UK economy unexpectedly flatlined in January, official figures show
The UK economy entered the Middle East crisis after a weak start to the year, according to official figures showing flatlining January output before the US-Israel war on Iran hit global energy prices,Figures from the Office for National Statistics (ONS) showed 0% growth in gross domestic product (GDP), down from an increase of 0,1% in December, as the economy failed to recover from uncertainty surrounding the chancellor Rachel Reeves’s autumn budget,Falling significantly short of City predictions for growth of 0,2%, the figures came as the UK and other countries faced a potentially severe economic hit as the Middle East conflict drove up oil and gas prices, hitting consumers with higher living costs.
Output in Britain’s dominant service sector flatlined, amid sharp declines in activity in the recruitment industry and hospitality sector.Unemployment in the UK has risen to the highest level in five years in recent months, with businesses complaining that employer tax increases and a rising “national living wage” are hitting jobs.Hiring has fallen most in sectors including hospitality and retail.The production sector – which includes manufacturing, mining, and energy generation – fell by 0.1% on the month, while the construction industry grew by 0.
2%.Over the broader three months to the end of January, growth rose by 0.2%.Alpesh Paleja, deputy chief economist at the CBI, said: “The broader picture is still one of an economy treading water since the middle of last year.“However, this data is already backward-looking.
The near-term outlook is now dominated by heightened uncertainty surrounding conflict in the Middle East.”Oil prices rose past $100 a barrel on Thursday for a second time this week, as widespread Iranian attacks on energy facilities across the region overshadowed a vast release of government reserves.Analysts said that if sustained, higher energy prices would drive up inflation, dashing hopes of an interest rate cut from the Bank of England next week.Financial markets anticipate Threadneedle Street could be forced to increase borrowing costs next year.Against an increasingly volatile backdrop, Reeves is expected to use a speech early next week to spell out Labour’s plan for the economy amid growing calls for an emergency energy support package.
Responding to the GDP figures, the chancellor said: “Our economic plan is the right one, but I know there is more to do.“In an uncertain world, we are building a stronger and more secure economy by cutting the cost of living, cutting national debt and creating the conditions for growth to make all parts of the country better off.”Experts said sharply rising living costs, alongside heightened geopolitical uncertainty, would damage consumer spending and business confidence, with the potential to trigger a recession if the conflict was sustained.The economy grew by 1.3% in 2025, an improvement on growth of 1.
1% in 2024, although worse than official forecasts of 1.5% amid uncertainty over tax increases and the health of the public finances.
Gerry Adams was leader of IRA, ex-police officers tell high court
Gerry Adams was the leader of the Irish Republican Army, two former police officers have told the high court.The former Sinn Féin leader is being sued for symbolic “vindicatory” damages of £1 each by John Clark, Jonathan Ganesh and Barry Laycock, who allege he was culpable for three separate IRA bombings in which they were injured.Adams denies ever having been a member of the IRA or having sat on its army council.On Thursday, however, Tim Hanley, a retired detective for the Royal Ulster Constabulary (RUC), and a former RUC special branch intelligence officer anonymised as “witness B”, gave evidence that Adams had led the proscribed organisation.Hanley said in his written witness statement: “There is no question in my mind that Adams was the leader of the PIRA [Provisional IRA]; that’s what all the intelligence concluded
Starmer: It was my mistake appointing Mandelson – as it happened
Keir Starmer has told reporters in Northern Ireland that “it was me that made the mistake” in appointing Peter Mandelson as US ambassador “and it’s me that makes the apology to the victims of Epstein”.It is the prime minister’s first comments on Mandelson since the release of the files relating to his appointment yesterday afternoon.He said:double quotation markThe release of the information shows what was known. That led to further questions being asked.Unfortunately, because of the Metropolitan police investigation, we can’t release that information yet
No 10 rejects claims it covered up Starmer’s role in Mandelson appointment
Downing Street has rejected accusations it covered up Keir Starmer’s role in appointing Peter Mandelson as the UK ambassador to Washington, after documents detailing the process showed no formal input from the prime minister.A day after 147 pages of documents were released by the government, No 10 also denied that the approval and vetting of Mandelson had been rushed through, saying normal procedures were followed.Starmer’s spokesperson reiterated the prime minister’s regret over the choice, which saw Mandelson sacked just nine months into the job after new details emerged about his ties to Jeffrey Epstein, the convicted child sex offender.Speaking on a visit to Belfast on Thursday, Starmer said he had not known the extent of Mandelson’s links to Epstein. “But that doesn’t take away from the fact that it was me that made a mistake, and it’s me that makes the apology to the victims of Epstein, and I do that
Several Labour MPs in talks with Greens about defecting to the party, sources say
Several Labour MPs are in talks about defecting to the Greens, but are seeking guarantees they would be backed electorally by their new party, the Guardian has been told.Zack Polanski, the leader of the Greens in England and Wales, has said publicly that he has chatted to Labour MPs about the idea of switching sides, with the leftwing party enjoying a surge in membership and having overtaken Labour in some recent opinion polls.A series of other senior Green figures have confirmed that talks with several MPs are happening, but that none are yet at the stage of wanting to commit.“We already have a lot of experience of Labour councillors defecting to us, so this is not a surprise,” one said. “But it takes time
Starmer overruled warning of ‘reputational risk’ over Mandelson appointment, files show
Keir Starmer overruled officials who warned of a “reputational risk” in making Peter Mandelson US ambassador, despite being handed a dossier of evidence about the peer’s relationship with the sex offender Jeffrey Epstein, documents reveal.The disclosure in newly released files will raise fresh questions about Starmer’s judgment – as well as about the vetting procedures at the highest levels of government.The files show that Mandelson was offered a highly classified briefing from the Foreign Office even before he finished the formal vetting process.They also show that two of the government’s most senior security and foreign policy officials – national security adviser Jonathan Powell and FCDO permanent secretary Philip Barton – raised concerns about Mandelson’s appointment due to his involvement in previous public scandals.Despite the document prepared by the officials warning that Mandelson had continued his relationship with Epstein after his conviction, emails show close aides to the prime minister said they were “satisfied” with Mandelson’s explanations of their friendship
Starmer’s national security adviser expressed concern about Mandelson appointment, documents show - as it happened
According to the documents, Keir Starmer’s national security adviser Jonathan Powell expressed concerns about the appointment of Peter Mandelson with Morgan McSweeney, the PM’s former chief of staff.He said he believed Starmer “may have had a couple of political conversations” about Mandelson’s links to the disgraced financier.Powell also claimed Philip Barton, the most senior civil servant at the Foreign Office, also “had reservations around the appointment”, the BBC reported.The first set of documents relating to Peter Mandelson’s appointment as ambassador to the US was released by the government today. MPs ordered the government last month to release tens of thousands of documents relating to the 2024 appointment after questions over how Mandelson was vetted and what was known about his links to the late convicted sex offender Jeffrey Epstein
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UK companies struggling to hire young people amid cost pressures, MPs told