UK economy grew by just 0.1% in final quarter of 2025

Gross domestic product (GDP) rose by 0.1% on a monthly basis from October to December amid uncertainty sparked by Chancellor Rachel Reeves' budget.

The monthly figure for the previous month of November was revised down from 0.3% to 0.2%.

It means the economy grew by 1.3% over the entire year, an improvement on growth of 1.1% in 2024.

The figures are broadly what economists had predicted, with growth slowing following a major cyber attack on Jaguar Land Rover.

This saw activity grind to a halt and posed a major blow to Britain's manufacturing sector.

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Speaking to LBC, shadow chancellor Mel Stride decribed the figures as "disappointing".

He told Nick Ferrari at Breakfast: "0.1% is nothing to write home about at all and it comes on top of the last three-month roaming figure of 0.1% - and the one before that was the economy being entirely flat."

Liz McKeown, ONS director of economic statistics, said: “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.”

Ms Reeves and the Government had been hopeful that stronger economic growth can help increase tax revenues and support Government spending plans.

Reacting to today's figures, the Chancellor said: "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."

'Underwhelming'

But Suren Thiru, ICAEW Economics Director, described the rate of growth as "underwhelming",

He said: “These figures confirm that the UK economy ended 2025 with a whimper as weaker confidence and steepling cost pressures helped limit output across the fourth quarter, including through minimal growth in December.

“Businesses had a particularly bleak quarter as the dark cloud of uncertainty caused by the Budget and higher costs severely curtailed trade and investment plans.

“The underwhelming final quarter caps off another disheartening year for the UK economy with growth tailing off unnervingly quickly after the strong start to 2025, as rising taxes, heightened uncertainty and poor productivity increasingly squeezed activity.

“The UK economy should see slightly stronger growth in this current quarter with reduced uncertainty now the Budget is in the rear-view mirror, and lower inflation likely to boost consumer spending and business activity, despite higher unemployment.

“These figures mean that a March interest rate cut remains doubtful by giving those policymakers wanting more evidence that inflation is slowing comfort over economic conditions to delay reducing rates, particularly given the elevated political uncertainty.”

In Novemeber, Ms Reeves announced tax rises amounting to £26 billion as she battled a downgrade in forecast economic growth.

More than 1.7 million people face paying more income tax after she froze thresholds in the autumn budget, meaning people are being dragged into paying the tax for the first time or shifted into higher bands as earnings increase.

The measures contribute to a tax burden that will rise to an “all-time high” in 2030/31.