UK economic system shrank unexpectedly by 0.1% in January

The UK economic system shrank unexpectedly by 0.1% in January, with a slowdown in manufacturing one of many important causes for the dip.

The efficiency was weaker than anticipated, and got here after the economic system had grown by 0.4% in December.

It will likely be seen as a blow to the federal government, which has mentioned its primary precedence is to spice up UK financial development.

The figures come forward of the chancellor’s Spring Assertion, which is predicted to incorporate authorities spending cuts.

Liz McKeown, ONS director of financial statistics, mentioned: “The economic system shrank a little bit in January however grew within the newest three months as an entire, with the general image persevering with to be of weak development.”

Building and oil and gasoline extraction had a “weak month”, she mentioned.

However this was partially offset by retail, significantly meals retailers, “as folks ate and drank at house extra”, she mentioned.

Though development was down for the month in January, month-to-month readings might be risky and the ONS mentioned the economic system was estimated to have grown by 0.2% over the three months to January.

Chancellor Rachel Reeves mentioned: “The world has modified and throughout the globe we’re feeling the implications.”

She added the federal government is “going additional and sooner” to “kickstart financial development”.

Yael Selfin, chief economist at KPMG UK, mentioned the UK economic system had began the yr “on the again foot” as uncertainty about Trump tariffs was making companies cautious about funding.

She mentioned predictions of “sluggish development” means Reeves will in all probability “tighten purse strings” within the Spring Assertion.

The current lower to UK support to fund a rise in defence spending “is a preview that some departments will see their spending plans squeezed”, she added.

Anna Leach, chief economist on the Institute of Administrators, mentioned a slight rise or fall in a single month was not vital, however the vital level was the economic system total is “fairly weak and subsequently fairly susceptible”.

Automotive producers specifically have “notable weaknesses” with commerce uncertainty from Trump tariffs, and “chopping and altering within the targets of the adoption of electrical automobiles”.

She mentioned the UK development figures “actually will not assist” within the lead as much as the Spring Assertion, when the impartial forecaster the Workplace for Price range Duty is more likely to downgrade its development prediction.

Final month, the Financial institution of England halved its development forecast for the UK this yr.