UK economy shows modest growth of 0.1% amid ongoing budget uncertainty

The UK economy has seen an expansion of 0.1% in the final three months of last year in line with recently released figures. The Office for National Statistics (ONS) indicates that the economy grew at the same rate of 0.1% as the previous quarter. Annual growth reached by 1.3% in 2025 following an improvement from 1.1% in 2024. Meanwhile, the ONS was of the view that it grew by 0.1% on a monthly basis in December, slowing from a revised 0.2% in November.

In this regard, Liz McKeown, the 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 UK economy progressed moderately well in the first half of 2025 with growth of 0.7% in the first quarter and 0.3% in the second quarter.

Later on, the resulting economy was affected by the cyber-attack on Britain’s biggest carmaker, Jaguar Land Rover, which reduced automotive production and led to minimal growth in the third quarter. The Office for Budget Responsibility had forecast GDP growth to be 1.5% in 2025 and 1.4% in 2026. In line with the government's forecaster's expectations, the economy is growing at an annual pace of 1.5% up to 2030.

In this connection, Liz McKeown, ONS director of economic statistics said: “The economy continued to grow slowly in the last three months of the year, with the growth rate unchanged from the previous quarter."

All the signs are that growth is now picking up sharply ahead of the next Budget. We expect growth to come in at around 0.5 per cent in the first three months of this year, driven by the impact of previous rate cuts and sharp fall in inflation.

Sandra Horsfield at Investec Economics said: “The big picture is that the UK economy had defied the global gloomy narrative and outperformed expectations during 2025-forecast equates to GDP growth of 1.4% for the full year, whereas the consensus forecast in January 2025 had been for 1.2% CDP growth.” as reported by The Independent.

On Wednesday, Chancellor Rachel Reeves-who emphasized that Labour could win the political argument for a closer relationship with the EU said: “The government has the right economic plan to build a stronger, more secure economy, cutting the cost of living and creating the conditions for growth and investment in every part of the country.”