UK economy stalls in January as hospitality slowdown drags growth to zero

"The ONS said the overall economic picture remained "subdued", with consumer-facing sectors particularly weak. Within the dominant services sector, which accounts for around 80% of UK economic activity, there was a notable 2.7% drop in food and drink service activity as households curtailed spending on eating out."

"The disappointing performance highlights the fragile state of the UK economy even before the latest geopolitical shock from the escalating US-Israeli conflict with Iran, which economists warn could further dampen growth by pushing energy prices higher and fuelling inflation."

"The flat reading follows a period of slowing economic momentum during the second half of 2025, when uncertainty over tax changes, rising unemployment and lingering cost-of-living pressures led many consumers to reduce spending."

The UK economy stalled in January with zero GDP growth, disappointing forecasts of 0.2% expansion. The services sector, representing 80% of economic activity, showed no growth overall, with food and drink services experiencing a sharp 2.7% decline as households cut discretionary spending. Consumer-facing sectors remained particularly weak due to ongoing financial pressures. Industrial production fell 0.1%, while construction provided modest growth at 0.2%. The slowdown reflects broader economic fragility stemming from uncertainty over tax changes, rising unemployment, and persistent cost-of-living concerns that have dampened consumer behaviour throughout the second half of 2025.

Read at Business Matters