UK economy flatlines in January as restaurant spending falls and growth stalls

The UK economy stalled at the start of the year as households cut back on discretionary spending, with restaurants and food services experiencing a sharp decline in activity.

New figures from the Office for National Statistics (ONS) show that gross domestic product (GDP) recorded zero growth in January, falling short of economists’ expectations and marking a slowdown from the modest 0.1% growth recorded in December. Analysts had forecast that output would expand by around 0.2% over the month.

The disappointing performance highlights the fragile state of the UK economy even before the latest geopolitical shock from the escalating US-Israeli conflict with Iran, which economists warn could further dampen growth by pushing energy prices higher and fuelling inflation.

The ONS said the overall economic picture remained “subdued”, with consumer-facing sectors particularly weak. Within the dominant services sector, which accounts for around 80% of UK economic activity, there was a notable 2.7% drop in food and drink service activity as households curtailed spending on eating out.

This contraction in hospitality suggests that the pressure on household finances continues to weigh heavily on consumer behaviour. Restaurants and pubs are often among the first sectors to feel the impact when consumers begin tightening their budgets.