It coincided with four weeks of restrictions across much of the country.
The 2.6% monthly decline was much smaller than most analysts expected though - a Reuters poll had pointed to contraction of more than double that.
The downturn was led by the services sector, as pubs, restaurants and non-essential shops had to shut.
Economists are warning that Britain will likely suffer a double-dip recession.
Its economy shrank more sharply than any other major advanced economy in the first half of 2020.
And it's now 8.5% smaller than before the start of the pandemic.
Finance minister Rishi Sunak said Friday's (Jan 15) figures highlight the challenges ahead.
But added that the roll-out of vaccines in Britain - which has been faster than elsewhere in Europe - was a reason to be hopeful.
Several economists though say the economy will likely shrink in the first three months of 2021, thanks to a third, tougher lockdown now in place.
The UK is also facing a less open trading relationship with the European Union, which could put further pressure on business.
Bank of England Governor Andrew Bailey said this week that it was too soon to say if further stimulus would be needed.
The central bank ramped up its bond-buying programme to over $1.2 trillion in November.
