UK Economy Contracts; Pound Weakens Amidst Pressure

The UK economy experienced an unexpected contraction of 0.1% in January 2025, contrary to the predicted 0.1% growth, largely due to declines in manufacturing and construction sectors, despite a modest rise in the services sector. The contraction has put significant pressure on the Labour government, with Prime Minister Keir Starmer prioritizing economic development and public service funding. Manufacturing output fell by 1.1%, with notable reductions in sectors like basic metals and pharmaceuticals, while the British pound fell by 0.19% against the dollar. Treasury chief Rachel Reeves, facing criticism for her economic policies, has vowed to accelerate growth-promoting initiatives. The Bank of England is expected to maintain interest rates at 4.5% despite the latest data, as financial markets anticipate limited economic growth in the near future.