The UK economy grew by just 0.1% in the final three months of 2025, data from the Office for National Statistics (ONS) shows.
Between October and December 2025, manufacturing grew by 1.2%, while construction fell by 2.1% and services showed no growth.
On an annual basis, the UK gross domestic product (GDP) grew by 1.3% in 2025, up from 1.1% in 2024.
However, GDP per head – which measures economic growth divided by the total population of the country – fell for the second consecutive quarter by 0.1%. It is however up 0.6% when compared with the fourth quarter of 2024.
Commenting on the figures, Liz McKeown, director of economic statistics at the ONS, said: “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 services sector showed no growth, with the main driver instead coming from manufacturing. Construction, meanwhile, registered its worst performance in more than four years.
“The rate of growth across 2025 as a whole was up slightly on the previous year, with growth seen in all main sectors. Initial estimates show GDP per head was up on the previous year despite it contracting slightly in each of the last two quarters.”
Bank of England view
The Bank of England (BoE) published its view of the UK economy on 5 February, ahead of the latest GDP report from the ONS.
It cautioned that GDP growth remains below estimates of the potential for the economy, with a “subdued outlook for demand”.
The bank also admitted that weak GDP could have been affected by a “small drag” from the effects of monetary tightening. While the Monetary Policy Committee (MPC) held the base rate at 3.75%, its accompanying commentary indicates it is open to lowering rates in order to improve economic conditions.
It currently projects a modest uptick in growth in the first quarter of 2026 of just 0.2%. it also cautioned that employment growth in the economy is weaker than would be expected given modest GDP growth.
Reacting to the weak GDP figures, Chancellor Rachel Reeves admitted there is “more to do” to improve UK economic growth.
She commented: "Crucially, GDP per head of the population has increased over the last year after falling in the previous parliament.
"Is there more to do? Absolutely. But we've created the conditions for growth and I am confident this will be the year we will see the results of that."
Commenting on ONS data, Anna Leach, chief economist at the Institute of Directors, said: “GDP disappointed at year-end in 2025. Elsewhere, revisions reveal that the economy was effectively flat between June and December 2025.
“This demonstrates the significant damage that last year’s high levels of policy uncertainty inflicted upon activity. Weakness in construction output in particular reflects the impact of speculation over housing taxation, rising costs and regulatory disfunction, pushing activity to its lowest level since September 2024. The dominant services sector also stalled, posting no growth in Q4.
“Overall, the latest data paint a fragile picture of economic conditions, with demand and momentum fading as uncertainty intensified towards year-end. But encouragingly, our January confidence data shows a welcome rebound in sentiment among business leaders – the sharpest increase since immediately after the General Election – alongside improving revenue expectations.”
While economic news in the UK continues to be of concern, it is important not to make any decisions based on short-term events and instead consider the wider picture for your long-term financial plans.
If you would like to discuss the implications of the UK’s economic picture and your long-term financial situation, it is essential to speak to a planner to get a better idea of how to approach the current climate.