MarketMoodz
UK economy flatlines in January as services stall and costs bite
January GDP grew 0.0% month-on-month, after a 0.1% rise in December, signaling a flat start to 2024. The services sector stagnated and food-and-drink services fell 2.7%, while production slipped 0.1% and construction rose 0.2%, leaving the three-month pace at +0.2%.
Key Takeaways
- GDP flat at 0.0% in January; three-month growth +0.2%
- Services sector stagnated; food and drink services down 2.7%
- Production fell 0.1%; construction rose 0.2%
- OBR still projects about 1.1% growth for 2024
- Higher mortgage costs and energy-price dynamics weigh on demand
People Involved
- Yael Selfin Chief Economist, KPMG UK
- Dharshini David BBC Economics Editor
- Rachel Reeves Chancellor of the Exchequer
- Mel Stride Shadow Chancellor
Entities Involved
- Office for Budget Responsibility (OBR) Fiscal forecaster projecting 2024 growth
- Ofgem Energy regulator
- Bank of England (BoE) Central bank and policy maker
MarketMoodz Analysis
For investors, January’s flat GDP print points to a fragile domestic demand backdrop. A stagnating services sector, combined with a modest contraction in production and only modest construction gains, suggests limited upside for UK equities and the housing market as higher financing costs bite.
The OBR’s 1.1% 2024 growth forecast provides a policy anchor, but inflation risk remains elevated on energy prices and the pace of mortgage-rate normalization. Historically, the UK has struggled to sustain momentum when services stall, making policy guidance from the Spring Statement and BoE communication critical for market expectations.
What to watch next: the BoE’s rate path given the data, the trajectory of energy prices and the Ofgem cap, and further developments in the mortgage market as lenders recalibrate?
Source: Original Article
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