UK financial system shrank unexpectedly by 0.1% in January

The UK financial system shrank unexpectedly by 0.1% in January, with a slowdown in manufacturing one of many primary causes for the dip.

The efficiency was weaker than anticipated, and got here after the financial system had grown by 0.4% in December.

It will likely be seen as a blow to the federal government, which has mentioned its primary precedence is to spice up UK financial development.

The figures come forward of the chancellor’s Spring Assertion, which is predicted to stipulate authorities spending cuts.

Liz McKeown, ONS director of financial statistics, mentioned: “The financial system shrank a bit in January however grew within the newest three months as an entire, with the general image persevering with to be of weak development.”

Development and oil and fuel extraction had a “weak month”, she mentioned.

However this was partially offset by retail, significantly meals outlets, “as individuals ate and drank at dwelling extra”, she mentioned.

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

She added the federal government is “going additional and sooner” to “kickstart financial development”.

Yael Selfin, chief economist at KPMG UK, mentioned the UK financial system had began the 12 months “on the again foot” as uncertainty about Trump tariffs was making companies cautious about funding.

She mentioned predictions of “sluggish development” means Reeves will in all probability “tighten purse strings” within the Spring Assertion.

The latest reduce to UK support to fund a rise in defence spending “is a preview that some departments will see their spending plans squeezed”, she added.