UK economic growth stalled in January 2026, according to the Office for National Statistics (ONS). Monthly GDP was flat, after a modest 0.1% rise in December. Over the three months to January, however, the economy edged up 0.2%, slightly stronger than the previous quarter’s 0.1% growth.
Breaking it down by sector, services output didn’t move in January. Production slipped 0.1%, while construction grew 0.2%. Over the three months, production was up 1.3%, and services rose 0.2%, but construction fell 2.0%.
Rob Wood, chief UK economist at Pantheon Economics, described January as a “disappointing” month, driven in part by erratic sectors that are expected to bounce back. He adjusted his first-quarter growth forecast to 0.2% from an earlier estimate.
Wood pointed to some uneven trends: auto production saw a boost, but other areas of manufacturing, like machinery and electrical equipment, dropped sharply. In services, retail provided a lift, while hospitality and administrative activities dragged. Looking ahead, he warned that factors like the Middle East conflict and bad February weather could hit construction and retail sales.
"Surging uncertainty from the US-Israel war with Iran will also hit sentiment surveys, like the PMI, in March and risks growth undershooting our call," Wood added. "But a lot depends on how long hostilities last and the related damage to oil supply."
Adding a wider market perspective, Lale Akoner, global market analyst at eToro, said the figures highlight the fragility of the UK economy.
“For households, the bigger concern may be the return of cost-of-living pressures," Akoner said. "Oil prices have climbed back above $100 a barrel amid escalating conflict involving Iran, raising the risk of higher fuel and energy costs feeding through to consumers.”
Akoner pointed out that the UK could be particularly vulnerable because of its reliance on natural gas and the way regulated energy tariffs pass wholesale price increases to households with a delay.
“This leaves the Bank of England in a difficult position. While weak growth might normally support rate cuts, the risk of a second-round energy-driven inflation spike may push policymakers to delay easing as they assess how persistent the shock could be,” she added.