The UK economic system shrank in the beginning of 2025, in keeping with official figures which had been anticipated to indicate additional meagre development.
The Workplace for Nationwide Statistics (ONS) mentioned that output declined by 0.1% throughout the month following the 0.4% development seen in December.
A development determine of 0.1% had been tipped by a majority of economists.
The ONS mentioned a droop in manufacturing output was in charge.
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Its director of financial statistics, Liz McKeown, mentioned: “The economy shrank a little in January but grew in the latest three months as a whole, with the overall picture continuing to be of weak growth.
“The autumn in January was pushed by a notable slowdown in manufacturing, with oil and gasoline extraction and development additionally having weak months.
“However, services continued to grow in January led by a strong month for retail, especially food stores, as people ate and drank at home more.”
January’s knowledge marks a recent blow for the chancellor because the economic system faces headwinds on many fronts at a time when her acknowledged precedence is securing financial development.
Looming giant for Rachel Reeves is the specter of an opposed enterprise response to price range tax hikes she is because of impose from April.
Corporations are going through the majority of the £40bn invoice by employer nationwide insurance coverage contributions and are warning of job losses, weaker pay rises and funding, together with doable worth hikes, to account for the surge in prices.
Different challenges embody the escalating commerce conflict initiated by Donald Trump, which is tipped by economists to dent development prospects globally.
Ms Reeves is low on ammunition as she prepares a spring assertion for MPs later this month, with the welfare invoice set to be slashed to keep away from breaking her personal spending guidelines.
On the identical time, the impartial Workplace for Funds Duty is extensively anticipated to downgrade its forecasts for UK development forward.
The chancellor mentioned of the ONS knowledge: “The world has changed and across the globe we are feeling the consequences.
“That is why we’re going additional and sooner to guard our nation, reform our public providers and kickstart financial development to ship on our Plan for Change.
“And why we are launching the biggest sustained increase in defence spending since the Cold War, fundamentally reshaping the British state to deliver for working people and their families; and taking on the blockers to get Britain building again.”
Her Conservative counterpart, Mel Stride, responded: “It is no surprise that growth is down again, following near no growth in the last three months of 2024.
“After constantly speaking Britain down, elevating taxes to file highs and crushing enterprise with their excessive employment laws this authorities is a development killer.
“Labour inherited the fastest growing economy in the G7 but since they arrived business confidence has collapsed and jobs are being lost.”
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