UK real gross domestic product (GDP) grew by just 0.2% in the three months to January 2026, according to the Office for National Statistics (ONS).
This follows GDP rising by just 0.1% in the three months to December and showing no growth in the three months to October.
The largest contributor to today’s GDP figures was a 1.3% increase in production, driven primarily by gains in manufacturing and energy supply, partially offset by declines in water and mining.
Additionally, the services sector returned to growth with a 0.2% rise, after showing no growth in the three months to December. Meanwhile, construction output took a hit, sliding by 2.0% over the period.
Luke Bartholomew, deputy chief economist at Aberdeen, said: “There had been some hope that the UK economy was picking up around the turn of the year.
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“But the fact that GDP stagnated in January suggests that the recovery in survey data was significantly overstating the health of the real economy.”
Susannah Streeter, chief investment analyst at the wealth club, added: “Stagflation is stalking the UK economy, with inflation set to rise while stagnation settles in, with risks increasing that the economy could go into reverse.”
Analysts have noted that uncertainty may rise from here, as policymakers become more concerned with the conflict in the Middle East.
Danni Hewson, head of financial analysis at AJ Bell, said: “The war in Iran has completely changed the playing field and the playbook Rachel Reeves has been working from might need ripping up.”
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Expectations of interest rate cuts during the Monetary Policy Committee (MPC) meeting next week have gone from a 80% likelihood to an “extreme long shot” of less than 10%, according to AJ Bell analysts.
