Latest GDP figures show modest expansion as markets weigh timing of rate cuts
The UK economy grew by 0.1% in the final quarter of 2025, according to the Office for National Statistics, marking a weak but positive end to the year.
For 2025 as a whole, gross domestic product increased by 1.3%, up from 1.1% in 2024. Monthly gross domestic product (GDP) rose 0.1% in December, after 0.2% growth in November and a 0.1% fall in October.
The quarterly figures underline an uneven picture. Services output was flat in the three months to December, while production rose 1.2%, helped by recovering output at Jaguar Land Rover after a major cyber‑attack earlier in the year. Construction fell 2.1% over the same period, its weakest three‑month performance since 2021.
“The economy continued to grow slowly n the last three months of the year, with the growth rate unchanged from the previous quarter,” Liz McKeown, ONS director of economic statistics.
“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.”
GDP grew 0.1% in Quarter 4 (Oct to Dec) 2025.
— Office for National Statistics (ONS) (@ONS) February 12, 2026
Services showed no growth (0.0%), while production grew (+1.2%) and construction contracted (-2.1%).
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Growth remains below the path projected by the Office for Budget Responsibility, which had expected GDP to rise by 1.5% in 2025 and 1.4% in 2026. Weaker activity in the run‑up to the late November budget, amid speculation over tax increases, also weighed on the outturn.
The Bank of England has held Bank Rate at 3.75% but has indicated that lower inflation, supported by cost of living measures in the budget, could allow rate cuts in the coming months.
For the mortgage industry, a gradual move towards lower rates would ease funding costs and support demand, though weak construction and flat services point to ongoing pressure on household incomes and housing supply.
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