Britain’s economy is undergoing a dramatic transformation, with services now overwhelmingly leading the charge as manufacturing’s share of economic output dwindles to a historic low.

The change reflects broader global trends and is influenced by domestic factors such as Brexit and the rise of London-centric growth.

Recent data highlights this shift: the UK now exports more in services—including finance, accountancy, legal advice, management consultancy, and advertising—than in goods, a first among the Group of Seven (G7) advanced economies. The gap between services and goods exports is widening rapidly.

Meanwhile, manufacturing’s contribution to GDP fell to a record low of 9.2% in the second quarter of this year, down from 9.9% before the COVID-19 pandemic.

Despite a nearly 20% increase in factory output since the mid-2000s, growth in this sector has stalled in recent years. Conversely, the services sector now makes up 81.2% of Britain’s economic output, up from less than 80% before the pandemic.

David Bharier, Head of Research at the British Chambers of Commerce, said the broader picture was important “...growth of 0.5% in the three months to July is positive news," he said. "It shows the UK economy is continuing to expand at a steady rate going into the second half of the year. The services sector remains the biggest contributor to growth.

“It is however concerning that monthly GDP growth has flatlined for the second month in a row, with production and construction also struggling in July. However, businesses are still struggling to increase investment and trade due to continuing global economic and political uncertainty. Until those barriers are lowered, wider economic growth will stay limited.”

The Office for National Statistics is expected to release updated figures later this month, which will provide further insight into these trends.