By bizn_fun 
UK ‘ended 2025 firmly in the slow lane’ – what the experts say
Reaction to the news that the UK grew by just 0.1% in the final quarter of 2025 (see earlier post) is rolling in, and City experts aren’t impressed.
Lindsay James, investment strategist at wealth managers Quilter, warns that the picture is ‘rather bleak at the moment’.
“A long list of data revisions from the ONS has revealed the UK economy barely kept its head above water in the final quarter of last year, with GDP growth coming in at just 0.1% after downward revisions to the previous two data prints. December saw a meagre uplift of 0.1%, which was in line with expectations, but November’s growth has been revised down to 0.2% from the 0.3% first reported.
“The Christmas period was weak by historical standards, and that is laid bare in today’s data. The services sector, which had previously been noted as the largest contributor, showed no growth and its impact was revised down from 0.2% to nothing in the three months to November too. Surprisingly, production output grew by 1.2%, having fallen by 0.1% in the three months to November, but it was outweighed by a fall of 2.1% in the construction sector which followed a 0.9% fall previously.
Scott Gardner, investment strategist at JP Morgan Personal Investing says the economy failed to hold onto the stronger growth seen in early 2025:
“The UK economy ended 2025 firmly in the slow lane, undershooting expectations and remaining in a low gear in the final quarter of the year as businesses and consumers digested the Chancellor’s November Budget. This marks a clear reversal in fortunes for the economy after strong growth shown in the first half of the year failed to carry over into the rest of 2025.
“Many will be hoping that the slow pace of economic expansion in the final quarter is only temporary after the Jaguar Land Rover shutdown stunted growth in the Autumn and led to a sharp fall in productivity. Services performed well over December, but construction and industrial production activity declined. Consumer spending showed more promising signs and has bounced back as real wage growth has fed through into higher retail and online spending.
The Unite union are calling for more investment to lift growth; their general secretary Sharon Graham says:
“Today’s figures are further proof that the UK economy will not get the growth we were promised until we reverse our historic levels of underinvestment.
“The figures also show that real household disposable income fell in 2025. Families up and down the country are getting poorer in real terms.
“We need to stop the rot and start delivering for everyday people.”
Key events
Bank of England could cut rates in March to spur growth
Britain’s weak growth will put more pressure on the Bank of England to lower interest rates.
The Bank held borrowing costs unchanged last week, but the money markets narrowly expect a cut in March.
Luke Bartholomew, deputy chief economist at Abderdeen, says:
“The UK economy managed to eke out some very modest growth at the back end of last year. On a purely national accounting basis, the economy started 2026 with very little momentum. But looking at various surveys, there were some tentative signs that sentiment turned a corner and started to improve after the budget last year, which could help deliver a pick-up in activity this year.
However, recent political uncertainty may see that sentiment bounce reverse. And it is still hard to see what will drive a sustained increase in the underlying rate of growth this year.
All of which means that the Bank of England is set to continue to lower interest rates to try to support growth, and we expect the next cut at the March meeting.”
TUC general secretary Paul Nowak is calling for ‘quickfire’ rate cuts:
“It’s welcome that the economy kept growing in December, and last year’s growth of 1.3% was the strongest for three years.
“But many workers are not yet feeling the benefit in their pockets. Household incomes are still being squeezed by a relentless cost-of-living crisis.
“Many working families don’t have any money left over to spend on the things that keep our economy moving – meals out, shopping on the high street, and family days out. That’s bad for families and bad for the wider economy.
“This doom loop must end. Ministers must stay laser-focused on cutting working people’s household costs and improving living standards this year.
“And the Bank of England must go further and faster with quickfire interest-rate cuts in the months ahead.
Britain’s economy ended 2025 on “a lacklustre note”, says James Smith, developed markets economist at ING, with growth of just 0.1% in the final quarter.
Smith adds:
What’s particularly eye-catching from the release is just how weak business investment (-2.7%) and construction (-2.1%) came in during the final few months of the year.
The former will have been heavily influenced by volatile car production, linked to a major cyberattack at the tail-end of the third quarter, even if it’s tempting to blame it on the wider uncertainty in the run-up to the Budget and the weakness in business confidence.
New housebuilding slumped in Q4
However, today’s GDP report also shows the government is struggling to hit another target – to boost housebuilding.
Private housing new work fell by 3.6% in October-December, which helped to drag output in the wider construction sector down by 2.1% in the quarter.
