The UK economy expanded by only 0.1% in the final quarter of 2025, according to official figures from the Office for National Statistics (ONS), falling short of economists' expectations of 0.2% growth. The weak performance was driven by a 2.7% drop in business investment and sluggish consumer spending, which rose just 0.2%.
The dominant services sector, which accounts for about 80% of the economy, recorded no growth. Instead, the modest expansion was supported by a 1.2% rise in production, while construction shrank by 2.1% – its worst performance in over four years. On a monthly basis, GDP grew 0.1% in December, down from a revised 0.2% in November.
Liz McKeown, ONS director of economic statistics, 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.”
For the full year 2025, GDP rose 1.3%, an improvement on 1.1% in 2024 but below the official forecast of 1.5%. The data comes as Chancellor Rachel Reeves prepares to deliver a major speech in the coming weeks, reaffirming her commitment to growth and outlining priorities including artificial intelligence and closer EU ties.
Business surveys suggest sentiment picked up in January, with economists forecasting 0.4% growth in the first quarter of 2026. However, experts warn the government must avoid further policy shocks. Suren Thiru of the Institute of Chartered Accountants said: “Businesses had a particularly bleak quarter as the dark cloud of uncertainty caused by the budget and higher costs severely curtailed trade and investment plans.”
