UK economy shrank unexpectedly by 0.1% in January

The UK economy unexpectedly decreased by 0.1% in January, with recession in the construction of one of the main reasons for the dip.

The performance was more weak than expected, and came after the economy increased by 0.4% in December.

This will be seen as a shock for the government, stating that its number one priority is to promote Britain’s economic growth.

The figures come beyond the spring statement of the Chancellor, which is expected to include the cut in government spending.

Economic Statistics ONS Director, Liz McCain said: “The economy decreased slightly in January, but a whole increased in the latest three months, the overall picture continued with weak growth.”

There was a “weak month” in construction and oil and gas extraction, he said.

But it was partially offset by retail, especially food shops, “as people eaten and drank at home”, he said.

Although development for the month in January was reduced, monthly readings could be unstable and ONS stated that the economy was estimated to increase 0.2% from January for three months.

Chancellor Rachel Reeves said: “The world has changed and we are feeling the results all over the world.”

He said that the government is going “ahead and fast” for “Kickstart Economic Growth”.

KPMG UK chief economist Yale Selfine said the UK economy started “on the back foot” year as Trump was cautious about investment in uncertainty about tariffs.

He said that the predictions of “dull development” mean Reeves may probably “tighten the purse strings” in the spring statement.

He said that the recent cut for UK assistance to increase defense spending is “a preview that some departments will see their spending schemes”, he said.

Anna Leach, the chief economist of the Institute of Directors, said that a slight increase or decline in a month was not significant, but the significant point was that the economy was completely “quite weak and so weak”.

Especially car manufacturers have “notable weaknesses” with business uncertainty from Trump Tariff, and “chopping and changing the goals of adopting electric vehicles”.

He said that the UK’s development figures “will definitely help” up to the spring statement, when independent forecasts are likely to reduce the prophecy of the office for budget responsibility.

Last month, Bank of England reduced its development forecast This year for Britain.