The UK economy expanded by 0.1% in the final three months of last year, undershooting expectations as speculation over tax rises in Rachel Reeves’s budget weighed on spending.
Figures from the Office for National Statistics (ONS) showed that gross domestic product rose 0.1% in the fourth quarter, unchanged from the previous three months. Economists had forecast growth of 0.2%.
The ONS also reported that the economy grew by 0.1% in December on a monthly basis. However, November’s figure was revised down to 0.2% from an earlier estimate of 0.3%.
Liz McKeown, director of economic statistics at the ONS, said the economy had “continued to grow slowly in the last three months of the year, with the growth rate unchanged from the previous quarter”.
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“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,” she said.
McKeown added that “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,” she said.
For the year as a whole, UK GDP increased by 1.3%, compared with 1.1% in the previous year.
Growth in the latest quarter was driven by higher industrial production, which rose 1.2%, but this was offset by a 2.1% fall in construction output, while services showed no growth, according to the ONS.
The chancellor said: “Thanks to the choices we have made, we’ve seen six interest rate cuts since the election, inflation falling faster than predicted and ours is the fastest growing G7 economy in Europe.”
“The government has the right economic plan to build a stronger and more secure economy, cutting the cost of living, cutting the national debt and creating the conditions for growth and investment in every part of the country.”
Lindsay James, investment strategist at wealth managers Quilter, warns that the picture is “rather bleak at the moment”.
She said: “A long list of data revisions from the ONS has revealed the UK economy barely kept its head above water in the final quarter of last year, with GDP growth coming in at just 0.1% after downward revisions to the previous two data prints. December saw a meagre uplift of 0.1%, which was in line with expectations, but November’s growth has been revised down to 0.2% from the 0.3% first reported.”