presenter Anna Jones announced the latest GDP data from the Office for National Statistics, which showed the has shrunk by -0.01% . Describing it “a worry” for Chancellor as “many of her numbers depend on good growth” she turned to business and economics correspondent Paul Kelso to explain the figures.
“They show us in the first month of the year, January, the economy contracted. Growth fell by -0.01%. The economy’s consensus was for growth of 0.1% so it’s not much either side of zero, but the being the wrong side of zero is where nobody wants to be,” he said. “We had growth in December of 0.4% slightly bucking the trend. But the last two quarters of 2024 were flat, and this is the last thing the chancellor will want to have seen today – never mind British business and indeed, the employees and people who depend on them.”
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Anna Jones halted regular news to announce the UK economy had shrunk (Image: Sky News)
“January was when the government’s growth narrative began. Every time you spoke to a government minister… growth was the message. We can see why, because it wasn’t being delivered in January,” he continued.
“The main contributor to the negative direction is [the fact] production fell nearly 1% – so that’s goods manufacturing, making stuff. that buoyancy there has been in the economy driven by services, which makes up the bulk of the economy.
“In the UK, that dropped away in January. So this rather confirms the trend with fear of an economy that is bumping along around zero.
“We are 10 days away from the spring statement, when the Office for Budget Responsibility will deliver its sums [as to] how it feels the economy is doing against the chancellors. This is important. Her fiscal rules, growth gets her out of the hole she appears to be in. It’s not been delivered in January.
“[It] should be said we don’t know the impact of trade figures here. The ONS has actually had to postpone publication today of its trade figures because of errors it discovered. That’s quite interesting in the context we’re talking about trade a lot. It would be lovely this morning to know how much we were exporting to the US?
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Despite Rachel Reeves promise of growth the UK economy shrunk (Image: Getty)
“The ONS said this is an error that dates back to 2023 they’re going to take more time to make sure they issue accurate figures, which I suppose we should be pleased for.
“But it does raise a question [that] perhaps those trade figures will feed into their GDP estimates. This is the first estimate we’ve had today, so we don’t know how reliable this figure is. Production is down. We’re making less stuff. Then presumably we might be exporting a bit less.
“But these are not numbers at which the Chancellor [wil be happy]. She’s in Scotland today talking about increasing funding to facilitate the defence industries.
“The last couple of weeks since, the security situation has changed around the world, even that has been lashed in to the government’s growth agenda,” he pointed out.