U.K. Economy Unexpectedly Contracts, Posing New Challenge to Government
Gross domestic product was 0.1% lower in January than in the final month of 2024.
By ED FRANKL
Thu, Mar 20, 2025 10:33am
2 min
2 min
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The U.K. economy unexpectedly shrank in the first month of the year, the latest frustration for a relatively new government that has pledged to bring an end to a decade-and-a-half of stagnation.
Gross domestic product was 0.1% lower in January than in the final month of 2024, the Office for National Statistics said Friday, weaker than the 0.1% rise expected by a consensus of economists. It also marks a slowdown from the 0.4% recorded in December.
Despite the economy’s continued struggles, the Bank of England is expected to leave its key interest rate unchanged when it meets next week. The annual rate of inflation jumped to 3% in January and is set to rise further over coming months.
Weaker-than-expected growth means tax revenues are likely to be lower than the government anticipated, adding to the challenges facing Treasury Chief Rachel Reeves as she prepares to announce new budget plans later this month.
“The U.K. economy is stuck in the slow lane,” Scott Gardner, investment strategist at digital wealth manager Nutmeg, said. “This latest data just goes to show the mountain to climb for Chancellor [Reeves] to reclaim momentum and get Britain growing at pace in 2025.”
There appears to be little hope of respite soon. U.K. firms’ activity expectations for this year declined in February, in contrast with a mild improvement globally, according to an S&P survey published this week.
Private-sector businesses are set to shrink their workforces as profit outlooks darken, with S&P’s index of employment expectations turning negative for the first time in more than 15 years outside the pandemic lockdowns of mid-2020.
“It is also the only time aside from the pandemic where firms have forecast simultaneous cuts to employment, capital expenditure and research and development, demonstrating the gloomy outlook for U.K. business investment in 2025,” David Owen , senior economist at S&P Global Market Intelligence, said.
The BOE last month halved its forecast for economic growth in 2025 to 0.75%. However, since it currently expects 0.1% growth for the first quarter, the January data suggests the U.K. might have an even weaker start to the year.
The government’s fiscal watchdog is also set to cut its own forecasts later this month. Britain’s economy grew 0.9% in 2024 as a whole, compared to 2.8% in the U.S.
Adding uncertainty to the forecasts are new tariffs that the Trump administration could impose on both the U.K. and neighboring European Union, a move that would curtail growth further.
“The U.K.’s economic performance may have been similarly downbeat in February, with any boost from consumer spending amid strong wage growth and lower interest rates weakened by the brake on business activity from this torrent of global uncertainty,” Suren Thiru , economics director at the Institute of Chartered Accountants in England and Wales, said.
The economy was dragged in January by a 1.1% drop in manufacturing output, a sector that could bear the brunt of any trade barriers.
President Trump has already imposed 25% tariffs on all steel and aluminum imports, including those from the U.K. Exports of steel from the U.K. to the U.S. in 2024 was worth around 370 billion pounds, or around $480 billion, according to trade association U.K. Steel.
Prime Minister Keir Starmer on Wednesday said that the U.K. will “keep all options on the table” in response to the tariffs.
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Gold miners are emerging as a compelling way to navigate market uncertainty, with analysts pointing to strong cash flows, attractive valuations and rising profit margins. As gold prices stabilize above US$4,000 an ounce, mining stocks could offer investors both downside protection and long-term upside.
By Paul R. La Monica
Thu, Aug 6, 2026 3 min
3 min
Gold is one of the market’s go-to hedges in rocky times. Don’t forget that gold miners’ stocks are too.
The stock market’s gains in 2026 belie the rocky macroeconomic picture: elevated inflation, heightened geopolitical tensions, and jitters about the artificial-intelligence trade. That backdrop, in theory, should be the time for gold to shine. Instead, the price of the yellow metal has tumbled more than 5% so far, after last year’s blistering 65% rally. In part, the U.S. dollar’s recovery has stymied gold, which benefited from the greenback’s weakness in 2025.
Even with the precious metal’s recent weakness, gold mining stocks could be the best way to profit from this year’s uncertainty.
Gold miners “are a valuable hedge against macro risks that would likely be damaging for equities,” BCA Research’s Noah Weisberger and Rishabh Shah wrote this week.
Concerns about the Federal Reserve’s next moves to tackle inflation, the increasingly crowded AI trade, and steep valuations for tech stocks are just some of the drivers that could help gold’s price get on even footing— and lead to even bigger gains for miner stocks.
These stocks’ prices tend to outpace gold’s moves, because the companies have fixed operational costs. So when gold’s price rallies, their profit margins soar, and vice versa. For instance, the VanEck Gold Miners GDX +7.39% exchange-traded fund has fallen 11% this year as the metal has slumped.
Now, gold’s price just needs to stabilize to help miners’ stocks take off, and that seems to be happening. The precious metal has recently found support above the $4,000 level, and has stuck in a narrow range since the end of June. But its price rose ever so slightly in July, ending a four-month losing streak for the metal. Technical analysis also suggests that gold is due for a comeback.
Barron’s recently wrote that the pullbacks for both gold miners and the metal itself are overdone. Senior technical analyst Doug Busch noted that the VanEck ETF is on the “verge of a breakout” and has the potential to hit $11o in early 2027, up more than 40% from its current price.
Gold miners also have more than their role as a market hedge going for them. Their fundamentals are solid, too, says Chris Mancini, portfolio co-manager of the Gabelli Gold Fund.
“Precious metals miners are generating substantial amounts of free cash flow given profit margins of over $2,000 per ounce, and are returning this cash to shareholders through buybacks and dividends,” he said in an email.
“Buying the miners is a cheap way to get exposure to the price of gold,” he added. His fund owns Newmont NEM +6.71%, a Barron’s stock pick last year, and Agnico Eagle Mines as top holdings, as well as miners Northern Star Resources, Endeavour Mining, and Kinross Gold K+8.59%.
Miners are better businesses than they used to be, the BCA team added.
“Capex is more disciplined, margins are high and rising…and they are largely independent of the AI story,” Weisberger, BCA’s head of equities, and Shah, a senior analyst, wrote.
That last part is key. AI is disrupting the software industry and many other services and information-oriented businesses, and investors have piled into AI stocks. But ChatGPT, Claude, Grok, and other large-language models aren’t going to replace the need to mine for metals.
“Equity portfolios can benefit from exposure to quality that is uncorrelated to AI risk, and gold miners fit the bill,” the BCA team said.
They recommend that investors buy the VanEck Gold Miners ETF, which owns top miners such as Agnico, Barrick Mining ABX +7.24%, and Newmont.
An important bonus for big gold miners’ stocks is that their valuations are attractive after the gold’s pullback, too. The VanEck ETF is now trading at just a little more than nine times next year’s earnings estimates. That’s a big discount to its five-year average price-to-earnings ratio of 14, according to FactSet.
What’s more, the ETF is currently valued at a more than 50% discount to the S&P 500 SPX -0.17%, which is trading for about 19 times earnings estimates for 2027. Mining stocks have typically traded at just a 25% discount to the broader market over the past five years. So there is significant upside for the group if valuations move back toward normal levels.
One factor that complicates mining stocks as a market hedge, of course, is if stocks bounce back, which has been the case so far in August.
But both the market and economic outlooks remain cloudy, and investors remain nervous about the Fed’s next moves and AI stocks. Gold miners should do just fine, even if the anxious mood on Wall Street persists.
