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last mo.

UK Economy Contracts 0.1% in January, Raising Concerns Over Growth

The unexpected decline in GDP highlights manufacturing struggles and global uncertainties ahead of Rachel Reeves's Spring Statement.

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The fall in GDP in January was driven by a notable slowdown in manufacturing, with oil and gas extraction and construction also having weak months

Overview

  • The UK's GDP fell by 0.1% in January, contrary to economists' predictions of slight growth, following a 0.4% increase in December.
  • The manufacturing sector saw a significant 1.1% decline, alongside contractions in construction and production, while services grew by a modest 0.1%.
  • Chancellor Rachel Reeves faces mounting pressure as weak growth and rising borrowing costs may necessitate spending cuts in her upcoming Spring Statement on March 26.
  • Global trade uncertainties, including tariffs introduced by President Donald Trump, and domestic tax increases are compounding economic challenges for businesses and consumers.
  • Analysts warn that the UK economy's sluggish performance, coupled with high inflation and cautious private sector investment, risks prolonged stagnation.