UK Economy Grew Very Little at End of 2025

The UK economy grew by a small amount, just 0.1%, in the last part of 2025. Some parts of the economy did well, but others did not grow. This slow growth is making people concerned about the future.
By Newsroom | UK Economy, Business |

The final quarter of 2025 saw the UK economy expand by a modest 0.1%, continuing a trend of sluggish growth throughout the year. Official figures released indicate that while the manufacturing sector provided a boost, weakness in construction and a standstill in services contributed to the overall subdued performance. This lack of significant economic momentum has prompted calls for further government action and sparked debate among political figures about the nation's economic trajectory.

Economic Landscape: A Year of Limited Momentum

The UK's economic activity in the last three months of 2025 registered a mere 0.1% growth, according to official statistics. This figure reflects a broader pattern of "subdued growth" that characterized the year.

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  • The Office for National Statistics (ONS) reported that the manufacturing sector was a key driver for the quarter's limited expansion.

  • In contrast, the construction industry experienced "continued weakness."

  • The services sector, a major component of the UK economy, showed no growth, remaining flat for the first time in two years.

Reactions and Perspectives on Economic Performance

The release of the 0.1% growth figures has elicited varied responses from political leaders and economic commentators, highlighting differing interpretations of the data and the path forward.

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  • Prime Minister Keir Starmer acknowledged the growth, stating, "our economy is growing," but conceded that "there's more to do" to alleviate the cost of living pressures on citizens.

  • Tory leader Kemi Badenoch offered a critical assessment, remarking that the figures suggest "our country is stuck in the slow lane."

  • Business groups have voiced a need for increased government support to address ongoing cost pressures. David Bharier, head of research at the British Chambers of Commerce, warned of a "persistent low growth trap."

  • Conversely, economist Jim O'Neill provided a more optimistic outlook, noting that the annual growth figure was "quite a bit higher" than many had anticipated at the beginning of 2025.

Factors Influencing Economic Activity

Several factors appear to have influenced the UK's economic performance, particularly in the lead-up to and during the final quarter of 2025.

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Budgetary Uncertainty and Consumer Behavior

Uncertainty surrounding the government's budget, particularly expectations about potential tax increases, may have influenced business investment and consumer spending.

  • Economists suggested that the anticipation of a budget announcement in late November led businesses and consumers to adopt a "wait-and-see" approach, thereby dampening economic activity.

  • While there were concerns that tax hikes could hinder spending, the actual tax increases announced were reportedly more modest than some had predicted.

Sectoral Performance: Strengths and Weaknesses

The performance of different economic sectors presented a mixed picture for the quarter.

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  • Manufacturing was identified as a significant contributor to the growth observed.

  • However, the construction sector continued to exhibit weakness.

  • The services sector remained stagnant, indicating a lack of expansion in this crucial area.

  • One notable disruption mentioned was a cyber attack on Jaguar Land Rover, which halted production for five weeks and impacted the manufacturing output during the quarter.

Monetary Policy Considerations

Discussions around interest rates and their potential impact on the economy are also ongoing.

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  • A deputy governor of the Bank of England indicated that it would be "reasonable to expect rate cut over the next couple of meetings," suggesting a potential easing of monetary policy.

  • Despite the weak economic growth, the London stock market reached a new record high during this period.

Expert Analysis and Future Outlook

Economic analysts are offering their interpretations of the current data and contemplating the prospects for the UK economy.

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"The UK economy continues its pattern of 'subdued growth'."- Liz McKeown, ONS Director of Economic Statistics

"The figures show 'our country is stuck in the slow lane'."- Kemi Badenoch, Tory Leader

"The UK faces a 'persistent low growth trap'."- David Bharier, Head of Research, British Chambers of Commerce

"The annual figure is 'quite a bit higher' than people expected at the start of the year."- Jim O'Neill, Economist and Cross-bench Peer

Read More: UK Economy Grows Very Little, Making People Worry Before Budget

Economists generally suggest that while a slight pickup in the economy might occur in the first half of 2026, significant, rapid growth is not widely anticipated. The International Energy Agency has also adjusted its forecast, cutting its projection for oil demand growth for the current year.

Conclusion and Implications

The 0.1% economic growth recorded in the final quarter of 2025 underscores a period of persistent, low economic expansion for the UK. The ONS data reveals a dichotomy in sectoral performance, with manufacturing providing a crucial impetus while construction faltered and services flatlined.

The influence of budgetary uncertainty on business and consumer confidence appears to be a significant theme, alongside external factors like specific industry disruptions. Political reactions highlight the differing perspectives on the government's handling of the economy, with opposition parties urging more decisive action.

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Looking ahead, while some anticipate a modest improvement in the near term, the overall sentiment suggests that the economy remains in a challenging phase. The continued focus on the "cost of living" and the debate around stimulating growth are likely to remain central to economic policy discussions.

Sources

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Frequently Asked Questions

Q: How much did the UK economy grow at the end of 2025?
The economy grew by 0.1% in the last three months of 2025. This is a very small amount of growth.
Q: What parts of the economy grew or did not grow?
Making things in factories helped the economy grow a little. But building homes and services did not grow.
Q: Are people worried about this slow growth?
Yes, many people are worried. They think the economy is moving too slowly and want the government to do more to help.
Q: What do experts think will happen next?
Some experts think the economy might get a little better in the first half of 2026. But most do not expect big growth soon.