As the UK approaches the revelation of its latest GDP figures, economists anticipate a slight growth in the economy during the last quarter of 2025. With the Office for National Statistics (ONS) set to publish the data on 12 February, market analysts project a modest 0.1% increase in GDP, despite ongoing concerns regarding the national Budget.
A Mixed Economic Picture
In the lead-up to the ONS announcement, experts have noted a mixed economic landscape. Following a pattern of financial fluctuations, the economy recorded a 0.1% growth in the three months leading up to September, followed by a brief dip in October of the same magnitude. November, however, saw a rebound, with a 0.3% increase spurred by a resurgence in manufacturing, particularly at Jaguar Land Rover, which recovered from a significant cyberattack.
While December is expected to show stagnation, predictions vary. Pantheon Macroeconomics estimates no growth for the final month of the year, reflecting concerns over weak performance in the construction sector, as indicated by the construction industry’s PMI data. This report highlighted a persistent downturn in housing, commercial construction, and civil engineering.
Budget Clarity and Consumer Spending
Despite the challenges, there are glimmers of hope. Some economists believe that the clarity following the autumn Budget may have positively impacted consumer spending as the holiday season approached. Victoria Scholar, head of investment at Interactive Investor, noted that the end of the Budget uncertainty could have led to increased economic activity. “It is likely that economic activity picked up after the Budget once that cloud of uncertainty shifted to the rear view mirror in December,” she commented, emphasising potential growth in sectors such as food, retail, and hospitality.
Robert Wood, chief UK economist at Pantheon Macroeconomics, echoed this sentiment, suggesting that GDP growth could potentially reach 0.2% due to improved activity in service sectors. However, he maintained a conservative estimate of 0.1%, indicating that while the Budget’s impact is diminishing, the overall growth outlook remains subdued.
The Broader Economic Context
The broader economic context reveals a cautious outlook. The Bank of England recently adjusted its growth estimates, lowering its 2025 growth forecast from 1.5% to 1.4%, and revising its projections for 2026 and 2027 down to 0.9% and 1.5% respectively. These adjustments reflect ongoing economic challenges and a need for sustained recovery efforts.
Why it Matters
The anticipated GDP figures are crucial for understanding the UK’s economic trajectory as it grapples with post-pandemic recovery and Budget-related uncertainties. A modest growth rate, although positive, signals the need for strategic measures to bolster economic confidence and ensure robust consumer spending. As businesses and policymakers navigate this complex landscape, the forthcoming data will provide essential insights into the health of the UK economy and its potential for future growth.
