UK economy unexpectedly flatlines ahead of Iran shock

13th Mar 2026 07:00

(Sharecast News) - The UK economy stalled in January, official data showed on Friday, just weeks before war in the Middle East sent global energy prices soaring.

According to the Office for National Statistics, GDP was 0.0% in January, down on December's 0.1% uptick and below expectations for growth of 0.2%.

While construction improved by 0.2%, the dominant services sector showed zero growth and production fell 0.1%.

In the three months to January, GDP rose 0.2%, although that was below forecasts for a 0.3% uplift. Over the quarter, services grew by 0.2% - after showing no growth in the three months to December - while production output was 1.3% stronger. Construction output, however, slid 2.0%, compounding a 2.1% fall in the previous three months.

The Bank of England's Monetary Policy Committee meets next week and had been widely expected to trim interest rates to help bolster anaemic economic growth. However, oil and gas prices have soared since the end of February in response to war in the Middle East - Brent crude is currently trading at over $100 a barrel - and analysts now widely expect the cost of borrowing to be left on hold at 3.75%.

Liz McKeown, director of economic statistics at the ONS, said: "Growth ticked up slightly in the latest three months, partly reflecting the recovery of car manufacturing following the cyber incident in the autumn.

"Within services, which also increased, wholesale continued to rebound from a weak summer.

"However, the overall picture remains subdued, with no growth in the latest month."