UK economy expands 0.1% in fourth quarter

12th Feb 2026 07:36

(Sharecast News) - The UK economy grew by just 0.1% in the final months of 2025, official data showed on Thursday, as the services sector stagnated.

According to the Office for National Statistics, the 0.1% uptick was unchanged on the third quarter. Expectations for the fourth had ranged from 0.1% to 0.2%.

In output terms, growth was driven by a 1.2% increase in production, including a 0.9% improvement in manufacturing. But that was offset by a 2.1% slide in construction - its largest fall in more than four years - and no growth in the dominant services sector.

It is the first time there has been no growth in services GDP for two years.

In December, GDP rose 0.1% following downwardly revised growth of 0.2% November. Over 2025 as a whole, GDP is estimated to have increased by 1.3%, up from 1.1% in 2024.

Liz McKeown, director of economic statistics at the ONS, said there had been growth across all the main sectors during 2025.

She continued: "Initial estimates show GDP per head was up on the previous year, despite it contracting slightly in each of the last two quarters."

Danni Hewson, head of financial analysis at AJ Bell, said: "The service sector 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.

"Building back Britain has been at the heart of the government's plans, but rhetoric and the promise of change are not enough when they are undermined by instability and questions."

Matt Swannell, chief economic advisor to the EY Item Club, said: "Overall growth estimates in the second half of the year probably understate the underlying strength of the UK economy. In recent years, the economy has regularly lost momentum in the middle of the year, before regathering pace...indicating that the activity estimates from the ONS continue to suffer from residual seasonality.

"Early indications are that growth will pick up in the first quarter of this year, boosted by that residual seasonality."

However, Swannell acknowledged that growth was still likely to be "sluggish" throughout 2026 as a whole, as uncertainty and weak profitability weighed on business sentiment and investment.

Ben Jones, senior lead economist at the Confederation of British Industry, said businesses had experienced a number of headwinds last year, including uneven demand, rising costs and persistent uncertainty.

He said: "Growth leant heavily on public spending. The challenge now is to get the private sector firing too. That depends both on households feeling able to spend more freely and on determined action to remove blockers to investment."