Economy Flatlines Ahead of Iran War Stoking New Cost of Living Crisis Fears
The economy unexpectedly flatlined in January ahead of the war in Iran, with the lack of signs of growth stoking fears of recession and another cost-of-living crisis. The Mail has more.
In January, the economy recorded zero growth, according to figures published by the Office for National Statistics (ONS). Most economists had expected growth of 0.2%.
It underscores the economy’s fragility even before the outbreak of the Iran conflict, which has triggered an energy shock likely to raise inflation.
The prospect of another energy crisis has stoked fears that the UK will fall into a period of stagflation – the combination of higher inflation and unemployment, and stagnating growth – which has further dampened the chances of rate cuts.
The ONS said the overall picture is “subdued”, led by zero growth across services and a 0.1% fall in production in January. While construction grew 0.2% in January, it continued its contraction over the quarter, down 2%.
The figures will be grim reading for the Chancellor, who has pinned her hopes on improving economic growth.
She said the figures come “amid an uncertain world” but insisted: “Our economic plan is the right one, but I know there is more to do,” as the Middle East conflict threatens higher inflation.
Economists at ING anticipate a peak for headline inflation in late summer at around 3.5%.
“The problem facing the UK is that despite the government saying they need to stick to the plan to produce economic growth, forecasts point to very little improvement, with even 2% growth a year becoming a pipe dream,” said Lindsay James, investment strategist at Quilter.
Today’s figures follow a tepid end to 2025, which saw growth of just 0.2% and 0.1% in November and December, respectively.
While the economy managed to avoid recession last year, the Office for Budget Responsibility (OBR) downgraded 2026’s forecast for growth. Since then, the conflict has escalated and experts fear that a prolonged war will heap pressure on households and businesses and, therefore, growth.
“Stagnation in January would make us worried about growth this year, even without the energy price shock that will start to show up in the March data,” said Thomas Pugh, Chief Economist at RSM.
Worth reading in full.
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I have lived through umpteen “oil crises” and “energy shocks”, but oddly we all survived with little effect on the economy.
Could it be, I wonder, because our electricity was about 60% coal fired, most of the rest our own North Sea gas, with the balance made up with nuclear? Consequently we didn’t have the most expensive electricity of any developed Country.
Could it be we did not have the deadweight “green” and “carbon” taxes pulling our economy down, motor fuel duty was lower, corporation, income, NIC and other taxes were lower, and the size of Government was much smaller and its parasitical worker-class much fewer?
And could it be we didn’t have 12 million immigrant mouths to feed out of the wealth we were creating?
Just a thought.
No absolutely not. It’s due to climate change and foreign dictators and Nigel Farage and Twitter and the far right and brexit and stuff.
Of course you are correct, it’s entirely obvious, just not to people who are unable to grasp economics.
I would challenge the use of the word unexpected.
In view of the dramatic anti-growth policies the only growth possible by falsifying the statistics.
And GDP per capita is in free fall.
That’s why they only ever mention GDP, not per capita.
No, you’re wrong. It’s Trump’s fault.
“The economy unexpectedly flatlined in January”
It wasn’t unexpected for me, given that this government, one in a long line, is especially enthusiastic about destroying our country.
Me neither. Growth with the office temp as Chancellor would be more unexpected.
Agreed. I’m surprised it only flatlined and wasn’t negative.
Nothing unexpected about it. All part of their plan.
^^^^^^^^^^^^^^^^^
Internet Truth Of The Day! We have a winner!
Except, I dont believe it’s ‘their’ plan. More plausibly, it’s the outcome of the Uniparty’s continuing, slavish implementation of the UN’s Sustainability 2050 Agenda and the CO2 Net Zero bllx.
We need to rescind the Climate Change Act 2008, with its, ‘legally binding national commitment to reduce greenhouse gas emissions,’ asap. viz: Net Zero Targets, Carbon Budgeting and the intellectually defective clown-act known as, ‘The Climate Change Committee.’
If only we were fortunate enough to have hundreds of years’ worth of hydrocarbons under our feet.
Oh.
Flatlining economy – like the brain of the person running it.