LONDON (AP) – Britain’s economy barely grew in the final three months of 2025, official figures showed Thursday, with critics blaming uncertainty over the government budget for weaker-than-expected business investment and spending.
The UK economy, the world’s sixth largest by many measures, grew by just 0.1% on a quarterly basis, the same rate of growth recorded in the third quarter, according to the Office for National Statistics.
The economic growth rate was 1.3% for the year as a whole, up from 1.1% the previous year. This would be the highest annual growth rate since 2022.
economists said Uncertainty ahead of Labor government’s budget As of late November, businesses and consumers were taking a wait-and-see attitude.
For much of this period, there were expectations that Treasury Secretary Rachel Reeves would break her key promise not to raise income tax levels. After all, The tax increase was much more modest than expected..
Suren Thiru, economics director at accountancy group ICAEW, said: “After a strong start to 2025, the UK economy ended another disappointing year with an underwhelming final quarter as growth slowed at an alarmingly rapid rate, with activity increasingly squeezed by higher taxes, heightened uncertainty and lower productivity.”
Some recent economic indicators suggest that growth will accelerate in the first half of 2026. However, growth is not expected to rise dramatically for the full year. The Bank of England last week cut its growth forecast for the next two years from 1.2% to 0.9% in 2026 and from 1.6% to 1.5% in 2027.
Britain’s Labor government, which has lost significant support since winning the 2024 general election due in part to the economy, is hoping the Bank of England will cut its key interest rate by another quarter of a point to 3.50% in March, as growth is expected to slow and inflation to fall sharply this year. The bank kept it for me last week. unchanged at 3.75%.
“The challenge in 2026 is for governments to double down on their growth agenda to build a sustained economic recovery that will ultimately trickle down to people’s paychecks,” said Simon Pittaway, senior economist at the Resolution Foundation think tank.
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This version corrects the first paragraph to refer to the last three months of 2025 instead of 2026.
