January Sees Unforeseen 0.1% Contraction in UK Economy

The UK economy unexpectedly shrank by 0.1% in January 2025, falling short of Chancellor Rachel Reeves' growth projections, as reported by the Office for National Statistics. Despite City economists anticipating a 0.1 percent GDP growth, declines in the industrial sector outweighed gains in services, based on ONS data. This decline brings the UK closer to a recession, defined as two consecutive quarters of negative growth, according to Liz McKeown, the economic statistics director. Business leaders criticized Reeves' tax adjustments, especially the rise in National Insurance contributions and minimum wage increases, which have impacted confidence, noted Jochen Stanzl, Chief Market Analyst at CMC Markets.