The UK economy contracted by 0.1 per cent for January 2025 a blow to Chancellor Rachel Reeves, according to the latest figures from the Office for National Statistics (ONS).
Reeves has pledged to “kickstart the economy” with the fiscal policies outlined in her Autumn Budget and upcoming Spring Statement but she has received backlash from the business community over her tax changes.
This shrinking of the economy comes as a surprise to City economists, who expected gross domestic product (GDP) growth to jump by 0.1 per cent over the period.
ONS data revealed the services sector was unable to offset a decline in the industrial sector and maintain growth from the previous month.
As a result of these figures, the UK inches closer to recession territory, which happens when a country experiences two consecutive quarters of negative economic growth.
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Over the three months to January, GDP was estimated to have grown by 0.2 per cent, partially contributed by growth in the services sector, according to the ONS.
Liz McKeown, the director of economic statistics at the statistics authority, broke down how the figures continued to show “weak growth”.
She explained: “The fall in January was driven by a notable slowdown in manufacturing, with oil and gas extraction and construction also having weak months.
“However, services continued to grow in January led by a strong month for retail, especially food stores, as people ate and drank at home more.”
The Chancellor is under fire for her fiscal policies
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