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UK Economy Contracts by 0.1% in January, Surprising Analysts

A decline in manufacturing output and construction drives the unexpected contraction, adding pressure on the Labour government ahead of the 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 shrank by 0.1% in January, reversing December's 0.4% growth, according to the Office for National Statistics (ONS).
  • The contraction was driven by a 1.1% drop in manufacturing output and a 0.2% decline in construction, while the services sector saw marginal growth of 0.1%.
  • Economists had forecast 0.1% growth for January, making the decline a surprise and underlining ongoing economic fragility.
  • Chancellor Rachel Reeves faces mounting challenges ahead of the March 26 spring statement, with potential spending cuts and downgraded growth forecasts looming.
  • Global factors, including Donald Trump's new tariffs and ongoing trade uncertainties, are compounding domestic economic pressures.