The 0.1% decline in GDP in January, as reported by the Office for National Statistics, is a disappointing development for a government that has prioritized economic growth. This decline indicates that the economy is moving in the wrong direction and suggests that the Office for Budget Responsibility will present weaker forecasts to Rachel Reeves as she prepares to announce her spring statement on 26 March. The monthly data is more volatile than the closely watched quarterly growth rates and can often be revised, but it appears that the UK was stagnating even before Donald Trump’s disruption of the global trading system. The decline in GDP was attributed to weak manufacturing output and construction, with services output expanding only marginally. The drop in new work in construction is particularly concerning given the government’s commitment to building new homes. While the economy has not entered a recession, the backdrop is relatively weak, and UK companies must navigate the uncertainty created by the White House’s tariffs policies and the upcoming increase in employer national insurance contributions and national living wage. Stuart Morrison, the research manager at the British Chambers of Commerce, stated that the economy appears to be “treading water.” The shaky growth outlook is unlikely to prompt the Bank of England to lower interest rates, as they have emphasized caution in their monetary policy report.

Source: https://www.theguardian.com/business/2025/mar/14/gdp-shrinking-economy-rachel-reeves-growth-plans-analysis