GDP stagnated in January. Peripheral sectors (construction and agriculture) reported positive monthly growth while services registered zero growth and production showed a second consecutive monthly contraction.

• We continue to expect GDP growth of 0.3 per cent in the first quarter of 2026, driven by a recovery in activity in services and production.
• We expect the impact of elevated energy prices on growth to be limited in the first quarter, but if energy prices remain elevated for the rest of the year it could reduce GDP growth by around 0.2 percentage points in 2026.
• “GDP did not grow in January, despite surveys pointing to a revival in business sentiment early in the New Year. Services stagnated while production entered its second month of contraction. This is a worrying start to the quarter, given that the early-year improvement in business confidence is likely to be short-lived as global disruption linked to the Iran War hits the UK economy. We expect the impact on growth in the first quarter to be limited, but if energy prices remain elevated for the rest of the year it could reduce GDP growth by around 0.2 percentage points in 2026.”

GDP growth was 1.3 per cent in 2025, driven by investment and government consumption. Private consumption growth was weak last year, while net trade weighed on growth.

• Growth in the fourth quarter of last year was driven by the production sector, which saw strong outturns earlier in the quarter. Services showed no growth while construction saw the largest quarterly contraction since mid-2021.
• We expect GDP growth to be 0.3 per cent in the first quarter of 2026, consistent with survey evidence that business activity picked up at the start of the year. We expect services to drive growth this quarter.
• NIESR: “Today's GDP figures show that growth in 2025 was 1.3 per cent, coming in slightly below expectations. The fourth quarter only just scraped together a positive growth figure, with services disappointingly showing no growth. That said, surveys point toward a recovery in business sentiment in the New Year after months of damaging speculation in the run up to the Autumn Budget. With the Spring Statement upcoming in March, the Chancellor should look to support this change in sentiment by avoiding a repeat of last year and refrain from further policy changes.”

GDP rose 0.1 per cent in the three months to November with broad-based growth in services of 0.2 per cent offsetting weakness in manufacturing and construction.

• On a monthly basis, GDP rose by 0.4 per cent in November. This marks a rebound in growth following a monthly fall in GDP by -0.2 per cent in October. While manufacturing also saw strong rebound in terms of monthly growth, the construction sector continued to contract, falling by -1.3 per cent in November.
• With an uptick across all PMIs following in December, there are some early signs of a pickup in confidence following the prolonged period of caution in the run up to the 2025 Budget.
• Following the poor start to 2025 Q4, GDP growth in November performed better than expected due to strong service sector performance. In 2026, we forecast the service sector to continue to support growth while manufacturing and construction are set to stagnate.

GDP fell by 0.1 per cent in the three months to October. The contraction was broad-based, with zero growth in services and falling activity in production, construction, and agriculture.

• On a monthly basis, GDP fell by 0.1 per cent in October. GDP has now been falling in every month since June. Services contracted by 0.3 per cent while construction fell by 0.6 per cent – its sharpest contraction in a year-and-a-half. Growth in the production sector offset some of these effects, reporting 1.1 per cent growth for the month.
• Survey data indicates ongoing weakness in November, with businesses reporting that pre-Budget uncertainty resulted in delayed investment and weakened consumer sentiment. The upshot is that conditions could improve in December now that the Budget has passed.
• Following the poor start to the quarter, we expect GDP to show no growth in the fourth quarter, underpinned by stagnation in services and falling GDP in production, construction, and agriculture.

Coming in below forecast, GDP grew by 0.1 per cent in the third quarter. This was driven by growth in services and construction, offsetting a fall in production output. GDP growth in the third quarter largely reflects base effects from uneven growth in the second quarter.

• GDP contracted by 0.1 per cent in September. The growth figure for August was revised down from 0.1 per cent to 0.0 per cent. The contraction in September reflects a decline in production sector activity, which offset growth in services and construction
• The average month-on-month growth rate in the third quarter was -0.1 per cent, consistent with weak market conditions reported across business surveys. However, the factors behind September’s contraction may prove temporary, as survey data points to an uptick in production activity in October, supported by the restart of production at Jaguar Land Rover.
• We expect GDP to grow by 0.2 per cent in the fourth quarter, bolstered by growth in the services sector. Elevated uncertainty among businesses and households continue to pose downside risks to this forecast.

