The UK economy unexpectedly shrank in January following a decline in the manufacturing and construction sectors.
Friday’s monthly GDP figure from the Office for National Statistics (ONS) was weaker than expected, and came after the economy had grown by 0.4% in December.
The ONS blamed weak manufacturing output, down by 1.1% on the month, and construction, which fell by 0.2%.
The poor GDP readout will be seen as a blow to the chancellor Rachel Reeves ahead of her Spring Statement this month.
Scott Gardner, investment strategist at J.P. Morgan-owned digital wealth manager, Nutmeg, said: “The UK economy is stuck in the slow lane, showing no signs of growth in the first month of the year. This latest data just goes to show the mountain to climb for the chancellor to reclaim momentum and get Britain growing at pace in 2025.
“All eyes will now be on the chancellor’s Spring Statement at the end of the month after the Bank of England revised its growth projections downwards for 2025. The chancellor will hope that the OBR looks favourably on recent decisions to power growth, but there are question marks over whether previous measures announced in the Autumn Budget will prove a headwind to the economy in the middle of this year.”
David Morrison, senior market analyst at Trade Nation, added: “The market reaction was muted, with shallow pullbacks in both sterling and pre-open FTSE 100. The latter is firmer this morning, taking its cue from an overnight rally across US stock index futures.”
