The UK unexpectedly failed to grow in July, after flatlining in June, official figures showed.

Analysts had forecast slight growth of 0.2%.

A summer of sport, including the Euros and the Olympics, helped boost the services sector, but production and construction output both fell.

Another month without growth presents a challenge for the new Labour government, which has made boosting the economy a priority.

Despite the lack of growth, Liz McKeown, director of economic statistics at the Office for National Statistics said “longer term strength in the services sector meant there was growth over the last three months as a whole”.

Services growth was led by computer programmers and the health sector, which recovered from strike action in June. But there was drop in output for advertising, architects and engineers, Ms McKeown added.

GDP – or gross domestic product – is closely watched as a sign of how well the economy is faring.

However, the figures are an early estimate and are often revised slightly after more data comes in.

The government, which took office at the start of July, has said it wants to make the UK the fastest growing economy in the G7.

Chancellor Rachel Reeves said she was “under no illusion” about the scale of the challenge.

Lower growth also means a smaller tax take, giving the government less room for manoeuvre in the Budget coming up in October.

“The economy stagnated in July… but that doesn’t mean the UK is on the cusp of another recession,” said Ruth Gregory at Capital Economics.

“And we can take some comfort from the fact that services output rose by 0.1% month on month.”

Retailers and hospitality venues said in July they were seeing an uptick in business as the England football team progressed through the European championships.

However, some restaurants told the ONS the tournament had a negative impact on footfall.

Meanwhile, travel agents recorded an update in bookings because of the Paris Olympics, the ONS said.