GDP grew by 0.1% in the final quarter of 2025 – industry reaction

The UK economy grew by just 0.1% in the final quarter of 2025, according to the Office for National Statistics (ONS), matching the rate recorded in Quarter 3 (Q3).

Analysis of the data shows that Q4 marked the first time in over two years that the services sector showed no growth. Manufacturing provided a slight boost, while construction faced its worst quarterly performance in four years, declining by 2.1%. Growth in December itself was also 0.1%, following a 0.2% advance in November.

Commenting on GDP figures for Q4 2025, ONS Director of Economic Statistics Liz McKeown 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 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.

“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.”

Mike Randall, CEO at Simply Asset Finance, said “As we face yet another wave of political uncertainty, modest growth in the final quarter of 2025 underlines one resounding truth: stability and certainty are what build business confidence.

“This trust isn’t built through rhetoric, but delivery. What the UK needs now is action, and to keep building on the positive progress UK firms have made over the past year.”

“Protecting, and building on growth only emphasises the need for a cross-party commitment to back SMEs that lasts beyond election cycles. Too often small businesses are treated as a political barometer, with new parties and new promises every few years. That approach simply doesn’t drive investment; it freezes it.”

Policy Chair of the Federation of Small Businesses (FSB), Tina McKenzie, said “Small business owners looking at the GDP result for December – while being relieved that it was at least weakly positive – would be forgiven for feeling that it largely appears to have passed them by. A small uptick in a necessarily very broad figure shouldn’t disguise the tough reality being felt on the ground.

“The Autumn Budget did not do enough for small businesses and self-employed people, although it was received with some surprise and relief by large corporates, whose huge balance sheets already provide them with a cushion in difficult trading circumstances.

“The cost pressures on small businesses and self-employed people have built and built, and too many within the community are now at a very dangerous point. Late payments from large companies are exacerbating the pain they are feeling, while the prospect of a ‘costs timebomb’ hitting in April – a potentially fatal combination of higher business rates bills, hikes to standing charges on energy bills, and a higher National Living Wage – presents a moment of real danger to small firms.

“Last year was one many small business owners would prefer to forget. Confidence fell in every quarter, according to our research, ending in a post-COVID nadir of -71 points in the final three months of 2025. The sluggish performance of the UK economy was the top-cited barrier to small firms’ growth prospects across all four quarters of last year, followed by the tax burden, showing how small businesses and self-employed people are caught in a tricky spot, between low growth and rising fixed costs.

“To turn this around, more focus needs to be given by the Government to rebuilding small business confidence levels. It is small businesses and self-employed people which have helped drag the economy out of previous periods of stagnation, and it is therefore extremely concerning that huge numbers of them do not feel they are in a position to take risks in order to grow. The King’s Speech needs to include a bill to tackle the issue of late payment, which strangles the cashflow and futures of far too many ventures, while the upcoming Spring Forecast is another opportunity which could be used to announce measures to support the small business and self-employed community.”

Ben Jones, Senior Lead Economist, CBI, said “A softer-than-expected end to last year comes as little surprise given the pressures many businesses experienced throughout the year: uneven demand, rising costs and persistent uncertainty that led key hiring and investment decisions to be deferred.

“Growth last year leant heavily on public spending; the challenge now is to get private sector demand firing too. That depends both on households feeling able to spend more freely and on determined action to remove blockers to investment.

“Stability remains vitally important if we’re to build momentum across the economy and is a key part of the UK’s pitch to investors at home and abroad. However, stability alone will not give firms the confidence required to press go on critical investments that deliver growth, jobs and opportunity across all parts of the country.

“The Spring Forecast should be a critical delivery moment for the government’s growth mission. Businesses want to see government take action to speed up relief for high industrial energy costs, collaborate with firms to find appropriate landing zones for the Employment Rights Act, and make real progress on tax simplification to ease the cost of doing business.”

Simon Pittaway, Senior Economist at the Resolution Foundation, said “Once again the UK economy has had a poor performance in the second half of a year, with a promising start to 2025 drifting down to disappointing stagnation by the end.

“But overall last year was a decent one for growth, especially on the metric that matters most for people’s living standards – GDP per capita.

“The task for 2026 is for the government to double down on its growth agenda to build a sustained economic recovery that will eventually flow into people’s pay packets.”

Suren Thiru, ICAEW Economics Director, said “These figures confirm that the UK economy ended 2025 with a whimper as weaker confidence and steepling cost pressures helped limit output across the fourth quarter, including through minimal growth in December.

“Businesses had a particularly bleak quarter as the dark cloud of uncertainty caused by the Budget and higher costs severely curtailed trade and investment plans.

“The underwhelming final quarter caps off another disheartening year for the UK economy with growth tailing off unnervingly quickly after the strong start to 2025, as rising taxes, heightened uncertainty and poor productivity increasingly squeezed activity.

“The UK economy should see slightly stronger growth in this current quarter with reduced uncertainty now the Budget is in the rear-view mirror, and lower inflation likely to boost consumer spending and business activity, despite higher unemployment.

“These figures mean that a March interest rate cut remains doubtful by giving those policymakers wanting more evidence that inflation is slowing comfort over economic conditions to delay reducing rates, particularly given the elevated political uncertainty.”