Key events
And here is Rachel Reeves, the chancellor, responding to the drop in GDP.
The world has changed and across the globe we are feeling the consequences. That’s why we are going further and faster to protect our country, reform our public services and kickstart economic growth to deliver on our plan for change.
And why we are launching the biggest sustained increase in defence spending since the Cold War, fundamentally reshaping the British state to deliver for working people and their families; and taking on the blockers to get Britain building again.
Here is some instant reaction.
Hailey Low, associate economist at the National Institute of Economic and Social Research, a respected UK think tank, called on the chancellor, Rachel Reeves, to use her spring statement on 26 March to provide stability, rather than add to uncertainty.
The UK economy started 2025 on a negative note. Following the lacklustre performance in the second half of 2024, growth remains fragile due to global and domestic uncertainty.
It is crucial that the upcoming spring statement provides stability rather than adding to domestic uncertainty. Frequent policy U-turns risk undermining business and investor confidence at a time when clarity and consistency are most needed.
Introduction: UK economy shrinks 0.1% in January following decline in factory output
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The UK economy unexpectedly shrank in January following a decline at factories.
GDP is estimated to have fallen 0.1% in January, mainly caused by a 0.9% fall in the production sector, according to the Office for National Statistics. This comes after 0.4% economic growth in December. Economists had expected the economy to grow by 0.1% in January.
Monthly services output grew by 0.1% in January, following 0.4% growth in December, while construction output fell by 0.2% following a same-sized decline in December.
GDP is estimated to have grown by 0.2% in the three months to January, compared with the three months to October, mainly because of growth in the services sector.
Asian stock markets are mostly up, despite a sell-off on Wall Street sparked by Donald Trump’s tariff policies. Yesterday, Trump threatened to hit imports of wine, cognac and other alcohol from the European Union with a 200% tariff.
The escalating trade war dragged the S&P 500 on Wall Street more than 10% below its record, set just last month. A 10% decline from a recent peak is known as a “correction” — and Thursday’s 1.4% slide in the S&P 500, a key US stock market index, sent it to its first correction since 2023.
Gold surged through $3,000 an ounce last night, but is down slightly at $2,986 at present. The value of gold has nearly doubled in the past five years.
Chinese stocks led the gains in Asia amid expectations of policy support from Beijing, with top government officials set to hold a press briefing on Monday. The Shanghai exchange rose by 1.7% while the Shenzhen market bounced by 2.1%, and Hong Kong’s Hang Seng climbed by 2.2%. Japan’s Nikkei was up by 0.7%.
Stock market futures are pointing to a higher open in Europe and on Wall Street later.
There is some relief after top US Senate Democrat Chuck Schumer signalled his party would provide the votes to avert a government shutdown in the US.
The Agenda
