Market Update: We break down the business implications, market impact, and expert insights related to Market Update: Britain’s economy unexpectedly stalled at start of the year – Full Analysis.
The powerhouse services sector stagnated, manufacturing grew just 0.1% and construction expanded 0.2%
Published Fri, Mar 13, 2026 · 03:42 PM
[LONDON] The UK economy unexpectedly failed to grow in January, suggesting activity was stalling even before conflict in the Middle East threatened to deliver a fresh blow to consumers and businesses.
Gross domestic product was unchanged after 0.1 per cent growth in the previous month, the Office for National Statistics said on Friday (Mar 13). It was worse than the 0.2 per cent growth economists had expected.
The powerhouse services sector stagnated, manufacturing grew just 0.1 per cent and construction expanded 0.2 per cent, suggesting the economy was already off track to achieve the 0.3 per cent expansion forecast by the Bank of England for the first quarter as a whole.
However, that forecast, along with the rest of 2026, has been called into question by the turmoil triggered by the US and Israeli attack on Iran on Feb 28.
Oil rose above US$100 a barrel once again on Thursday amid the worst supply disruption in the history of the global oil market. British households and firms could be hit by another inflationary shock that hits spending and forces the Bank of England to delay interest-rate cuts.
The effects of the war are already feeding through to consumers with petrol prices climbing by the most since 2022 and lenders hiking mortgage rates. The BOE is expected to skip a rate reduction on Thursday. Only a few weeks ago, another quarter-point cut was seen as highly likely as policymakers responded to a weakening labour market. BLOOMBERG
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