Wealthy European Nation Stagnates: Zero Growth, Worse to Come

The UK economy experienced stagnation in January, according to data from the Office for National Statistics released on Friday, 13 March 2026.

Gross domestic product (GDP) showed zero growth at the start of the year, following GDP expansion of 0.1% in December. Conditions are likely to worsen in the coming months as the Middle East conflict has caused oil prices to surge.

In response to Friday’s data, Finance Minister Rachel Reeves acknowledged that much more needs to be done to grow the UK economy in an uncertain world. On Monday, she also warned that the UK risks experiencing elevated inflation as a consequence of the conflict involving Iran, the United States and Israel.

“January’s growth data has been almost entirely overshadowed by events in the Middle East, with oil prices continuing to rise despite emergency reserves being released and concerns mounting over unprecedented supply disruptions,” said Samuel Edwards, analyst at financial services firm Ebury, according to AFP.

“With the UK highly exposed to this inflation shock, businesses across the country are preparing for surging energy and fuel costs, combined with interest rates remaining elevated for a prolonged period,” he added.

The Bank of England, which before the conflict was widely expected to cut its benchmark interest rate next week, is now expected to hold borrowing costs steady. Other forecasts even suggest the central bank will raise interest rates due to inflation risks.

“And GDP growth is more likely to lose momentum over the coming months than gain it,” said Paul Dales, chief economist for the UK at research group Capital Economics.

“Energy price shocks also reduce GDP growth,” he added.