The UK economy recorded modest growth of 0.1% in the final quarter of 2025, reflecting subdued business investment and cautious consumer spending. Data from the Office for National Statistics (ONS) shows the economy expanded at the same pace as the previous quarter, falling short of economists’ expectations of 0.2% growth.
Overall, the economy grew by 1.3% during 2025, an improvement on the 1.1% recorded in 2024 but below official forecasts of 1.5%. Monthly data also showed growth of 0.1% in December, slowing from 0.2% in November, which was revised down from an earlier estimate of 0.3%.
Despite the services sector accounting for around 80% of UK economic activity, it recorded no growth during the quarter. Instead, expansion was driven by the production sector, which increased by 1.2%. In contrast, construction output declined by 2.1%, marking its weakest performance in more than four years.
Business investment fell sharply by 2.7% during the quarter, while consumer spending rose modestly by 0.2%. Surveys suggest economic activity slowed in the lead-up to the Autumn Budget, as businesses delayed investment decisions and households reduced spending amid uncertainty around potential tax changes.
Growth earlier in 2025 was stronger, with output rising 0.7% in the first quarter and 0.3% in the second. However, production was disrupted later in the year following a cyberattack on Jaguar Land Rover, which contributed to weaker third-quarter performance.
Recent surveys indicate improved business and consumer confidence heading into 2026, with economists forecasting 0.4% growth in the first quarter. The Office for Budget Responsibility expects annual growth to average 1.5% through to 2030, although productivity challenges remain. The Bank of England has held interest rates at 3.75%, signalling potential reductions as inflation pressures ease.
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