The British economy unexpectedly shrank during January, piling pressure on Treasury chief Rachel Reeves before a key statement about the state of the public finances later this month.

Sterling lost some ground versus the dollar on Friday after data painted a grim picture of the British economy, and it softened against the euro as prospects of a German debt deal lifted the shared European currency.

The slowdown in January piles further pressure on Rachel Reeves and Sir Keir Starmer ahead off this month’s spring statement