BBC business reporter Tom Espiner reported that the UK economy took an unexpected hit in January, contracting by 0.1%. This decline was attributed to a slowdown in manufacturing, marking a stark contrast to the 0.4% growth experienced in December. The government, with a primary focus on fostering economic growth, is likely to view this setback as a troubling development.
As the country braces for the chancellor’s upcoming Spring Statement, which is anticipated to outline government spending cuts, the Office for National Statistics (ONS) director of economic statistics, Liz McKeown, highlighted the mixed performance in different sectors. While construction and oil and gas extraction experienced a slump, the retail sector, particularly food shops, saw a boost as more people opted to eat and drink at home.
Despite the decline in monthly growth in January, the ONS reported an estimated 0.2% growth over the three months leading up to January. Chief economist Yael Selfin of KPMG UK attributed the sluggish start to the year to global uncertainties, including the impact of Trump tariffs on investment. Chancellor Rachel Reeves echoed the sentiment, emphasizing the need for accelerated measures to jumpstart economic growth.
Looking ahead, chief economist Anna Leach from the Institute of Directors cautioned that the overall fragility of the UK economy puts it at risk. Specific challenges faced by industries like car manufacturing, exacerbated by trade uncertainties and shifting targets in adopting electric vehicles, further underscore the need for strategic economic interventions. With the Office for Budget Responsibility expected to revise its growth projections in the upcoming Spring Statement, the UK economy remains at a critical juncture
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