UK economic growth remained weak at the end of 2025, with output rising just 0.1% in the final quarter, slower than economists expected.
Month-on-month growth in December also came in at 0.1%, according to the Office for National Statistics, while November’s growth was revised down to 0.2%.
This meant Q4 growth was below the 0.2% average forecast and 0.1 percentage points shy of the Bank of England’s call. Year-on-year growth slowed to 1.0% from 1.2% in Q3.
December’s detail was mixed. Manufacturing output fell 0.5% on the month as November’s rebound, linked to parts of the automotive supply chain recovering from the Jaguar Land Rover cyberattack, faded. Industrial production was the weakest area overall.
By contrast, services output rose 0.3%, led by transport, hospitality and administrative services.
Across the quarter, household spending rose 0.2% but business investment fell 2.7%. Construction also dropped 2.1%.
Some economists argue the second half may understate underlying momentum due to residual seasonality in the data.
The EY ITEM Club said private sector demand remained "modest” in Q4 but expects growth to pick up in the first quarter.
"Although growth is expected to pick up in Q1, 2026 is likely to be another year of sluggish UK growth. Ongoing uncertainty and weak profitability are likely to weigh on business sentiment and investment spending. Meanwhile, continued fiscal tightening and slowing real income growth will present powerful headwinds to growth," he said.
Economists at ING said "growth has become suspiciously seasonal", with the first half of the year looking much stronger than the second every year since 2022.
"Though hard to pin down, we suspect it’s partly down to higher inflation, the prevalence of price hikes early on in the year, which are not being fully adjusted for in the deflator/seasonal adjustment process somewhere along the line.
"There’s no reason to think this trend will stop in 2026 and if for no other reason, we suspect we’ll get a bit of a bounce back in Q1 GDP."
Pantheon Macroeconomics forecast 0.4% quarter-on-quarter growth in Q1, saying strengthening business sentiment since the New Year as uncertainty fell back points to GDP growth accelerating.
"Output needs to grow just 0.1% month-to-month through Q1 for quarterly growth to match the MPC’s estimate of 0.3% quarter-to-quarter, but business surveys suggest monthly growth can exceed that low bar.
"What’s more, any residual seasonality in the data also favours a Q1 rebound."
Pantheon said the data did "little to dissuade MPC doves from pushing ahead with a rate cut in March, but we think economic momentum will make March the last MPC cut of this cycle".