UK GDP drops again ahead in blow for Rachel Reeves ahead of Budget | Personal Finance | Finance

The UK economy contracted by 0.1% in January, figures from the Office of National Statistics (ONS) show. The drop was driven by a sharp fall in the production sector. Liz McKeown, ONS director of economic statistics, said: “The economy shrank a little in January but grew in the last three months as a whole, with the overall picture continuing to be one of weak growth. 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. Ms McKeown added: “Especially for food stores, as people ate and drank more at home.” January’s drop comes after two months of consecutive growth, with increases of 0.4% in December 2024 and 0.1% in November 2024. Most economists had forecast gross domestic product (GDP) to rise by 0.1% in the first month of the year.

Responding to the figures, Chancellor Rachel Reeves said: “The world has changed, and across the globe, we are feeling the consequences.

“That’s why we are going further and faster to protect our country, reform our public services and kickstart economic growth to deliver on our plan for change. And why we are launching the biggest sustained increase in defence spending since the Cold War, fundamentally reshaping the British state to deliver for working people and their families; and taking on the blockers to get Britain building again.”

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