UK economy misses forecasts with sluggish end to 2025

The UK economy grew by just 0.1% in the final three months of 2025, undershooting expectations and highlighting the fragile state of growth amid political and budget uncertainty, according to official figures.

Data from the Office for National Statistics (ONS) revealed that gross domestic product (GDP) rose by 0.1% in the October-to-December period, matching the pace recorded in the previous quarter but coming in below the 0.2% growth forecast by many economists. Output also rose by 0.1% in December, following a downwardly revised 0.2% increase in November.

Despite the sluggish finish to the year, the ONS said the economy expanded by 1.3% across 2025 as a whole, the strongest annual growth since 2022. However, that still fell short of the 1.4% growth pencilled in by the Bank of England and most forecasters.

Liz McKeown, the ONS director of economic statistics, said the economy continued to “grow slowly” at the end of the year, with services – the UK’s dominant sector – showing no growth over the quarter. “The main driver instead came from manufacturing,” she said, while construction recorded its weakest performance in more than four years.

Sectoral data underlined the uneven picture. Production output grew by 1.2% in the three months to December, while services flatlined and construction shrank by 2.1%, marking the sector’s worst three-month performance since 2021. On a monthly basis in December, services rose by 0.3%, but production fell by 0.9% and construction declined by 0.5%.

The end of the year was marked by volatility. Output dipped by 0.1% in October before rebounding in November, helped by recovering production at Jaguar Land Rover following a major cyber attack. Economists also pointed to the long lead-up to the November 26 Budget as a drag on activity, with consumers and businesses delaying spending and investment amid uncertainty over tax and spending plans.

Business leaders warned that continued political uncertainty risked keeping growth subdued.

Mike Randall, chief executive of Simply Asset Finance, said modest growth in the final quarter underscored the need for stability to rebuild confidence.

“What the UK needs now is action, and to keep building on the positive progress UK firms have made over the past year,” he said, calling for longer-term, cross-party support for small and medium-sized businesses to encourage investment.

The latest figures are likely to reinforce concerns at the Bank of England about the economy’s limited momentum as policymakers weigh the path for interest rates in the months ahead.