UK economy shrank unexpectedly in January

The UK system shrank unexpectedly by 0.1% successful January, with a slowdown successful manufacturing 1 of the main reasons for the dip.

The show was weaker than expected, and came aft the system had grown by 0.4% successful December.

It volition beryllium seen arsenic a stroke to the government, which has said its fig 1 precedence is to boost UK economical growth.

The figures travel up of the chancellor's Spring Statement, which is expected to see authorities spending cuts.

Liz McKeown, ONS manager of economical statistics, said: "The system shrank a small successful January but grew successful the latest 3 months arsenic a whole, with the wide representation continuing to beryllium of anemic growth."

Construction and lipid and state extraction had a "weak month", she said.

But this was partially offset by retail, peculiarly nutrient shops, "as radical ate and drank astatine location more", she said.

Although maturation was down for the period successful January, monthly readings tin beryllium volatile and the ONS said the system was estimated to person grown by 0.2% implicit the 3 months to January.

Chancellor Rachel Reeves said: "The satellite has changed and crossed the globe we are feeling the consequences."

She added the authorities is "going further and faster" to "kickstart economical growth".

Yael Selfin, main economist astatine KPMG UK, said the UK system had started the twelvemonth "on the backmost foot" arsenic uncertainty astir Trump tariffs was making businesses cautious astir investment.

She said predictions of "sluggish growth" means Reeves volition astir apt "tighten purse strings" successful the Spring Statement.

The caller chopped to UK assistance to money an summation successful defence spending "is a preview that immoderate departments volition spot their spending plans squeezed", she added.

Anna Leach, main economist astatine the Institute of Directors, said a flimsy emergence oregon autumn successful 1 period was not significant, but the important constituent was the system wide is "quite anemic and truthful rather vulnerable".

Car manufacturers successful peculiar person "notable weaknesses" with commercialized uncertainty from Trump tariffs, and "chopping and changing successful the targets of the adoption of electrical vehicles".

She said the UK maturation figures "certainly won't help" successful the pb up to the Spring Statement, erstwhile the autarkic forecaster the Office for Budget Responsibility is apt to downgrade its maturation prediction.

Last month, the Bank of England halved its maturation forecast for the UK this year.