The UK economy expanded by 1.0% year-on-year in the fourth quarter of 2025, slowing from 1.2% in the previous quarter and slightly undershooting market expectations of 1.2%, according to preliminary estimates. It marked the weakest annual growth rate since the second quarter of 2024. The softer reading capped a challenging year for the economy, which grappled with significant tax increases, trade tensions linked to US President Donald Trump’s policies, and a major cyberattack on the country’s largest car manufacturer. Business and consumer confidence also remained subdued toward year-end ahead of Chancellor of the Exchequer Rachel Reeves’ November 26 budget. Both the services and production sectors grew by 1.0% in Q4, while construction posted a modest 0.2% increase. For 2025 as a whole, the economy expanded by 1.3%, slightly above the 1.1% growth recorded in 2024.
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