{"id":759061,"date":"2026-02-12T08:23:20","date_gmt":"2026-02-12T08:23:20","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/759061\/"},"modified":"2026-02-12T08:23:20","modified_gmt":"2026-02-12T08:23:20","slug":"uk-economy-grew-by-0-1-last-quarter-despite-budget-uncertainty","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/759061\/","title":{"rendered":"UK economy grew by 0.1% last quarter despite Budget uncertainty"},"content":{"rendered":"

\"Chancellor Chancellor Rachel Reeves (PA Wire) <\/p>\n

The UK economy<\/a> grew modestly again in the last three months of 2025 amid pressure from budget uncertainty,<\/a> figures just released show.<\/p>\n

The Office for National Statistics (ONS<\/a>) said UK GDP<\/a> (gross domestic product<\/a>) data grew by 0.1 per cent in the final quarter<\/a> between October and December last year, following growth of 0.1 per cent in the third quarter.<\/p>\n

Some had suggested that fourth-quarter growth <\/a>could tip slightly higher after stronger-than-expected activity in November and that clarity following the autumn Budget could have supported firms in the run-up to Christmas.<\/p>\n

It is still expected that the first quarter 2026 will show a stronger level of growth, but meaningful and sustained economic expansion remains dependent on inflation coming down and businesses adapting to new, higher levels of costs – while unemployment also remains above 5 per cent.<\/p>\n

Previous figures from the ONS<\/a> showed that the economy<\/a> contracted by 0.1 per cent in October and then expanded by 0.3 per cent in November as the manufacturing sector was boosted by recovering production at Jaguar Land Rover after its major cyber attack.<\/p>\n

The Bank of England<\/a> on Thursday cut its growth forecast for 2026, from 1.2 per cent to 0.9 per cent, and for 2027, from 1.6 per cent to 1.5 per cent.<\/p>\n

Liz McKeown, ONS director of economic statistics, said: \u201cThe economy continued to grow slowly in the last three months of the year, with the growth rate unchanged from the previous quarter.<\/p>\n

\u201cThe often-dominant services sector showed no growth, with the main driver instead coming from manufacturing.<\/p>\n

\u201cConstruction, meanwhile, registered its worst performance in more than four years.<\/p>\n

\u201cThe rate of growth across 2025 as a whole was up slightly on the previous year, with growth seen in all main sectors.\u201d<\/p>\n

It comes after economists broadly predicted that the economy had grown by 0.1 per cent in the quarter, following growth of 0.1 per cent in the third quarter.<\/p>\n

The British Chambers of Commerce (BCC) has called for government action to back up their words to aid economic recovery, noting that small businesses are holding back on spending due to lingering fears about rising taxation and other cost pressures.<\/p>\n

Story Continues <\/p>\n

\u201cImproving the outlook now depends on restoring business dynamism. Government must move from strategy to delivery \u2013 backing infrastructure projects, speeding up planning decisions, addressing skills gaps, and strengthening export support \u2013 so firms can invest, export and grow,\u201d said the BCC\u2019s head of research, David Bharier.<\/p>\n

The Trades Union Congress (TUC) meanwhile pointed out that the year-long growth was a recent high, but general secretary Paul Nowak still urged the Bank of England to cut interest rates more quickly to stimulate spending.<\/p>\n

\"Graph Graph shows real GDP grew by 0.1 per cent in the three months to December 2025 (ONS) <\/p>\n

\u201cIt\u2019s welcome that the economy kept growing in December, and last year\u2019s growth of 1.3 per cent was the strongest for three years,\u201d he said.<\/p>\n

\u201cBut many workers are not yet feeling the benefit in their pockets. Many working families don\u2019t have any money left over to spend on the things that keep our economy moving.<\/p>\n

\u201cThis doom loop must end. Ministers must stay laser-focused on cutting working people\u2019s household costs and improving living standards this year.<\/p>\n

\u201cAnd the Bank of England must go further and faster with quickfire interest-rate cuts in the months ahead.<\/p>\n

\u201cBritain needs to finally move on from the cost-of-living crisis that\u2019s kept us stuck for too long \u2013 the priority must be helping families to spend and businesses to invest.\u201d<\/p>\n

Victoria Scholar, head of investment at Interactive Investor, said: \u201cit is likely that economic activity picked up after the budget once that cloud of uncertainty shifted to the rearview mirror in December.<\/p>\n

\u201cPlus, there could have been an improvement in the services sector with consumers spending on things like food and beverages, retail, and hotels around the festive season.\u201d<\/p>\n

Sandra Horsfield, at Investec Economics, said: \u201cThe big picture is that the UK economy had defied the gloomy popular narrative and outperformed expectations during 2025 \u2013 our forecast equates to GDP<\/a> growth of 1.4 per cent for the full year, whereas the consensus forecast in January 2025 had been for 1.2 per cent GDP growth.<\/p>\n

\u201cWe project a similar story of resilience and outperformance relative to consensus for 2026, as utilities investment and, eventually, housebuilding accelerate \u2013 the latter with a little help from further falls in interest rates too.<\/p>\n

\u201cThe consensus forecast for this year is 1 per cent, against our own forecast of 1.3 per cent.\u201d<\/p>\n

However, RMS UK\u2019s chief economist Thomas Pugh cautioned that there was an overriding factor which could hamper such optimistic predictions – \u201cnoisy leadership\u201d from within government.<\/p>\n

\u201cLooking ahead, all the signs are that growth is now picking up sharply as budget uncertainty recedes. We expect growth to come in at around 0.5 per cent in the first three months of this year and the impact of previous rate cuts and sharp falls in inflation should start to show up as stronger consumer spending later in the year,\u201d he said.<\/p>\n

\u201cThe biggest risk now is that a protracted and noisy leadership contest which could reopen Pandora\u2019s box of tax increases and inject a renewed bout of uncertainty into consumers and businesses, offsetting much of the improvement in the economic fundamentals.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Chancellor Rachel Reeves (PA Wire) The UK economy grew modestly again in the last three months of 2025…\n","protected":false},"author":2,"featured_media":759062,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[3,4],"tags":[748,393,4884,35862,1144,15165,24164,712,16,15,1764],"class_list":["post-759061","post","type-post","status-publish","format-standard","has-post-thumbnail","category-uk","category-united-kingdom","tag-britain","tag-england","tag-great-britain","tag-manufacturing-sector","tag-northern-ireland","tag-office-for-national-statistics","tag-ons","tag-scotland","tag-uk","tag-united-kingdom","tag-wales"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/116056700091071237","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/759061","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=759061"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/759061\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/759062"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=759061"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=759061"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=759061"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}