By Obinna Uballa
The United Kingdom economy grew just 0.1% in the third quarter of 2025, according to preliminary figures from the Office for National Statistics (ONS), falling short of economists’ expectations of 0.2% growth and marking a slowdown from the 0.3% expansion recorded in Q2.
Month-on-month, the economy contracted by 0.1% in September, following no growth in August, which was revised down from a previously reported 0.1% rise, CNBC reported.
“Growth slowed further in the third quarter, with both services and construction weaker than in the previous period. There was also a further contraction in production,” said Liz McKeown, ONS Director of Economic Statistics.
Manufacturing was a key drag on growth, with Jaguar Land Rover’s five-week production halt due to a cyberattack cited as a major disruption. McKeown also highlighted declines in the pharmaceutical sector.
Budget Ahead: Boost or Blow?
The weak GDP print, according to the report, comes ahead of the Autumn Budget on November 26, where Finance Minister Rachel Reeves is expected to announce new tax measures aimed at closing the fiscal deficit.
“At my Budget later this month, I will take the fair decisions to build a strong economy that helps us continue to cut waiting lists, cut the national debt, and cut the cost of living,” Reeves said, according to CNBC.
Analysts warn that the proposed tax hikes could dampen consumer spending and services activity, potentially limiting growth in 2026. However, the Bank of England may provide support if it cuts interest rates at its final policy meeting of the year on December 18.
Scott Gardner, investment strategist at JPMorgan Personal Investing, said: “Boosting housing market activity is key to unlocking sustained growth. With tax rises all but confirmed, consumption and services spending could face headwinds next year.”
Amanda Blanc, CEO of Aviva, noted that businesses and consumers are eager for clarity: “The Budget can’t come soon enough. You can deal with certainty, what you can’t deal with is speculation.”
The Bank of England held rates steady at its last meeting, with Governor Andrew Bailey signalling that further inflation and labor market data would guide decisions.
Rob Wood, Chief UK Economist at Pantheon Macroeconomics, said the MPC is likely to cut rates in December regardless of the GDP outcome, as fiscal tightening from the upcoming Budget is expected to dominate economic conditions.
“Growth is proving resilient, running close to the UK’s potential of 0.3% quarter-to-quarter despite strong headwinds from fiscal and global uncertainty,” Wood added.
