By Evans Momodu
1 minute read
Published 14:50 UK GMT


The UK economy unexpectedly shrank by 0.1% in January 2025, reversing the 0.4% growth recorded in December, according to data from the Office for National Statistics (ONS). Economists had forecasted a 0.1% increase, but manufacturing, oil and gas extraction, and construction all saw weaker performance.

Liz McKeown, ONS Director of Economic Statistics, commented:

"The economy shrank a little in January but grew over the last three months as a whole. The overall picture remains one of weak growth."

Despite declines in manufacturing and construction, the services sector continued to expand, driven by strong retail sales, particularly in food stores, as more people ate and drank at home.

The contraction is a setback for Chancellor Rachel Reeves, who has prioritised economic growth amid rising global challenges.

Businesses are bracing for £40 billion in tax hikes, including higher employer National Insurance contributions, set to take effect in April.
Many firms warn of job losses, weaker wage growth, and potential price increases due to rising costs.

With economic uncertainty mounting, critics are urging Reeves to reconsider the tax increases to prevent further economic strain.
Source: Skynews