Westminster, South Bank, London, England.
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The U.K. economy grew a meager 0.1% in the fourth quarter, according to preliminary figures from the Office for National Statistics on Thursday.
Economists polled by Reuters expected the economy to have grown 0.2% over the October-December period, following 0.1% growth in the third quarter.
Month-on-month, the economy expanded 0.1% in December, down from a 0.2% expansion, revised down from 0.3%, the previous month. Pound sterling was flat against the dollar following the data, at $1.3624.
The ONS’ Director of Economic Statistics Liz McKeown said the latest data showed a mixed economic picture.
“The often-dominant services sector showed no growth, with the main driver instead coming from manufacturing. Construction, meanwhile, registered its worst performance in more than four years,” she said on X Thursday.
The U.K. economy is estimated to have grown 1.3% in 2025, the ONS noted, following growth of 1.1% in 2024.
The growth figures come after the Bank of England voted narrowly at its early February meeting to keep interest rates on hold, at 3.75%, given persistent inflationary pressures.
Those pressures are expected to ease in the coming months, however, and economists predict that the central bank could next cut rates in April to stimulate the lackluster British economy.
Samuel Edwards, head of Client Portfolio Management at financial services firm Ebury, noted that the U.K. had ended 2025 on a positive note, “albeit a very modest one.”
“After a very turbulent week in UK politics and a wave of market jitters, businesses will be pleased to have a slither of positive economic news,” he said.
“However, whilst the U.K. economy keeps its head above water, concerns remain around the slowing jobs market and sticky inflation,” he remarked in emailed comments.
Scott Gardner, investment strategist at J.P. Morgan Personal Investing, commented Thursday that after a mixed bag in the final quarter, recent data hints that the U.K. economy is due a recovery in 2026.
“Manufacturing activity picked up in the first month of the year while the services industry has seen a decent influx of new business activity. The hope is that this progress can grease the wheels of the economy and lead to an improved outlook and performance over 2026.”
