UK economy grows by 0.1% despite uncertainty over Reeves’s budget | Economic growth (GDP)
The UK economy grew by 0.1% in the final three months of last year, official data showed, despite signs that tax speculation in Rachel Reeves’ budget had dampened spending.
Figures from the Office for National Statistics show the economy recovered slightly in the fourth quarter from growth of 0.1% in the previous three months. Economists had expected a 0.2 percent increase.
The economy grew by 1.3% in 2025, following growth of 1.1% in 2024. It grew by 0.1% month-on-month in December, the ONS said, slowing from 0.2% in November.
The rise comes despite consumer and business surveys suggesting economic activity is slowing towards the end-November budget as households hold back spending and companies delay investment decisions due to speculation the Chancellor will impose significant tax rises.
The data is a ray of hope for Reeves, who hopes the economic recovery will help Labour’s fortunes.
The UK economy performed relatively well in the first half of 2025; It grew by 0.7% in the first quarter and 0.3% in the second quarter. But the cyber attack on Jaguar Land Rover, Britain’s largest carmaker, hit economic output; This attack suppressed vehicle production and led to minimal growth in the third quarter.
The Office for Budget Responsibility had forecast GDP growth of 1.5% in 2025 and 1.4% in 2026. The government’s official forecaster predicts the economy will grow at an annual rate of 1.5% until 2030, partly due to lower productivity growth.
Bank of England policymakers last week left interest rates unchanged at 3.75% but indicated in Reeves’ budget that falling inflation as a result of cost-of-living measures would lead to cuts in the coming months.
