In January, the economy recorded zero growth, according to figures published by the Office for National Statistics (ONS). Most economists had expected growth of 0.2%.
It underscores the economy’s fragility even before the outbreak of the Iran conflict, which has triggered an energy shock likely to raise inflation.
The prospect of another energy crisis has stoked fears that the UK will fall into a period of stagflation – the combination of higher inflation and unemployment, and stagnating growth – which has further dampened the chances of rate cuts.
The ONS said the overall picture is “subdued”, led by zero growth across services and a 0.1% fall in production in January. While construction grew 0.2% in January, it continued its contraction over the quarter, down 2%.
The figures will be grim reading for the Chancellor, who has pinned her hopes on improving economic growth.
She said the figures come “amid an uncertain world” but insisted: “Our economic plan is the right one, but I know there is more to do,” as the Middle East conflict threatens higher inflation.
Economists at ING anticipate a peak for headline inflation in late summer at around 3.5%.
“The problem facing the UK is that despite the government saying they need to stick to the plan to produce economic growth, forecasts point to very little improvement, with even 2% growth a year becoming a pipe dream,” said Lindsay James, investment strategist at Quilter...<<<Read More>>>...
