Economy grows by worse-than-expected 0.1% in final quarter of 2025 | MoneyNews
Early official figures are doing nothing to dispel issues the financial system stays caught in the doldrums.
The Office for National Statistics (ONS) has reported progress of 0.1% for the final quarter of 2025 – mirroring the 0.1% determine masking July to September – worse than the 0.2% anticipated by many economists.
Growth of 0.1% was measured for December, with exercise easing following the pre-November slowdown partly blamed on nerves amongst customers and the non-public sector forward of the budget.
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The knowledge was worse when progress was measured by head of inhabitants – a extra correct measure of the nation’s dwelling requirements – with output down throughout the second half of 2025.
ONS director of financial statistics, Liz McKeown, stated of its findings: “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 companies sector confirmed no progress, with the primary driver as an alternative coming from manufacturing.
“Construction, meanwhile, recorded its worst performance in more than four years.
“The charge of progress throughout 2025 as an entire was up barely on the earlier yr, with progress seen in all foremost sectors.
“Initial estimates show GDP per head was up on the previous year despite it contracting slightly in each of the last two quarters.”
The knowledge was launched as the federal government stays beneath stress to incentivize funding in opposition to a backdrop of complaints over Treasury-imposed enterprise prices which have hit employment.
Growth for the financial system has been entrance and middle of Labour’s priorities for energy from the off however its stewardship has been criticized by enterprise teams, particularly in the retail and hospitality sectors.
It additionally emerged this week {that a} senior member of the cupboard agreed.
The Health Secretary Wes Streeting informed Lord Mandelson by way of a message in March final yr, shared with Sky News this week, that the federal government had “no growth strategy at all.”
Separately, a report by a committee of MPs on Wednesday demanded a sequence of reforms to arrest enterprise closures and decline on the excessive road – together with slicing prices, overhauling enterprise charges and ending late funds.
The Business and Trade Committee discovered that small companies had been now working beneath pressures much like, and in some circumstances worse than, these skilled through the COVID pandemic.
Firms have broadly admitted passing on increased employment prices whereas the UK’s unemployment charge has risen by a full share level to five.1% for the reason that authorities took workplace in 2024.
Investment is being held again, enterprise teams say, by not solely increased prices but in addition wider uncertainties together with the results of Donald Trump’s commerce battle.
Chancellor Rachel Reeves stated of the expansion figures: “Thanks to the choices we have made, we’ve seen six interest rate cuts since the election, inflation falling faster than predicted and ours is the fastest growing G7 economy in Europe.
“The Government has the correct financial plan to construct a stronger and safer financial system, slicing the fee of dwelling, slicing the nationwide debt and creating the circumstances for progress and funding in each half of the nation.”
Inflation is forecast to ease sharply in the approaching months after 18 months of upward stress on the tempo of value will increase.
But economists largely see 2026 simply undershooting the 1.3% progress determine seen in 2025.
Yael Selfin, chief economist at KPMG UK, stated he anticipated exercise to select up in the approaching months however forecast progress of 1% for this yr.
“Renewed uncertainty has emerged as a risk to the growth outlook this year. To avoid hindering economic growth momentum, households and businesses need stable foundations and policy clarity,” he wrote, mirroring calls for from opposition events for a U-turn on enterprise burdens imposed by the chancellor to unlock non-public sector funding.
