My 7-month-old dog is licking and peeing blood. Is it serious?

I see what you mean in the picture provided, it looks like there is some blood there on the wee wee pad. I also see that Annie isn't spayed, so this could mean that she is going into heat for the first time. She is a small breed dog at seven months of age, and that age is when that can happen for the first time in small breed dogs. The other possibility is that she has a UTI, but I can't say for certain without seeing her in person. I would have her seen by a vet to determine if she is in heat or if she has UTI. Until she sees the vet, do not take her in public and do not let her be alone with any intact males. It is never recommended to mate a female dog during her first heat. I hope this helps.