As forecast, GDP grew by 0.3 per cent in the three months to August. This was driven by growth in services, construction, and agriculture over the three-month period which offset falling production output.

• GDP grew by 0.1 per cent in August – slightly below our forecast of 0.2 per cent. The aggregate growth figure for July was revised downwards to show a 0.1 per cent contraction. Limited growth in August reflects another stagnant month for services while positive growth in production was partly offset by falling construction activity.
• August’s disappointing monthly growth outturn is consistent with high-frequency indicators and survey data, which highlight fragile demand conditions and continued uncertainty among businesses and households.
• We expect GDP to grow by 0.3 per cent in the third quarter – a downward revision from our previous forecast. We have an early projection of 0.4 per cent growth in the fourth quarter of this year. Elevated uncertainty among businesses and households continue to pose downside risks to this forecast.
• NIESR: "In line with our forecast GDP grew by 0.3 per cent in the three months to August, though the monthly figure was slightly weaker than expected. Early indicators for September point to limited growth in the third quarter. The economy has slowed over the course of the year, after a difficult summer for businesses. Regaining momentum hinges on restoring business confidence and reducing uncertainty, which the government can support by setting aside a larger fiscal buffer in the upcoming Budget.”

GDP grew by 0.0 per cent in July – slightly below our forecast of 0.1 per cent. This comes after the positive surprise of 0.4 per cent growth in June. Limited growth in July reflects a stagnant month for services and a reduction in production activity. The contraction in production was driven by weakness in manufacturing while services exhibited limited growth across sub-sectors.

• As forecast, GDP grew by 0.2 per cent in the three month to July driven by growth in services which offset falling production output. Construction and agriculture also grew in the three months to July.
• July’s mediocre growth outturns are consistent with high-frequency indicators and survey data, which point to continued uncertainty among businesses and uneven momentum across sectors.
• We expect GDP to grow by 0.4 per cent in the third quarter, as we forecast better monthly growth outturns for August and September. However, elevated uncertainty among businesses and households continue to pose downside risks to this forecast.

The June growth figure pushed GDP growth up to 0.3 per cent in the second quarter of this year. Growth across the second quarter was mixed, with the April correction for brought-forward activity ahead of US tariffs providing a weak start which was followed by a recovery in services but continued contraction in production and construction sectors.

• We expect GDP to grow by 0.5 per cent in the third quarter – a slight upward revision from our early projection of 0.4 per cent last month. Despite this upward revision, elevated uncertainty among businesses and weak private consumption pose downside risks to this forecast. We also think that the Chancellor will have to tighten fiscal policy in the Autumn, and that speculation over such policy changes will weigh on economic activity in the coming months.
• “GDP growth was slightly higher than forecast, recording 0.4 per cent in June owing to stronger-than-expected growth in services and construction. The economy therefore grew by 0.3 per cent in the second quarter. Despite this positive surprise, we expect growth to remain subdued in the third quarter of this year as uncertainty over fiscal policy and international trade continues to weigh on economic activity. As outlined in our recent UK Economic Outlook, the Chancellor must build a substantial fiscal buffer in the Autumn Budget to avoid uncertainty plaguing growth into next year.”

Monthly GDP fell by 0.1 per cent in May, following a contraction of 0.3 per cent in April, mainly caused by a significant decline in the production and construction sectors.

• Recent indicators suggest the growth outlook remains fragile, with momentum uneven across sectors. Persistent falls in hiring and subdued investment point to ongoing caution among households and businesses.
• Based on the latest survey data and business sentiment, we continue to project GDP growth of 0.2 per cent in the second quarter of 2025. However, fragile demand conditions and persistently weak private investment are likely to limit the strength of growth this year.
• The Chancellor’s fiscal headroom remains limited by historically high levels of public borrowing and debt. Her spending plans now hinge heavily on reviving economic growth, underscoring the urgent need for credible reform to stimulate business investment.
• NIESR: “Today’s growth figure of -0.1 per cent in May following April's contraction indicates that the UK’s economic outlook remains fragile. Failure to implement the planned spending cuts has further eroded the UK's fiscal space and its ability to respond to future shocks. Combined with depressed hiring intentions and strained public finances, growth prospects remain muted in the medium term. With fiscal space increasingly constrained, the Chancellor faces hard trade-offs this autumn budget, having to raise taxes or cut spending to meet her self-imposed rules"