UK GDP grew by 1.3% in 2025, up from 1.1% in 2024 and slightly ahead of overall expectations. However, quarterly growth was weaker than expected at 0.1% in Q4.
The latest ONS statistics show downward revisions to initial monthly figures in Q4, with November’s growth revised down from 0.3% to 0.2%. October saw an unrevised fall of 0.1%.
Real GDP, adjusted for inflation, grew by 0.1% in Q4, after a fall of 0.1% in the three months to November (revised down from growth of 0.1%), and a fall of 0.1% in the three months to October (revised down from no growth).
Despite strong overall growth in 2025, lacklustre monthly and quarterly figures for Q4 have led industry experts to predict further cuts to interest rates as the Bank of England tries to stimulate the economy.
Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, commented: “Having only registered 0.1% growth over Q3, the confirmation that GDP increased by a similar 0.1% in Q4 confirms no acceleration to close out 2025. Today’s data confirms that economic activity remained subdued and below trend at just 1.3% over 2025, only a very marginal improvement from the 1.1% recorded in the previous year.
“Lying behind the quarterly improvement were one-off adjustments confirmed in the Chancellor’s late November Budget which were not repeated in December, hence the slight dip in the pace of activity in the final month of the year. Although pre-Budget jitters were calmed after the event, the impact on service sector activity (no growth over the final quarter) remained subdued despite seasonal festivities.
“Rate-setters on the Bank of England’s Monetary Policy Committee have adjusted their hitherto cautious rhetoric and appear ready to cut the base rate for a seventh time, perhaps sooner rather than later. Financial markets have been quick to price in another near-term rate cut in March and today’s downbeat activity data, coupled with slowly falling price pressures mean that households and businesses might not have to wait too long for a further policy loosening.”
Luke Bartholomew, deputy chief economist at Abderdeen, said: “The UK economy managed to eke out some very modest growth at the back end of last year. On a purely national accounting basis, the economy started 2026 with very little momentum. But looking at various surveys, there were some tentative signs that sentiment turned a corner and started to improve after the Budget last year, which could help deliver a pick-up in activity this year.
"However, recent political uncertainty may see that sentiment bounce reverse. And it is still hard to see what will drive a sustained increase in the underlying rate of growth this year. All of which means that the Bank of England is set to continue to lower interest rates to try to support growth, and we expect the next cut at the March meeting.”
Kevin Brown, savings expert at Scottish Friendly, added: “The UK economy managed to carve out another quarter of modest growth at the end of 2025, and annual growth of 1.3% shows it has proved stubbornly resilient.
“Elevated interest rates, sticky inflation, and months of budget-related uncertainty could have been enough to stall activity altogether. Instead, growth has held up, albeit only just.
“There are early signs that once the fog around the Autumn Budget began to clear, parts of the economy regained direction, particularly across the services sector. That was enough to offset ongoing weakness in manufacturing and construction and keep the economy inching forward."
