- The UK economy grew 0.1% in the last quarter of 2025 and 1.3% over the year as a whole – lower than the OBR forecast in November
- Manufacturing helped lift the production sector which saw growth of 1.2% over the final three months of the year
- Services saw no growth and the construction sector fell by 2.1%
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK GDP figures:
“Subdued, sluggish, and slow – three words that sum up UK economic growth during the last three months of 2025 and in the year as a whole.
“Whilst the chancellor can celebrate the fact the UK enjoyed the fastest growth of any European G7 country last year and that growth was a smidgeon higher than in 2024, she does have to bear responsibility for the choices made and the timing of her last Budget. The service sector, which is often the powerhouse of the UK economy, has struggled to deal with reduced confidence which was exacerbated by the months of speculation and pitch rolling ahead of last year’s unusually late Budget.
“Although the four interest rate cuts delivered by the Bank of England last year have helped make mortgages more affordable for those looking to buy a new home, concerns about potential tax changes kept the brakes firmly pressed down on the housing market at the end of 2025. This has had an impact on housebuilders like Barratt Redrow.
“‘Building back Britain’ has been at the heart of the government’s plans, but rhetoric and the promise of changes aren’t enough when they’re undermined by instability and questions.
“There have been many blocks manoeuvred into place over the past couple of years, from planning policy to increased government spend on infrastructure and clean energy. With time they should start to stimulate the economy but political upheaval from both inside and outside the country could add further complications to an already difficult task.”
