UK financial system grew by 0.1% final quarter regardless of Funds uncertainty

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Your assist makes all of the distinction. Learn extra The UK financial system grew modestly once more within the final three months of 2025 amid stress from funds uncertainty, figures simply launched present.

The Workplace for Nationwide Statistics (ONS) stated UK GDP (gross home product) knowledge grew by 0.1 per cent within the closing quarter between October and December final yr, following development of 0.1 per cent within the third quarter.

Some had urged that fourth-quarter development may tip barely larger after stronger-than-expected exercise in November and that readability following the autumn Funds may have supported companies within the run-up to Christmas.

It's nonetheless anticipated that the primary quarter 2026 will present a stronger degree of development, however significant and sustained financial enlargement stays depending on inflation coming down and companies adapting to new, larger ranges of prices - whereas unemployment additionally stays above 5 per cent.

Earlier figures from the ONS confirmed that the financial system contracted by 0.1 per cent in October after which expanded by 0.3 per cent in November because the manufacturing sector was boosted by recovering manufacturing at Jaguar Land Rover after its main cyber assault.

The Financial institution of England on Thursday lower its development forecast 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.

Liz McKeown, ONS director of financial statistics, stated: “The financial system continued to develop slowly within the final three months of the yr, with the expansion charge unchanged from the earlier quarter.

“The customarily-dominant providers sector confirmed no development, with the principle driver as a substitute coming from manufacturing.

“Building, in the meantime, registered its worst efficiency in additional than 4 years.

“The speed of development throughout 2025 as an entire was up barely on the earlier yr, with development seen in all principal sectors.”

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It comes after economists broadly predicted that the financial system had grown by 0.1 per cent within the quarter, following development of 0.1 per cent within the third quarter.

The British Chambers of Commerce (BCC) has referred to as for presidency motion to again up their phrases to help financial restoration, noting that small companies are holding again on spending as a result of lingering fears about rising taxation and different value pressures.

“Enhancing the outlook now is determined by restoring enterprise dynamism. Authorities should transfer from technique to supply – backing infrastructure initiatives, dashing up planning selections, addressing expertise gaps, and strengthening export assist – so companies can make investments, export and develop,” stated the BCC’s head of analysis, David Bharier.

The Trades Union Congress (TUC) in the meantime identified that the year-long development was a latest excessive, however basic secretary Paul Nowak nonetheless urged the Financial institution of England to chop rates of interest extra shortly to stimulate spending.

<img src="https://static.independent.co.uk/2026/02/12/7/28/Figure-1_-Real-GDP-grew-by-0-1-in-the-three-months-to-December-2025-after-falling-by-0-1-in-the-thre.png" srcset="https://static.independent.co.uk/2026/02/12/7/28/Figure-1_-Real-GDP-grew-by-0-1-in-the-three-months-to-December-2025-after-falling-by-0-1-in-the-thre.png?quality=75&width=320&auto=webp 320w, https://static.independent.co.uk/2026/02/12/7/28/Figure-1_-Real-GDP-grew-by-0-1-in-the-three-months-to-December-2025-after-falling-by-0-1-in-the-thre.png?quality=75&width=640&auto=webp 640w" loading="lazy" alt="Graph shows real GDP grew by 0.1 per cent in the three months to December 2025" class="sc-1mc30lb-0 ggpMaE inline-gallery-btn"/> open picture in gallery

Graph exhibits actual GDP grew by 0.1 per cent within the three months to December 2025 (ONS) “It’s welcome that the financial system saved rising in December, and final yr’s development of 1.3 per cent was the strongest for 3 years,” he stated.

“However many employees will not be but feeling the profit of their pockets. Many working households don’t have any cash left over to spend on the issues that maintain our financial system shifting.

“This doom loop should finish. Ministers should keep laser-focused on slicing working individuals’s family prices and bettering residing requirements this yr.

“And the Financial institution of England should go additional and quicker with quickfire interest-rate cuts within the months forward.

“Britain must lastly transfer on from the cost-of-living disaster that’s saved us caught for too lengthy – the precedence should be serving to households to spend and companies to take a position.”

Victoria Scholar, head of funding at Interactive Investor, stated: “it's seemingly that financial exercise picked up after the funds as soon as that cloud of uncertainty shifted to the rearview mirror in December.

“Plus, there may have been an enchancment within the providers sector with customers spending on issues like meals and drinks, retail, and inns across the festive season.”

Sandra Horsfield, at Investec Economics, stated: “The massive image is that the UK financial system had defied the gloomy well-liked narrative and outperformed expectations throughout 2025 – our forecast equates to GDP development of 1.4 per cent for the total yr, whereas the consensus forecast in January 2025 had been for 1.2 per cent GDP development.

“We challenge an identical story of resilience and outperformance relative to consensus for 2026, as utilities funding and, ultimately, housebuilding speed up – the latter with a bit assist from additional falls in rates of interest too.

“The consensus forecast for this yr is 1 per cent, towards our personal forecast of 1.3 per cent.”

Nonetheless, RMS UK’s chief economist Thomas Pugh cautioned that there was an overriding issue which may hamper such optimistic predictions - “noisy management” from inside authorities.

“Wanting forward, all of the indicators are that development is now choosing up sharply as funds uncertainty recedes. We anticipate development to return in at round 0.5 per cent within the first three months of this yr and the affect of earlier charge cuts and sharp falls in inflation ought to begin to present up as stronger shopper spending later within the yr,” he stated.

“The most important threat now could be {that a} protracted and noisy management contest which may reopen Pandora’s field of tax will increase and inject a renewed bout of uncertainty into customers and companies, offsetting a lot of the advance within the financial fundamentals.”