UK Economy Grows Very Little at End of 2025

The UK economy grew by a very small amount, 0.1%, in the last part of 2025. The important services part of the economy did not grow at all. Making goods helped the economy grow a little. Construction did very poorly.
By Newsroom | Economy, United Kingdom |

The United Kingdom's economy experienced subdued growth, expanding by a mere 0.1% in the final three months of 2025. This marginal increase comes amidst mixed performance across various sectors, with the crucial services sector showing no expansion, while manufacturing provided the primary boost. The overall economic picture suggests a period of sluggish progress as the year concluded.

UK economy grew by 0.1% in final quarter of 2025 - 1

Economic Activity in Q4 2025

Official figures released by the Office for National Statistics (ONS) indicate that the UK economy grew by 0.1% between October and December 2025. This rate of growth was unchanged from the previous quarter, signalling a lack of significant momentum.

UK economy grew by 0.1% in final quarter of 2025 - 2

  • The services sector, which is a key driver of the UK economy, registered no growth over the quarter. This is the first time this has occurred in two years.

  • Manufacturing, however, showed a stronger performance, contributing to the overall minimal expansion.

  • Construction experienced its worst performance in four years.

  • Specific areas within services, such as travel agencies, tour operators, and administrative support services, demonstrated positive activity.

Read More: UK Economy Grows Very Slowly at End of 2025

The figures also suggest that economic activity eased in December following a pre-November slowdown. This slowdown was partly attributed to consumer and private sector caution ahead of the government's budget announcement.

UK economy grew by 0.1% in final quarter of 2025 - 3

Performance of Key Sectors

The economic data for the final quarter of 2025 reveals disparities in sector performance:

UK economy grew by 0.1% in final quarter of 2025 - 4
SectorQ4 2025 PerformanceNotable Events/Conditions
ServicesNo growthFirst time in two years; some areas like travel agencies showed strength.
ManufacturingProvided the main boost to overall growthSpecific administrative and support services also contributed positively.
ConstructionWorst performance in four yearsGovernment is struggling to meet housebuilding targets.
Industrial ProductionDeclined
Consumer SpendingShowed promising signs, bounced backBenefited from real wage growth feeding into higher retail and online spending.

Economic Commentary and Political Response

Chancellor Rachel Reeves stated that the government's actions had set the stage for the Bank of England to potentially lower interest rates. She also highlighted Britain as having the fastest-growing economy in the G7 group of nations within Europe.

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However, other analyses frame the situation as "subdued growth." Liz McKeown, ONS director of economic statistics, described the overall picture as one of continuing slow growth, with the rate remaining unchanged from the previous quarter.

  • Investec Economics noted that while services performed well in December, construction and industrial production declined. They expressed a more positive outlook for the UK's growth prospects moving forward, suggesting the Autumn budget was less of a near-term headwind than initially expected.

  • The Business and Trade Committee's findings indicated that small businesses are facing pressures comparable to, or even exceeding, those experienced during the COVID-19 pandemic.

Broader Economic Context

The reported growth of 0.1% in the final quarter of 2025 suggests that the UK economy has been in a lacklustre state for a considerable period. This trend, excluding a stronger first quarter of 2025, has persisted for the past 18 months.

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The data also raises questions about the government's ability to meet its targets, specifically regarding boosting housebuilding. The weak GDP reading amplifies discussions on the levers available to the Chancellor to stimulate further economic expansion.

Conclusion

The UK economy's 0.1% growth in the final quarter of 2025 underscores a period of gentle expansion rather than robust recovery. While certain sectors and areas like consumer spending showed resilience, the overall lack of growth in the vital services sector and the significant decline in construction paint a picture of an economy navigating considerable headwinds. The government's commentary emphasizes foundational improvements for future rate cuts and competitive European growth, yet independent observations point to a continued need for stimulus measures to invigorate the economy.

Sources Used

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Frequently Asked Questions

Q: How much did the UK economy grow at the end of 2025?
The economy grew by only 0.1% between October and December 2025. This was the same as the quarter before.
Q: Which parts of the economy did well or poorly?
The services sector, which is very important, did not grow at all. Manufacturing helped the economy grow a little. The construction industry had its worst time in four years.
Q: What did the government say about the economy?
The Chancellor said the government's actions are helping the Bank of England possibly lower interest rates. She also said the UK has the fastest growing economy in Europe among the G7 countries.