The ONS has reported data this morning showing that the UK economy grew 0.1% in the last quarter of 2025 and 1.3% across 2025 as a whole, following growth of 1.1% in 2024. As well as describing this ‘subdued growth’, the ONS also reported that, in output terms, growth in the latest quarter was driven by an increase of 1.2% in production, while the construction sector fell by 2.1% and the services sector showed no growth.
Investment strategists have been sharing their reaction to the latest GDP data saying:
Danni Hewson, AJ Bell head of financial analysis, comments:
“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 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.”
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.”
Lindsay James, investment strategist at Quilter:
“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.
“On an annual basis, GDP is estimated to have grown by 1.3% in 2025, up slightly from 1.1% in 2024 and slightly ahead of overall expectations. However, today’s print was supposed to give a clear picture of the UK’s growth last year, but we have instead been left with the ONS opening January to November 2025 to further revisions. Regardless, it is clear the economy is very fragile.
“The Christmas period was weak by historical standards, and that is laid bare in today’s data. The services sector, which had previously been noted as the largest contributor, showed no growth and its impact was revised down from 0.2% to nothing in the three months to November too. Surprisingly, production output grew by 1.2%, having fallen by 0.1% in the three months to November, but it was outweighed by a fall of 2.1% in the construction sector which followed a 0.9% fall previously.
“While the picture is rather bleak at the moment, some optimism is warranted if inflation falls. Should it come back down to the Bank of England’s 2% target, the door could open to more significant rate cuts later in the year.
“We should now be reaching a place where peak uncertainty is behind us, and businesses are better able to plan for the post budget and post trade deal world. However, the well flagged leadership challenge – which headlines would have us believe is fast becoming a case of when rather than if – risks derailing that. Should that materialise and we see a lurch to the left, it could result in higher spending, higher taxes and even weaker growth. Only time will tell how it plays out.”
