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The UK economic system had a minor growth within the fourth quarter of 2025 coming a contact beneath expectations as an anticipated increase from the companies sector failed to come back to fruition.
Contemporary figures from the Workplace for Nationwide Statistics (ONS) confirmed the economic system expanded a sluggish 0.1 per cent in three months to December 2025.
A survey of Metropolis economists by Bloomberg had projected 0.2 per cent progress for the fourth-quarter.
This got here because the companies sector, which is commonly seen because the engine of the economic system resulting from its hefty contribution of over 80 per cent to GDP, had no progress within the interval.
Manufacturing output expanded 1.2 per cent while development shrank 2.1 per cent.
“The economic system continued to develop slowly within the final three months of the yr, with the expansion charge unchanged from the earlier quarter,” Liz McKeown, director of financial statistics on the ONS, mentioned.
“The usually-dominant companies sector confirmed no progress, with the principle driver as a substitute coming from manufacturing.”
McKeown added development registered its worst efficiency in over 4 years.
The Chancellor was additionally handed one other main blow within the month-to-month knowledge with November’s progress revised all the way down to 0.2 per cent, from the preliminary estimate of 0.3 per cent. The economic system’s 0.1 per cent contraction in October was maintained.
In December – the primary month after Reeves’ Finances – the economic system expanded 0.1 per cent.
Andrew Sentance, a former policymaker on the Financial institution of England, mentioned the UK was on tempo for “essentially the most dismal decade for progress in 100 years”.
“An extended checklist of knowledge revisions from the ONS has revealed the UK economic system barely stored its head above water within the remaining quarter of final yr,” mentioned Lindsay James, funding strategist at Quilter.
“We should always now be reaching a spot the place peak uncertainty is behind us, and companies are higher capable of plan for the publish finances and publish commerce deal world. Nonetheless, the nicely flagged management problem – which headlines would have us consider is quick changing into a case of when slightly than if – dangers derailing that.”
Development for 2025 got here in at 1.3 per cent, undershooting the 1.5 per cent projected by the Workplace for Finances Accountability (OBR) and 1.4 per cent from the Worldwide Financial Fund.
Finances bounce fails to leap into motion
An uptick in exercise was pencilled in by economists after numerous surveys within the remaining quarter urged companies had put their funding plans on maintain till uncertainty across the public funds was quelled.
Reeves was anticipated to be dealing with a drastic black gap after a productiveness downgrade. However the Workplace for Finances Accountability’s financial forecast would later present a surge in tax receipts – due largely to inflation – greater than lined the £16bn downgrade.
Nonetheless, Reeves raised taxes to the tune of £26bn within the Finances, although companies had been capable of curb a few of their worst fears.
The elimination of some fiscal uncertainty was tipped by economists to have led to an uplift in exercise after the November Finances.
An Institute of Administrators (IoD) ballot forward of the Finances confirmed non-public sector optimism had plunged to the bottom stage for the reason that trade physique began gathering knowledge a decade in the past as tax hypothesis ramped up.
Reacting to the brand new figures, shadow Chancellor Mel Stride mentioned: “These disappointing statistics present a Downing Road and a Treasury which have taken their eye off the ball.
“Wes Streeting is true to say Labour have ‘no progress technique’. They’re distracted by scandals of their very own making as Keir Starmer’s authority crumbles.”
Chancellor Rachel Reeves mentioned: “Because of the alternatives now we have made, we’ve seen six rate of interest cuts for the reason that election, inflation falling quicker than predicted and ours is the quickest rising G7 economic system in Europe.
“The Authorities has the appropriate financial plan to construct a stronger and safer economic system, slicing the price of dwelling, slicing the nationwide debt and creating the circumstances for progress and funding in each a part of the nation.”
Development’s greater image glooms
Economists have sounded the alarm on a late-year progress spurt with Oxford Economics mentioning that any uplift can be “payback” for declines in output over earlier months.
“This seems to be noisy knowledge slightly than there being any robust underlying narrative,” Oxford Economics UK economists Andrew Goodwin and Edward Allenby mentioned.
The Financial institution of England additionally handed Reeves a blow in the course of the Financial Coverage Committee’s newest assembly after the MPC minimize its progress forecast for 2026 to 0.9 per cent from 1.2 per cent.
This additionally got here alongside a revised progress estimate for 2025 of 1.4 per cent, from the earlier 1.5 per cent.
Simon French, chief economist at Panmure Liberum, mentioned: “2026 gained’t be a classic yr for UK financial efficiency by historic requirements.
“The composition of financial progress stays overly reliant on public sector spending, and housing wealth.”
