UK economy unexpectedly shrank by 0.1% in January in blow to Rachel Reeves
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Economy shrinks heaping more pressure on Labour
- The UK economy unexpectedly shrank by 0.1% in January, contrary to predictions of 0.1% growth, posing a challenge to the Labour government's economic agenda.
- This contraction follows weak growth in the last quarter of 2024 and is attributed to slowdowns in manufacturing, oil and gas extraction, and construction, despite growth in the services sector, particularly retail.
- Chancellor Rachel Reeves attributed the economic downturn to international factors, while the Conservatives blamed Labour's policies, including tax increases.
- Reeves emphasized the government's commitment to economic growth and highlighted plans for increased defense spending and public service reform.
- The Liberal Democrats called for a revised economic plan focused on supporting small businesses, while economists warned of further economic challenges due to higher taxes and a deteriorating global landscape.