UK economy shrank by less than expected 2.9% in January

[LONDON] Britain's economy shrank by a less severe than expected 2.9 per cent in January from December as the country went back into a coronavirus lockdown, official data showed on Friday.

Economists polled by Reuters had expected a contraction of 4.9 per cent.

Britain's economy is likely to shrink by 4 per cent in the first quarter of 2021, due mostly to the latest lockdown but also because of disruption caused by new, post-Brexit rules for trade with the European Union, the Bank of England said last month.

"The economy took a notable hit in January, albeit smaller than some expected, with retail, restaurants, schools and hairdressers all affected by the latest lockdown," Jonathan Athow, an Office for National Statistics statistician, said.

"Manufacturing also saw its first decline since April with car manufacturing falling significantly. However, increases in health services from both vaccine rollout and increased testing partially offset the declines in other industries."

Britain's economy shrank by 1.7 per cent in the three months to January, stronger than a median forecast of a contraction of 2.5 per cent in the Reuters poll.

The economy was 9.2 per cent smaller than in January last year, the Office for National Statistics said.

REUTERS