UK GDP has fallen by 0.1% in January after an increase of 0.4% in December, the Office for National Statistics (ONS) has revealed.

The drop was a result of a fall in the production sector in the three months to January.

Real GDP is estimated to have grown by 0.2% in the three months to January, compared to the three months to October 2024.

The services and construction sectors grew by 0.4% respectively, while the production sector fell by 0.9%.

Head of financial analysis at AJ Bell, Danni Hewson, said: "The UK is struggling to find the key to the growth that the government says is a priority if people are going to start to feel better about their own financial lives.

"And when you drill into the one main positive from the month, that people had spent more on their weekly food shop, it could be seen as households choosing to batten down the hatches and stay at home rather than spend money out because they’re nervous about the road ahead.

"It’s understandable that they’re nervous when you consider the trade wars which have wrought such havoc on global stock markets this week and seem to have contributed to the decline in manufacturing, with car makers in particular slowing production."

Month-on-month, the services output is estimated to have grown by 0.1% in the month to January, following growth of 0.4% In December. Of the 14 subsectors, output increased in six, with seven sectors seeing output decline and one showed no growth.

The production sector’s output dropped by 0.9% in January, primarily due to a 1.1% in manufacturing output.

Furthermore, the construction sector’s monthly output fell by 0.2%, matching an identical drop in December. The ONS reported tat this fall came "solely from a fall of 0.7% in new work", despite repair and maintenance growing by 0.4%.

Chief executive officer at Secure Trust Bank, David McCreadie, concluded: "December’s growth was largely driven by seasonal holiday spending, making it appear more like an outlier than a sign of sustained recovery. Meanwhile, industrial production remains in decline, underscoring concerns about the UK's long-term economic resilience. A structural overhaul, starting with Treasury-led reforms is crucial, but the upcoming Spring Statement is unlikely to deliver measures that can drive immediate change.

"January’s GDP data offers little to inspire confidence on Threadneedle Street. However, it is unlikely to prompt a shift in monetary policy when the Bank of England meets next week."

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