The UK economy showed only the slightest signs of life at the end of 2025, according to the latest GDP monthly data from the Office for National Statistics. Real gross domestic product rose by just 0.1% in the three months to December, following downward revisions to earlier months.
Services output, the largest component of the economy, was flat over the quarter. While production made a positive contribution, this was offset by a sharp decline in construction, highlighting the lack of broad-based momentum.
On a monthly basis, GDP also increased by only 0.1% in December, in line with expectations, after November’s growth was revised lower. For the year as a whole, the economy is estimated to have expanded by around 1.3% in 2025, slightly ahead of 2024 but still reflecting a subdued and uneven recovery.
Industry experts are reacting to the latest data below.
Lindsay James, investment strategist at Quilter:
“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.
“On an annual basis, GDP is estimated to have grown by 1.3% in 2025, up slightly from 1.1% in 2024 and slightly ahead of overall expectations. However, today’s print was supposed to give a clear picture of the UK’s growth last year, but we have instead been left with the ONS opening January to November 2025 to further revisions. Regardless, it is clear the economy is very fragile.
“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.
“While the picture is rather bleak at the moment, some optimism is warranted if inflation falls. Should it come back down to the Bank of England’s 2% target, the door could open to more significant rate cuts later in the year.
“We should now be reaching a place where peak uncertainty is behind us, and businesses are better able to plan for the post budget and post trade deal world. However, the well flagged leadership challenge – which headlines would have us believe is fast becoming a case of when rather than if – risks derailing that. Should that materialise and we see a lurch to the left, it could result in higher spending, higher taxes and even weaker growth. Only time will tell how it plays out.”
Luke Bartholomew, Deputy Chief Economist, at Aberdeen said;
“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.”
Danni Hewson, AJ Bell head of financial analysis, comments:
“Subdued, sluggish, and slow – three words that sum up UK economic growth during the last three months of 2025 and in the year as a whole.
“Whilst the chancellor can celebrate the fact the UK enjoyed the fastest growth of any European G7 country last year and that growth was a smidgeon higher than in 2024, she does have to bear responsibility for the choices made and the timing of her last Budget. The service sector, which is often the powerhouse of the UK economy, has struggled to deal with reduced confidence which was exacerbated by the months of speculation and pitch rolling ahead of last year’s unusually late Budget.
“Although the four interest rate cuts delivered by the Bank of England last year have helped make mortgages more affordable for those looking to buy a new home, concerns about potential tax changes kept the brakes firmly pressed down on the housing market at the end of 2025. This had an impact on housebuilders like Barratt Redrow.
“‘Building back Britain’ has been at the heart of the government’s plans, but rhetoric and the promise of changes aren’t enough when they’re undermined by instability and questions.
“There have been many blocks manoeuvred into place over the past couple of years, from planning policy to increased government spend on infrastructure and clean energy. With time they should start to stimulate the economy but political upheaval from both inside and outside the country could add further complications to an already difficult task.”
Kevin Brown, savings expert at Scottish Friendly, has commented:
“The UK economy managed to carve out another quarter of modest growth at the end of 2025, and annual growth of 1.3% shows it has proved stubbornly resilient.
“Elevated interest rates, sticky inflation, and months of budget-related uncertainty could have been enough to stall activity altogether. Instead, growth has held up, albeit only just.
“There are early signs that once the fog around the Autumn Budget began to clear, parts of the economy regained direction, particularly across the services sector. That was enough to offset ongoing weakness in manufacturing and construction and keep the economy inching forward.
“For savers, if the Bank of England base rate heads lower as anticipated this year, today’s cash interest rates will fall. Relying too heavily on cash risks seeing returns eroded as inflation persists. For those with a longer-term horizon, this is a reminder that investing remains one of the most effective ways to try to protect and grow purchasing power over time, even if the economic backdrop still feels uncertain.”
Richard Flax, Chief Investment Officer at Moneyfarm:
“The latest GDP reading of 0.1% was in line with expectations, but it underlines how weak underlying momentum remains in the UK economy. After November’s stronger than expected rebound, growth has once again cooled, suggesting recent improvements have yet to translate into a sustained recovery. With performance still uneven across sectors, the outlook remains fragile, leaving markets and sterling highly sensitive to upcoming data and policy signals.”
Derrick Dunne, CEO of YOU Asset Management, comments:
“These figures are a real warning shot across the bows of the Government and Bank of England, both of whom are trying to steer the economy with tighter fiscal and monetary policies than are probably now healthy.
