Top economist Vicky Pryce has warned that the UK could face a recession if the US economy deteriorates.
Speaking on GB News, Pryce said: "Everyone is talking about the US entering a recession - if the US does, there's a serious issue about what happens to the rest of us."
Her comments come as official figures show the UK economy unexpectedly contracted by 0.1 per cent in January, driven primarily by a fall in the production sector.
The Office for National Statistics (ONS) reported that monthly services output grew by 0.1 per cent in January, slowing from December's 0.4 per cent growth.
Production output fell by 0.9 per cent in January, following growth of 0.5 per cent in December.
Construction output declined by 0.2 per cent for the second consecutive month.
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Nicholas Hyett, investment manager at Wealth Club, called the figures "not the news the Chancellor would have wanted before this month's Spring Statement."
He warned: "We could be at the start of a long slow slide into recession."
READ MORE: Recession alert: UK economy SHRINKS by 0.1% in shock to Rachel Reeves before Spring Budget
Despite economic concerns, Pryce highlighted that consumers have more spending power in the current climate.
"Wages are rising considerably faster than inflation and there is still hope next week that interest rates will continue to come down," she noted.
She added that minimum wage increases are also putting more money in people's pockets.
"Although people are worried about the future, particularly with National Insurance contributions for employers which may see job losses, there is more money."
"The consumer should be feeling better and spending more," Pryce said.
The Bank of England has already signalled concerns about UK economic growth, halving its 2025 forecast from 1.5 per cent to 0.75 per cent.
This comes ahead of Chancellor Rachel Reeves' Spring Statement on 26 March, where she will present her plans for the British economy.
The statement will include economic forecasts from the Office for Budget Responsibility, assessing the impact of government tax and spending plans.
Reeves has defended her tax increases on businesses as a "one-off measure necessary to boost investment in public services."
Pryce cautioned that consumer spending alone cannot sustain economic growth long-term.
"You can't just do that with the retail sector, people going out and spending on food," she warned.
"That can't sustain the economy for any length of time. When you see construction in trouble and general production, oil and gas in trouble, that is a concern if it carries on."
She concluded that while recession isn't inevitable, the UK remains vulnerable to economic shifts.
"Any few little changes could happen and it could go the other way."
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Speaking on GB News, Pryce said: "Everyone is talking about the US entering a recession - if the US does, there's a serious issue about what happens to the rest of us."
Her comments come as official figures show the UK economy unexpectedly contracted by 0.1 per cent in January, driven primarily by a fall in the production sector.
The Office for National Statistics (ONS) reported that monthly services output grew by 0.1 per cent in January, slowing from December's 0.4 per cent growth.
Production output fell by 0.9 per cent in January, following growth of 0.5 per cent in December.
Construction output declined by 0.2 per cent for the second consecutive month.
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Nicholas Hyett, investment manager at Wealth Club, called the figures "not the news the Chancellor would have wanted before this month's Spring Statement."
He warned: "We could be at the start of a long slow slide into recession."
READ MORE: Recession alert: UK economy SHRINKS by 0.1% in shock to Rachel Reeves before Spring Budget
Despite economic concerns, Pryce highlighted that consumers have more spending power in the current climate.
"Wages are rising considerably faster than inflation and there is still hope next week that interest rates will continue to come down," she noted.
She added that minimum wage increases are also putting more money in people's pockets.
"Although people are worried about the future, particularly with National Insurance contributions for employers which may see job losses, there is more money."
"The consumer should be feeling better and spending more," Pryce said.
The Bank of England has already signalled concerns about UK economic growth, halving its 2025 forecast from 1.5 per cent to 0.75 per cent.
This comes ahead of Chancellor Rachel Reeves' Spring Statement on 26 March, where she will present her plans for the British economy.
The statement will include economic forecasts from the Office for Budget Responsibility, assessing the impact of government tax and spending plans.
Reeves has defended her tax increases on businesses as a "one-off measure necessary to boost investment in public services."
Pryce cautioned that consumer spending alone cannot sustain economic growth long-term.
"You can't just do that with the retail sector, people going out and spending on food," she warned.
"That can't sustain the economy for any length of time. When you see construction in trouble and general production, oil and gas in trouble, that is a concern if it carries on."
She concluded that while recession isn't inevitable, the UK remains vulnerable to economic shifts.
"Any few little changes could happen and it could go the other way."
Find Out More...