The British economy unexpectedly shrank by 0.1% in January, putting pressure on Treasury chief Rachel Reeves ahead of a key statement on public finances. The decline was attributed to bad weather affecting manufacturing and construction, despite a solid performance by the services sector. Prime Minister Keir Starmer has made economic growth a priority, aiming to boost living standards and public services funding. Reeves, criticized for being overly gloomy and raising taxes, vowed to promote policies to boost growth and announced plans for infrastructure projects and post-Brexit economic relations with the EU. The opposition Conservative Party blamed the government for being a “growth killer” due to tax rises and proposed employment rights changes. Reeves is expected to announce spending cuts in her budget statement on March 26, as growth is not meeting expectations and borrowing rates are high. The monthly decline raises concerns about the government’s ability to stimulate economic growth and meet fiscal goals.
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