UK Economy Records Modest Expansion in Final Quarter of 2025
The British economy demonstrated a slight acceleration in growth during the fourth quarter of 2025, according to the latest official data released this morning. The figures provide a crucial assessment of the Labour government's economic performance during its first full calendar year in power.
Quarterly and Monthly Growth Figures
Gross domestic product expanded by approximately 0.2% during the October-December period, marking an improvement from the 0.1% growth recorded in the previous quarter. This quarterly performance was heavily influenced by Chancellor Rachel Reeves's November budget, which economists had been closely monitoring for its economic impact.
In December alone, the economy grew by 0.1%, representing a slowdown from November's more robust 0.3% expansion. The stronger November performance was largely attributed to the recovery of automotive manufacturer JLR following a significant cyber attack that had temporarily disrupted operations earlier in the quarter.
Annual Economic Performance
For the entire year of 2025, the UK's annual growth rate reached 1.2%, according to a Reuters poll of economists. While this figure remains modest by historical standards, it represents a slight improvement over 2024's growth rate of 1.1%.
Grant Slade, an economist at investment research firm Morningstar, provided context for these developments. "We can expect to see annual economic growth of about 1.5% in 2025 for the UK economy," Slade noted. "Activity rebounded in the fourth quarter as a cyber-attack at a major auto manufacturer halted operations, sharply impacting the transport equipment sector in the quarter prior."
Economic Outlook and Analysis
Looking forward, Slade expressed cautious optimism about Britain's economic prospects. "We're more positive on the UK's growth outlook, with the Autumn budget proving less of a headwind to near-term economic activity than we'd originally anticipated."
However, the economist also highlighted potential challenges ahead. "Notwithstanding, economic growth appears set to soften sequentially in 2026, consistent with the Bank of England's still restrictive policy stance and weakening labour market conditions."
Today's Economic Calendar
The GDP release was part of a broader slate of economic data published today:
- 7am GMT: UK GDP report for December and Q4 2025
- 7am GMT: UK trade report for December
- 9am GMT: International Energy Agency oil market report
- 1.30pm GMT: US initial jobless claims report
These figures collectively provide a comprehensive picture of both domestic and international economic conditions as policymakers and investors assess the trajectory of recovery and growth.
