UK economy grew by 0.1% last quarter despite Budget uncertainty
Figures just released show the UK economy growing modestly again in the final three months of 2025 amid pressure from budget uncertainty.
The Office for National Statistics (ONS) said UK GDP (gross domestic product) data increased by 0.1 per cent in the final quarter between October and December last year, following 0.1 per cent growth in the third quarter.
Some have suggested that fourth-quarter growth could be slightly higher following stronger-than-expected activity in November, and that clarity after the autumn budget could support firms in the run-up to Christmas.
Previous figures from the ONS had shown the economy contracted by 0.1 per cent in October and then grew by 0.3 per cent in November as the manufacturing sector revived as output recovered following Jaguar Land Rover’s massive cyber attack.
The Bank of England on Thursday reduced its 2026 growth forecast from 1.2 percent to 0.9 percent and its 2027 growth forecast from 1.6 percent to 1.5 percent.
ONS director of economic statistics Liz McKeown said: “The economy continued to grow slowly in the last three months of the year, with the rate of growth remaining unchanged from the previous quarter.
“The usually dominant services sector did not show growth; the main driver came from manufacturing instead.
“Meanwhile, construction recorded its worst performance in more than four years.
“The overall growth rate in 2025 increased slightly compared to the previous year, and growth was seen in all main sectors.”
This comes after economists generally forecast that the economy would grow 0.1% in the quarter, following growth of 0.1% in the third quarter.
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Victoria Scholar, head of investment at Interactive Investor, said: “Economic activity is likely to pick up after the budget when the cloud of uncertainty is in the rearview mirror in December.
“There could also be an improvement in the services sector, with consumers spending on things like food and beverage, retail and hotels during the festive season.”
Sandra Horsfield of Investec Economics said: “The big picture is that the UK economy is defying the bleak popular narrative in 2025 and exceeding expectations, with our forecast equating to 1.4% GDP growth for the full year, whereas the consensus forecast in January 2025 was for 1.2% GDP growth.
“We foresee a similar story of resilience and consensus outperformance for 2026, as utilities investment and ultimately housebuilding accelerate – the latter helped somewhat by further declines in interest rates.
“The consensus estimate for this year is 1.3% versus our own forecast.”
