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 principal 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 stated its primary precedence is to spice up UK financial progress.

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, stated: “The economic system shrank somewhat in January however grew within the newest three months as an entire, with the general image persevering with to be of weak progress.”

Building and oil and fuel extraction had a “weak month”, she stated.

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

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

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

She added the federal government is “going additional and quicker” to “kickstart financial progress”.

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

She stated predictions of “sluggish progress” means Reeves will most likely “tighten purse strings” within the Spring Assertion.

The latest reduce to UK help 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, stated a slight rise or fall in a single month was not vital, however the necessary level was the economic system general is “fairly weak and due to this fact fairly susceptible”.

Automobile 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 stated the UK progress figures “definitely will not assist” within the lead as much as the Spring Assertion, when the unbiased forecaster the Workplace for Finances Accountability is prone to downgrade its progress prediction.

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