ONS: UK economy grew by 0.1% in final quarter of 2025

Picture of central London finance district — *The UK economy grew just 0.1% in the last three months of the year, according to the ONS*

(Image credit: Andy Andrews via Getty Images)

The UK economy grew by just 0.1% in the final three months of 2025 as the year ended on a sluggish note.

The slight rise in Gross Domestic Product (GDP) between October and December followed a 0.1% increase in Q3, according to the Office for National Statistics (ONS).

GDP also rose by 0.1% in the month to December, down from growth of 0.2% in November. November’s figure was revised down from a previous estimate of 0.3%.

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Adam Hoyes, senior asset allocation analyst at wealth management firm Rathbones, said: “Today’s preliminary GDP data show the UK economy wrapping up 2025 on a lacklustre note, which will be a disappointment to a prime minister and chancellor relying on a growing economy to help both turn around their political fortunes and set the public finances on a more sustainable footing.

“The meagre increase reemphasises the need for the government to prioritise growth and investment after the missed opportunity of the Autumn Budget.”

Why did the economy struggle in Q4 2025?

The services sector, which accounts for a significant portion of the UK economy, flatlined (0%) in the last three months of 2025, following a 0.2% uptick between July and September. (Q3).

Eight of the 14 services subsectors showed growth in the final quarter, offset by falls in the other four subsectors. Education and the financial and insurance industries were among the subsectors which saw growth.

The construction sector registered its worst growth in more than four years, shrinking by 2.1%.

These falls were offset by positive growth in production in the last three months of the year, which grew by 1.2% after a fall of 0.7% the previous quarter, in part due to a major cyber attack at Jaguar Land Rover in August.

The growth in the production sector in the last quarter of 2025 was mainly driven by a rise of 0.9% in manufacturing while mining and quarrying was up by 1.4%.

Scott Gardner, investment strategist at J.P. Morgan Personal Investing, said consumer spending also showed “promising signs” but many would be hoping the slow pace of growth improves in 2026.

Could an interest rate cut be on the cards?

The Bank of England’s Monetary Policy Committee (MPC) held interest rates at 3.75% in a narrow 5-4 vote this month.

It is predicting inflation to slow to around 2%, its target, by April, acknowledging that “risk from greater inflation persistence has continued to become less pronounced”.

With that in mind, and today’s latest GDP figures showing a stagnating economy, could it make a rate cut at MPC’s next meeting on 19 March more likely?

Not according to Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales (ICAEW).

Thiru said: “The UK economy should see slightly stronger growth in this current quarter with reduced uncertainty now the Budget is in the rear-view mirror, and lower inflation likely to boost consumer spending and business activity, despite higher unemployment.

“These figures mean that a March interest rate cut remains doubtful by giving those policymakers wanting more evidence that inflation is slowing comfort over economic conditions to delay reducing rates, particularly given the elevated political uncertainty.”

What does rising GDP mean for you?

GDP is the total value of all the goods and services produced in a country over a set period of time. Rising GDP shows an economy is healthy.

People living in a country with high GDP are likely to have higher incomes and therefore better standards of living.

If these people spend their incomes inside the country, that also boosts takings for businesses who in turn are likely to hire more staff and invest more, creating a snowball effect.

However, GDP rising too fast can cause inflation to surge. This makes interest rate rises by the Bank of England more likely, leading to higher borrowing and mortgage costs.

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Sam has a background in personal finance writing, having spent more than three years working on the money desk at The Sun.

He has a particular interest and experience covering the housing market, savings and policy.

Sam believes in making personal finance subjects accessible to all, so people can make better decisions with their money.

He studied Hispanic Studies at the University of Nottingham, graduating in 2015.

Outside of work, Sam enjoys reading, cooking, travelling and taking part in the occasional park run!