The UK economy is anticipated to have recorded modest growth in the final quarter of 2025, despite ongoing pressures from budget uncertainty, according to economic analysts. The Office for National Statistics (ONS) is set to release comprehensive GDP data for December, the fourth quarter, and the full year, providing crucial insights into the nation's economic performance.
Quarterly Growth Expectations
Economists widely predict that the economy expanded by 0.1% in the fourth quarter, mirroring the growth rate observed in the third quarter. However, some experts suggest that this figure could edge slightly higher, potentially reaching 0.2%, driven by stronger-than-expected activity in November and improved business confidence following the autumn budget.
Monthly Performance and Sectoral Insights
Previous ONS figures indicated a contraction of 0.1% in October, followed by a 0.3% expansion in November, largely fueled by a recovery in manufacturing, particularly at Jaguar Land Rover after a significant cyber attack. In contrast, December is forecasted to have seen no growth, with weak data highlighted by industry surveys such as the construction PMI, which reported continued declines across housing, commercial construction, and civil engineering.
Victoria Scholar, head of investment at Interactive Investor, commented: "Economic activity likely picked up after the budget, as uncertainty diminished in December. There may have been an improvement in the services sector, with consumers spending on food, beverages, retail, and hotels during the festive season."
Annual Growth and Forecasts
For the full year of 2025, annual growth is projected at 1.4%, up from 1.1% in 2024. Sandra Horsfield of Investec Economics noted: "The UK economy has defied gloomy narratives and outperformed expectations in 2025, with our forecast of 1.4% GDP growth exceeding the consensus of 1.2%. We anticipate similar resilience in 2026, supported by utilities investment and potential interest rate cuts."
Broader Economic Outlook
Despite these positive indicators, the broader outlook remains muted. The Bank of England recently revised its growth estimates, reducing the 2025 forecast from 1.5% to 1.4% and cutting projections for 2026 from 1.2% to 0.9%, and for 2027 from 1.6% to 1.5%. Robert Wood, chief UK economist at Pantheon Macroeconomics, maintained a prediction of 0.1% growth for Q4 but acknowledged that it "could tip to 0.2%" as budget uncertainty fades.
Investec experts are forecasting 0.2% growth for both December and the fourth quarter overall, reinforcing the narrative of economic resilience amid challenges.