Budget concerns stalled construction output by an estimated 2.1% across 7 of the 9 sectors in Q4 2025. New work and repair and maintenance both fell by 2.6% and 1.5%, respectively but it was new housing, which fell the hardest down by 3.6%. Overall development confidence remained… pic.twitter.com/PVHl0S7Kz4
— Emma Fildes (@emmafildes) February 12, 2026
UK ‘fastest growing G7 economy in Europe’ in 2025
Today’s GDP report gives us a chance to compare the UK’s economic performance in 2025 against its major rivals.
Keir Starmer promised to deliver the fastest growing economy in the G7 – and today the government can boast that the UK outpaced the largest economies in Europe.
UK GDP is estimated to have increased by 1.3% annually in 2025, the ONS reported this morning (see earlier post), stronger than in 2024 but still pedestrian compared to long-term trend growth rates.
That beats France, which reported 0.9% growth in 2025, Italy, where the economy grew by 0.7% from the year earlier, and Germany, where gross domestic product rose by just 0.2% in 2025. “Weak, weak, weak”, as Tony Blair once put it.
However, we can’t do a full G7 league table yet as we don’t have Q4 GDP data from Japan, the US or Canada.
Canada’s GDP is officially estimated to have risen by 1.3% in 2025, which would match the UK, while the US is expected to grow more quickly than that.
Chancellor of the Exchequer Rachel Reeves points out that the UK is the fastest growing G7 economy in Europe, saying:
“Thanks to the choices we have made, we’ve seen six interest rate cuts since the election, inflation falling faster than predicted and ours is the fastest growing G7 economy in Europe.
The Government has the right economic plan to build a stronger and more secure economy, cutting the cost of living, cutting the national debt and creating the conditions for growth and investment in every part of the country.”
UK ‘ended 2025 firmly in the slow lane’ – what the experts say
Reaction to the news that the UK grew by just 0.1% in the final quarter of 2025 (see earlier post) is rolling in, and City experts aren’t impressed.
Lindsay James, investment strategist at wealth managers Quilter, warns that the picture is ‘rather bleak at the moment’.
“A long list of data revisions from the ONS has revealed the UK economy barely kept its head above water in the final quarter of last year, with GDP growth coming in at just 0.1% after downward revisions to the previous two data prints. December saw a meagre uplift of 0.1%, which was in line with expectations, but November’s growth has been revised down to 0.2% from the 0.3% first reported.
“The Christmas period was weak by historical standards, and that is laid bare in today’s data. The services sector, which had previously been noted as the largest contributor, showed no growth and its impact was revised down from 0.2% to nothing in the three months to November too. Surprisingly, production output grew by 1.2%, having fallen by 0.1% in the three months to November, but it was outweighed by a fall of 2.1% in the construction sector which followed a 0.9% fall previously.
Scott Gardner, investment strategist at JP Morgan Personal Investing says the economy failed to hold onto the stronger growth seen in early 2025:
“The UK economy ended 2025 firmly in the slow lane, undershooting expectations and remaining in a low gear in the final quarter of the year as businesses and consumers digested the Chancellor’s November Budget. This marks a clear reversal in fortunes for the economy after strong growth shown in the first half of the year failed to carry over into the rest of 2025.
“Many will be hoping that the slow pace of economic expansion in the final quarter is only temporary after the Jaguar Land Rover shutdown stunted growth in the Autumn and led to a sharp fall in productivity. Services performed well over December, but construction and industrial production activity declined. Consumer spending showed more promising signs and has bounced back as real wage growth has fed through into higher retail and online spending.
The Unite union are calling for more investment to lift growth; their general secretary Sharon Graham says:
“Today’s figures are further proof that the UK economy will not get the growth we were promised until we reverse our historic levels of underinvestment.
“The figures also show that real household disposable income fell in 2025. Families up and down the country are getting poorer in real terms.
“We need to stop the rot and start delivering for everyday people.”
Real GDP per head grew in 2025, but….
Real GDP per capita, a key measure of living standards, picked up last year after stagnating in 2024, today’s GDP report shows.
The Office for National Statistics reports that real GDP per head is estimated to have increased by 1.0% annually in 2025, following no growth in 2024.
However, real GDP per head is estimated to have fallen by 0.1% in October-December, the second consecutive quarterly fall.
Real GDP per head adjusts for changes in population levels, so is a better measure of whether people are actually getting better off.
ONS: Economy continues to grow slowly
Here’s ONS director of economic statistics Liz McKeown on this morning’s news that the UK economy grew by 0.1% in October-December:
“The economy continued to grow slowly in the last three months of the year, with the growth rate unchanged from the previous quarter.
