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UK economy stagnates even before coronavirus outbreak

UK economy stagnates even before coronavirus outbreak

The British economy stagnated in January, reflecting the weakness in the economy even before the outbreak of the coronavirus, the monthly GDP data released on Wednesday showed.

The U.K. economy reported zero growth in January, noting it was also flat in the November-January quarter, following a 0.3 percent growth in December. Analysts had called for a 0.2 percent expansion.

In the three months ending in January, the services sector stalled, whist the production dropped 1.0 percent.

“The main drivers behind the weakening seen in services were the wholesale, retail and motor trade sector and the information and communication sector, which fell by 0.7% and 1.0%, respectively,” the ONS report said.

It seems that the situation could get worse due to the rapid spread of the Covid-19, where the total number of coronavirus cases in the U.K. totaled 373- a rise of 54 from the previous day- with six deaths.

Surprisingly, the BOE policymakers voted unanimously earlier today to cut interest rates from 0.75 percent to 0.25 percent, while announced stimulus for small businesses to counter the negative impact of the coronavirus.

BOE Governor Mark Carney, however, insisted that it was too early to talk about U.K. recession, referring that medical treatments are devised.

As of 09:50 GMT, the GBPUSD pair traded higher at 1.2960 after hitting a bottom at 1.2829 earlier in the session.

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