UK economy shrank unexpectedly by 0.1% in January | Global News Avenue

The UK economy unexpectedly shrank by 0.1% in January, one of the main reasons for manufacturing fell.

Performance was weaker than expected and after the economy grew by 0.4% in December.

This will be seen as a blow to the government, which says its priority is to boost economic growth in the UK.

The figures were ahead of the principal’s spring statement and are expected to include government spending cuts.

“The economy shrank a little in January, but grew in the latest three months, and the overall situation continued to grow weaker,” said Liz McKeown, director of economic statistics at ONS.

She said the “weaker months” of construction and oil and gas extraction.

But that partly is offset by retail, especially food stores, she said, “with people eating and drinking at home,” she said.

Despite a decline in January’s monthly growth, monthly readings may be volatile, and ONS said it is estimated that the economy has grown by an estimated 0.2% in the three months to January.

“The world has changed and on a global scale, we are feeling the consequences,” Prime Minister Rachel Reeves said.

She added that the government is “further and faster” to “start economic growth.”

KPMG UK chief economist Yael Selfin said the UK economy has begun to “back up” because the uncertainty of Trump’s tariffs has made companies cautious about investment.

She said the forecast of “stagnant growth” means Reeves could “tighten the purse string” in his spring statement.

She added that the recent cuts in UK aid to fund the increase in defence spending “is a preview that some departments will see their spending plans squeezed”.

Anna Leach, chief economist at the Directors Institute, said it doesn’t matter if there is a slight rise or fall in a month, but it’s important that the overall economy is “quite weak and therefore fragile.”

Automakers in particular have “obvious weaknesses”, trade uncertainty over Trump tariffs and “shredding and changing goals of adopting electric vehicles.”

She said the UK’s growth figures “definitely won’t help” before the spring statement, when independent forecasts grasped budget responsibilities would likely lower their growth forecasts.

last month, Bank of England half its growth forecast This year in the UK.