour member of Parliament, said on his LinkedIn account.

"It was unacceptable and dangerous for him to use inflammatory language. We must all remember democracy's most fundamental principle: to resolve differences through debate and the ballot box, not through political violence."

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