The UK economy expanded by only 0.1% in the final three months of last year, according to official data, as falling business investment and weak consumer spending led to little momentum going into 2026.<\/p>\n
Figures from the Office for National Statistics<\/a> (ONS) show that the economy grew at the same rate of 0.1% as the previous three months. This was less than a 0.2% rise that economists had been expecting.<\/p>\n The economy grew by 1.3% in 2025, an improvement on growth of 1.1% in 2024, although worse than official forecasts of 1.5%. The ONS said the economy also expanded by 0.1% on a monthly basis in December, slowing from 0.2% in November \u2013 a figure that was revised down from 0.3%<\/a>.<\/p>\n The rise came despite there being no growth at all in the dominant services sector, which makes up about 80% of the economy. The small boost was instead driven by the production sector, up by 1.2%, while the construction industry shrank 2.1%, its worst performance in four years, the ONS said.<\/p>\n Liz McKeown, the director of economic statistics at the ONS, said: \u201cThe economy continued to grow slowly in the last three months of the year, with the growth rate unchanged from the previous quarter.<\/p>\n \u201cThe often-dominant services sector showed no growth, with the main driver instead coming from manufacturing. Construction, meanwhile, registered its worst performance in more than four years.\u201d<\/p>\n Business investment fell by 2.7% in the final quarter, while consumer spending grew by a sluggish 0.2%. The figures back up earlier consumer and business surveys that suggested economic activity had slowed in the run-up to the late November budget, as households held off spending and companies delayed investment decisions amid speculation that the chancellor would implement significant tax rises.<\/p>\n \u201cThe big picture is that private sector activity still appears to be extremely subdued,\u201d said Ruth Gregory, the deputy chief UK economist at Capital Economics<\/a>.<\/p>\n The UK economy fared relatively well in the first half of 2025, with growth of 0.7% in the first quarter and 0.3% in the second quarter. However, economic output was then hit by the cyber-attack on Britain\u2019s biggest carmaker, Jaguar Land Rover<\/a>, which depressed vehicle production and led to the minimal growth in the third quarter. Speculation around the autumn budget appears to have further hindered growth in the final three months.<\/p>\n \u201cThese figures confirm that the UK economy ended 2025 with a whimper,\u201d said Suren Thiru, the economics director at the Institute of Chartered Accountants in England and Wales. \u201cBusinesses had a particularly bleak quarter as the dark cloud of uncertainty caused by the budget and higher costs severely curtailed trade and investment plans.\u201d<\/p>\n However, more recent surveys for January have suggested that business and consumer sentiment picked up in the new year, with economists expecting growth of 0.4% in the first quarter of 2026.<\/p>\n Fergus Jimenez-England, an associate economist at the National Institute of Economic and Social Research, said the government must avoid spooking businesses any further. \u201cWith the spring statement upcoming in March, the chancellor should look to support this change in sentiment by avoiding a repeat of last year and refrain from further policy changes,\u201d he said.<\/p>\n The Office for Budget Responsibility had forecast GDP growth<\/a> to be 1.5% in 2025 and 1.4% in 2026. The government\u2019s official forecaster expects the economy to grow at annual pace of 1.5% up to 2030, partly because of low productivity growth.<\/p>\n Bank of England policymakers left interest rates unchanged at 3.75% last week<\/a> but indicated that lower inflation as a result of cost of living measures in Reeves\u2019s budget should pave the way for cuts in the months ahead.<\/p>\n