UK economy ekes out 0.1% growth in the fourth quarter

The United Kingdom’s economy experienced minimal growth of 0.1% in the fourth quarter of the year, as reported by the Office for National Statistics. This figure fell short of economists’ expectations, who had anticipated a growth of 0.2% following a 0.1% increase in the previous quarter.

In December, the economy expanded by 0.1%, a slight decrease from the 0.2% growth seen in the previous month. The pound sterling remained steady against the dollar at $1.3624 following the release of the data.

Liz McKeown, the Director of Economic Statistics at the ONS, described the economic landscape as mixed. While the services sector showed no growth, manufacturing emerged as the main driver of the economy. However, the construction sector recorded its weakest performance in over four years.

The ONS estimated that the UK economy grew by 1.3% in 2025, compared to 1.1% growth in the previous year. The Bank of England decided to maintain interest rates at 3.75% in early February due to persistent inflationary pressures. However, there are expectations that the central bank may reduce rates in April to stimulate the sluggish British economy.

Samuel Edwards, head of Client Portfolio Management at financial services firm Ebury, viewed the end of 2025 as a modestly positive period for the UK economy. Despite some positive economic indicators, concerns linger regarding the slowing job market and persistent inflation.

Investment strategist Scott Gardner from J.P. Morgan Personal Investing expressed optimism about a potential economic recovery in 2026. He noted an increase in manufacturing activity and new business ventures in the services industry, which could lead to an improved economic outlook and performance in the upcoming year.

Overall, the UK economy’s performance in the last quarter of 2025 sets the stage for potential growth and recovery in the year ahead.