UK economy flatlines unexpectedly in January

The UK economy unexpectedly stalled in January following meagre growth at the end of last year, official figures have shown, amid fears Britain is heading for a hit from the Iran conflict as prices are sent soaring.

The Office for National Statistics (ONS) said there was zero growth in gross domestic product (GDP) in January.

It comes after GDP edged just 0.1% higher in the final three months of last year amid budget uncertainty and a subdued performance in December, with growth of 0.1% also in the month of December.

Most economists had expected growth of 0.2% in January.

Housebuilding in particular saw a tough start to the year, with private housing new work plunging by 5.6% in January – the worst performance since March 2020 at the start of the Covid pandemic.

Liz McKeown, ONS director of economic statistics, said the “overall picture remains subdued” in the UK economy.

Chancellor Rachel Reeves said the figures come amid an “uncertain world”, as the Iran war threatens to push up inflation as oil, fuel and gas prices have rocketed higher since the conflict started.

She said: “Our economic plan is the right one, but I know there is more to do.

“In an uncertain world, we are building a stronger and more secure economy by cutting the cost of living, cutting national debt and creating the conditions for growth to make all parts of the country better off.”