“The often-dominant services sector showed no growth, with the main driver instead coming from manufacturing. Construction, meanwhile, registered its worst performance in more than four years.
“The rate of growth across 2025 as a whole was up slightly on the previous year, with growth seen in all main sectors.
“Initial estimates show GDP per head was up on the previous year despite it contracting slightly in each of the last two quarters.”
UK economy grew 0.1% in December, November revised down
The UK economy also grew by 0.1% in December alone, the first month after Rachel Reeves’s budget.
But there’s bad news in the monthly data – November’s growth has been revised down to 0.2%, from the first estimate of 0.3%. The economy still shrank by 0.1% in October.
In December, Services grew by 0.3%; production fell by 0.9% and construction output dropped by 0.5%.
Annual growth picks up
On an annual basis, the UK economy picked up a little speed in Labour’s first calendar year in office.
GDP is estimated to have increased by 1.3% annually in 2025, up from growth of 1.1% in 2024.
That’s still relatively weak by historic standards.
UK GDP report released
Newsflash: The UK economy grew by 0.1% in the final quarter of 2025.
That’s a little slower than many economists had expected, with the services sector stagnating during the October-December period, and follows a 0.1% increase in the previous quarter.
The Office for National Statistics says:
In output terms, growth in the latest quarter was driven by an increase of 1.2% in production, while the construction sector fell by 2.1% and the services sector showed no growth.
More to follow…
With less than five minutes to go until the big GDP reveal, here’s Sandra Horsfield of Investec Economics on the UK’s growth performance…..
“The big picture is that the UK economy had defied the gloomy popular narrative and outperformed expectations during 2025 – our forecast equates to GDP growth of 1.4% for the full year, whereas the consensus forecast in January 2025 had been for 1.2% GDP growth.
“We project a similar story of resilience and outperformance relative to consensus for 2026, as utilities investment and, eventually, housebuilding accelerate – the latter with a little help from further falls in interest rates too.
“The consensus forecast for this year is 1%, against our own forecast of 1.3%.”
Ahead of the UK growth report, we have “tentative signs” that the housing market in England and Wales is recovering from a months-long slowdown.
The Royal Institution of Chartered Surveyors (Rics) said its members were feeling more optimistic about the year ahead than at any time since December 2024, as inquiries from new buyers, agreed sales and house prices became less negative in January.
More here.
City economists are split about what to expect at 7am.
A Reuters poll found that forecasts for growth in the final three months of 2025 range from 0% to 0.2%.
Robert Wood, chief UK economist at Pantheon Macroeconomics, said GDP growth “could tip to 0.2%” in Q4 thanks to a pick-up in the services sector, but is predicting 0.1%.
Wood explains:
“We think the broad thrust from activity in the services sub-sectors in December indicates that budget uncertainty is already fading quickly.”
Introduction: UK GDP report coming up
Good morning. We’re about to get a report card on the Labour government’s first calendar year in power.
Growth data for the British economy in December, and for the fourth quarter of 2025, will be released at 7am UK time
They’re expected to show modest growth in the October-December period – with economists forecasting an expansion of around 0.2% in a quarter dominated by Rachel Reeves’s November budget.
That would be a pick-up on the 0.1% growth reported in July-September.
In Deember alone, GDP is expected to have risen by 0.1%, slowing after the 0.3% gowth in November (when carmaker JLR’s recovery from its cyber attack lifted output).
And this may lift the UK’s annual growth rate to 1.2% for 2025 as a whole, a Reuters poll found – that’s still weak by historic standards but slightly better than 2024’s 1.1% growth.
Grant Slade, economist at investment research firm Morningstar, sets the scene:
“We can expect to see annual economic growth of about 1.5% in 2025 for the UK economy. It is like that activity rebounded in the fourth quarter as a cyber-attack at a major auto manufacturer halted operations, sharply impacting the transport equipment sector in the quarter prior.
Looking ahead, we’re more positive on the UK’s growth outlook, with the Autumn budget proving less of a headwind to near-term economic activity than we’d originally anticipated. Notwithstanding, economic growth appears set to soften sequentially in 2026, consistent with the BoE’s still restrictive policy stance and weakening labour market conditions.”
The agenda
-
7am GMT: UK GDP report for December and Q4 2025
-
7am GMT: UK trade report for December
-
9am GMT: IEA oil market report
-
1.30pm GMT: US initial jobless claims report