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The UK economy is anticipated to have registered modest growth during the final quarter of 2025, as it navigated persistent budget uncertainty, according to leading economists.
The Office for National Statistics (ONS) is set to release crucial GDP figures for December and the entire fourth quarter on Thursday, offering a clearer picture of the nation’s economic performance.
Economists largely predict a 0.1 per cent expansion for the quarter. However, some analysts suggest the growth could be marginally higher, buoyed by stronger-than-expected activity in November and a perceived increase in clarity following the autumn Budget, which may have supported businesses in the run-up to the festive season.
This follows earlier ONS data indicating a 0.1 per cent growth in the three months leading to September.
The subsequent months saw a 0.1 per cent contraction in October, followed by a 0.3 per cent rebound in November, largely attributed to a recovery in manufacturing output at Jaguar Land Rover after a significant cyberattack.
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The Bank of England believes the economy grew by 1.4 per cent last year (John Walton/PA) (PA Wire)
Despite this, December is projected to have experienced no growth, according to estimates from Pantheon Macroeconomics.
Several industry surveys, including the month’s construction PMI data, also pointed to continued weakness across housing, commercial construction, and civil engineering sectors.
Conversely, others believe that improved certainty post-Budget might have stimulated a modest rise in spending.
Victoria Scholar, head of investment at Interactive Investor, commented: “It is likely that economic activity picked up after the budget once that cloud of uncertainty shifted to the rear view mirror in December.
“Plus, there could have been an improvement in the services sector with consumers spending on things like food and beverages, retail, and hotels around the festive season.”
Robert Wood, chief UK economist at Pantheon Macroeconomics, suggested GDP growth “could tip to 0.2%” but maintained his original prediction of 0.1 per cent.
He added: “We think the broad thrust from activity in the services sub-sectors in December indicates that budget uncertainty is already fading quickly.”
Nevertheless, the broader outlook for UK economic growth remains subdued. The Bank of England announced on Thursday that it now estimates the economy grew by 1.4 per cent last year, a slight reduction from its previous forecast of 1.5 per cent.
The central bank also revised down its growth projections for 2026, from 1.2 per cent to 0.9 per cent, and for 2027, from 1.6 per cent to 1.5 per cent.