<\/p>\n
The UK economy expanded by 0.1% in the final three months of last year, according to official data, despite signs that tax speculation around Rachel Reeves\u2019s budget had dampened spending.<\/p>\n
Figures from the Office for National Statistics<\/a> (ONS) show that the economy grew at the same rate of 0.1% as the previous three months. Economists had been expecting a rise of 0.2%.<\/p>\n The economy grew by 1.3% in 2025, an improvement on growth of 1.1% in 2024. The ONS said it grew by 0.1% on a monthly basis in December, slowing from 0.2% in November \u2013 a figure that was revised down from 0.3%<\/a>.<\/p>\n The rise came despite there being no growth at all in the dominant services sector, which makes up about 80% of the economy. Growth in the economy was instead driven by the production sector, up by 1.2%, while the construction industry shrank 2.1%.<\/p>\n Liz McKeown, the director of economic statistics at the ONS, said: \u201cThe economy continued to grow slowly in the last three months of the year, with the growth rate unchanged from the previous quarter.<\/p>\n \u201cThe 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.\u201d<\/p>\n The smaller-than-expected rise came after consumer and business surveys suggested economic activity had slowed in the run-up to the late November budget, as households held off spending and companies delayed investment decisions amid speculation that the chancellor would implement significant tax rises.<\/p>\n The data is a fillip for Reeves, who hopes an economic turnaround will help Labour\u2019s fortunes.<\/p>\n The UK economy fared relatively well in the first half of 2025, with growth of 0.7% in the first quarter and 0.3% in the second quarter. However, economic output was then hit by the cyber-attack on Britain\u2019s biggest carmaker, Jaguar Land Rover<\/a>, which depressed vehicle production and led to the minimal growth in the third quarter.<\/p>\n The Office for Budget Responsibility had forecast GDP growth<\/a> to be 1.5% in 2025 and 1.4% in 2026. The government\u2019s official forecaster expects the economy to grow at annual pace of 1.5% up to 2030, partly because of low productivity growth.<\/p>\n Bank of England policymakers left interest rates unchanged at 3.75% last week<\/a> but indicated that lower inflation as a result of cost of living measures in Reeves\u2019s budget should pave the way for cuts in the months ahead.<\/p>\n