The U.K. economy grew a meager 0.1% in the fourth quarter of 2025, according to preliminary data from the Office for National Statistics (ONS) released Thursday. Economists had expected slightly stronger growth of 0.2% for the October-December period, following a 0.1% expansion in the third quarter. On a monthly basis, the economy grew 0.1% in December, down from a revised 0.2% in November.
The ONS noted a mixed performance across sectors. While the services sector, typically the main driver of the economy, showed no growth, manufacturing contributed positively, and construction recorded its weakest performance in over four years. ONS Director of Economic Statistics Liz McKeown described the figures as reflecting a “mixed economic picture.”
Despite the modest quarterly growth, the U.K. economy is estimated to have expanded 1.3% in 2025, up from 1.1% in 2024. The data comes after the Bank of England’s early February meeting, where policymakers voted narrowly to keep interest rates unchanged at 3.75%, citing persistent inflationary pressures that are expected to ease in the coming months. Economists now anticipate that the central bank could cut rates as early as April to support the sluggish economy.
Market analysts welcomed the small positive growth. Samuel Edwards, head of Client Portfolio Management at Ebury, said that the U.K. ended 2025 “on a positive note, albeit a very modest one,” adding that businesses may find reassurance after a turbulent political and market period. Concerns remain, however, over a slowing jobs market and stubborn inflationary pressures.
Looking ahead, experts see potential for a recovery in 2026. Scott Gardner, investment strategist at J.P. Morgan Personal Investing, highlighted signs of improvement in both manufacturing and services at the start of the year. “The hope is that this progress can grease the wheels of the economy and lead to an improved outlook and performance over 2026,” he said, reflecting cautious optimism for Britain’s economic prospects.
