In January, the UK economy unexpectedly shrank by 0.1%, disappointing economists who had forecasted 0.1% growth. The contraction was primarily driven by a decline in the industrial sector, with manufacturing output falling by 1.1%. The services sector's inability to counterbalance this decline is troubling. Yael Selfin from KPMG UK remarked that global uncertainty is weighing on growth expectations. Following a 0.4% rise in December, overall growth outlooks for early 2025 remain mixed, with the National Institute projecting growth could be as high as 0.4% and the Bank of England estimating only 0.1%.
The UK economy contracted by 0.1% in January, dealing a blow to Rachel Reeves before the spring statement later this month.
Yael Selfin, the chief economist at KPMG UK, said: The UK economy starts the year on the back foot as global uncertainty casts a shadow on the outlook.
In December the economy expanded by 0.4%, helping the last quarter of the year to register a 0.1% rise and avoid two quarters of zero growth.
The National Institute of Economic and Social Research has forecast that the economy will grow by 0.4% in the first quarter of 2025, much higher than the Bank.
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