UK GDP 2025: 1.3% Misses Forecasts; 2026 Looms Dismal Decade Amid Stagnant Q4

UK GDP expanded 1.3pc in 2025, missing OBR and IMF forecasts and on track for its weakest decade of growth in 100 years. Output grew just 0.1pc in the final quarter, down from 0.2pc forecast, with services flat and construction off its best in over four years. Real GDP per capita rose 1pc year-on-year but fell in Q3 and Q4. Business investment contracted 2.7pc in Q4 as policy uncertainty, higher taxes and steepling costs weighed, while government consumption rose 0.4pc to prop growth. Productivity edged up in the year, with underlying productivity showing tentative improvement. The Bank of England is likely to cut interest rates in March, with a 73pc chance of a 25bp move to 3.5pc amid muted momentum and ongoing political uncertainty. Traders price in a 2026 growth outlook below 2025’s 1.3pc, citing little-to-no disposable income growth, weak business confidence and tighter policy. Consumer spending rose 1pc in 2025, supported by higher outlays on travel and some categories, while energy prices easing and inflation easing are expected to lift 2026 consumption.