The UK economy limped through the final quarter of 2025, with growth of just 0.1% falling short of forecasts and highlighting persistent economic headwinds. Official figures from the Office for National Statistics (ONS) show annual growth reached 1.3%, below the 1.4% expected by the Bank of England and most economists, as budget uncertainty and a stalled services sector weighed on performance.
The modest expansion matched the previous quarter's 0.1% growth, with December alone rising 0.1%. While 2025's overall growth improved from 1.1% in 2024 and marked the strongest performance since 2022, the year-end slowdown signals ongoing challenges for the British economy.
ONS director of economic statistics Liz McKeown 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.»
Sectors diverge sharply
Manufacturing drove the fourth quarter's expansion with 1.2% growth, partly boosted by Jaguar Land Rover's recovering production after a major cyber attack. But services, typically the dominant force in the UK economy, flatlined at 0% growth.
Construction registered its worst performance in over four years, falling 2.1% in the quarter. The sector's sharp decline contributed to the economy's weak finish to the year.
Budget uncertainty blamed
Scott Gardner, investment strategist at JP Morgan Personal Investing, said the UK economy «ended 2025 firmly in the slow lane, undershooting expectations and remaining in a low gear in the final quarter of the year as businesses and consumers digested the Chancellor's November budget». He noted: «This marks a clear reversal in fortunes for the economy after strong growth shown in the first half of the year failed to carry over into the rest of 2025.»
The long buildup to Chancellor Rachel Reeves' November 26 fiscal event was widely seen as holding back growth. Output fell 0.1% in October before rebounding 0.2% in November, though that figure was downwardly revised from earlier estimates.
Reeves insisted 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».
Note: This article was created with Artificial Intelligence (AI).
