The UK economy unexpectedly failed to grow in January, ahead of the outbreak of the Iran war. Official figures revealed zero growth for the month – a much weaker figure than had been predicted and followed sluggish growth of 0.1% in December.
The Office for National Statistics (ONS) described the figures as "subdued" and industry analysts said the economy was ‘flatlining’.
The figures cover a period before the outbreak of Middle East conflict in Iran, which has caused a major energy price shock that could have a ripple effect on economies around the world.
In response to the figures, Chancellor Rachel Reeves said:
"Our economic plan is the right one, but I know there is more to do.”
Analytics expert Raj Abrol, CEO, Galytix said:
“When risk and uncertainty are at the top of the economic agenda, financial stagnation will inevitably become the new normal. In an increasingly complex world, mastering AI to navigate investments and assess market volatility will be an essential step forward, allowing organisations to manage and deploy capital as well as planning future investments and building accurate risk profiles.”
Meanwhile Kenny MacAulay, CEO of Acting Office, a software platform for accounting practices added:
“Businesses are facing the perfect storm of soaring hiring costs due to NI increases, AI disruption and geopolitical uncertainty, all of which have seen growth flatline. In uncertain times, firms will need a radical rethink of traditional business models, centralising tech systems to reduce costs and operate more effectively."
"The fear for many is that this is just the beginning of an economic cliff edge and the government will have to move quickly to reassure nervous business owners that it has their back in difficult times.”
The ONS said the services sector showed no growth in January, while production fell by 0.1%. Meanwhile the construction sector grew by 0.2%.
In the three months to January, a less volatile measure in comparison to the monthly numbers, GDP grew by 0.2% - up from 0.1% in the three months to December.