“The real bellwether here is construction, which tends to lead other indicators in terms of what the economy is doing. The final quarter of 2025 will have been heavily impacted by the Budget speculation mess that prevailed, but the worst performance in more than four years is a real red flashing warning signal. Services didn’t grow at all either. The economy’s blushes were only saved by strong manufacturing growth.
“Ultimately it shows just how inherently fragile the UK’s economic performance is at the moment. What it needs is stability and continuity. A dose of lower rates, with the labour market continuing to weaken, might be a helping hand too.
“Anyone unsure what this could mean for their long-term financial plans should consider consulting with a financial planner.”
Chris Beauchamp, Chief Market Analyst at IG:
“This isn’t so much growth in Q4 as a rounding error. 0.1% in growth barely touches the sides, and the government failed to meet its meagre target for 2025 overall. At least all the main sectors of the economy grew last year, but this is very thin gruel. This should increase the pressure on the PM and the chancellor to come up with a growth plan, assuming they can find time away from the endless scandals engulfing the government.”
Adam Hoyes, Senior Asset Allocation Analyst at Rathbones, said:
“Today’s preliminary GDP data show the UK economy wrapping up 2025 on a lacklustre note, which will be a disappointment to a Prime Minister and Chancellor relying on a growing economy to help both turn around their political fortunes and set the public finances on a more sustainable footing. The meagre increase reemphasises the need for the government to prioritise growth and investment after the missed opportunity of the Autumn Budget.
“Despite expectations for a slight acceleration in growth over the fourth quarter, today’s figures paint a picture of an economy on tick over. A downward revision to November GDP and a marginal gain in December meant that the UK eked out the same 0.1% expansion as the quarter prior, undershooting consensus expectations and the Bank of England’s forecast. That takes GDP growth for 2025 as a whole to 1.3% – a slight improvement on 2024, but certainly nothing to write home about.
“Of particular concern is the quarterly decline in business investment. Uncertainty ahead of the Budget at the end of November probably played a role here, but it still underscores what we see as the structural cause of the UK’s poor growth rate in recent years – persistently low rates of investment. Any further uncertainty created by a potential change of occupants at Number 10 and 11 is unlikely to improve that situation in the short term.
“The Bank of England made it clear last week that we should expect further interest rate cuts over the course of 2026. Today’s data suggests that is a sensible assumption, and at the margin, may convince some of the more hawkish members of the Monetary Policy Committee to put a bit more weight on the downside risks to activity and consider backing rate reductions. Though it’s unlikely to move the dial substantially, and near-term market expectations for Bank Rate are little changed so far today.
“On a more positive note, the early indications are that the UK economy did kick off 2026 on a slightly brighter note, with early survey data suggesting a pickup in activity in January. But we aren’t holding out too much hope for a significant improvement in growth over this year as a whole relative to 2025.”
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“UK markets are set to open higher, brushing off a lacklustre GDP report that showed the economy barely moving at the end of last year. Growth in Q4 was muted and narrowly driven by services and government spending, a reminder that private‑sector momentum remains thin despite hopes that Q1 will look a little brighter. That leaves the bigger picture unchanged: a fragile growth outlook, softer inflation ahead, and a Bank of England that should have room to cut rates over 2026.”
Ian Corfield, the CEO of Secure Trust Bank:
“The latest GDP figures show the UK economy continuing along a path of modest but resilient growth. A 0.1% expansion in the fourth quarter brings full‑year growth for 2025 to 1.3%, a measured improvement on the 1.1% recorded the previous year. Importantly, the underlying composition of that growth is encouraging for our business.
The shift in momentum in the last quarter of 2025, with manufacturing emerging as the primary driver while services remained broadly flat, presents a mixed but constructive picture. Renewed manufacturing activity supports our retail finance partnerships, while our business finance division continues to back SMEs across a range of sectors as they navigate a changing economic environment.
Weak growth has become an accepted narrative in the UK in recent years, and 2025 was undoubtedly challenging amid tax rises, the US trade war and ongoing geopolitical uncertainty. Against that backdrop, the economy’s ability to continue expanding, even at a modest pace, is notable.
What remains particularly positive is the breadth of growth across sectors. This provides a stable foundation for the lending demand we continue to see from both consumers and businesses. Our extensive retail partner network and strong customer relationships leave us well placed to support continued economic activity.”
