UK economy stalls in January ahead of Iran war energy shock

The UK economy failed to grow at the start of 2026, underscoring weak momentum just before a surge in global energy prices linked to escalating tensions with Iran. Data from the Office for National Statistics showed that gross domestic product was flat in January on a monthly basis, disappointing economists who had expected growth of around 0.2%.

The figures indicate that economic activity remained subdued across several sectors. Production output declined during the month, with manufacturing acting as a key drag on overall growth. Oil and gas extraction and the construction sector also recorded weak performance, contributing to the lack of expansion.

Although the services sector — which represents the largest share of the UK economy — posted modest activity, it was not strong enough to offset the decline in industrial sectors. Analysts say persistent global uncertainty and cost pressures continue to weigh on business activity and investment.

The disappointing start to the year comes just before a sharp rise in energy prices triggered by the Middle East conflict involving Iran. Oil prices have surged above $100 per barrel, raising concerns that higher energy costs could fuel inflation and further dampen economic growth in the coming months.