UK Economy Contracts by 0.1% in January, Defying Growth Expectations

The unexpected decline, driven by a slowdown in manufacturing and production, raises concerns ahead of the Treasury's Spring Statement.

The UK economy shrank by 0.1% in January, contrary to economists' predictions of 0.1% growth, according to the Office for National Statistics (ONS).
The contraction was largely attributed to a slowdown in manufacturing, oil and gas extraction, and construction, while the services sector showed modest growth, led by retail.
This marks a reversal from December's 0.4% growth, which helped the economy register slight growth in the fourth quarter of 2024.
The Bank of England recently cut interest rates and halved its 2025 growth forecast to 0.75%, with further rate cuts anticipated to balance growth and inflation risks.
The data comes ahead of Chancellor Rachel Reeves' Spring Statement on March 26, where updated economic forecasts and fiscal plans will be outlined, sparking debates over the impact of tax increases on investment and growth.