U.K. Economy Edges Up 0.1% in December as Growth Remains Subdued

Britain’s economy recorded only a slight expansion in December, according to official figures, maintaining pressure on the Bank of England as policymakers weigh further interest rate cuts in 2026.

Data released Thursday by the Office for National Statistics showed that gross domestic product increased by 0.1% in the final month of 2025. That represented a slowdown from November’s 0.2% growth, which had itself been revised down from an initial estimate of 0.3%. November’s stronger reading had been boosted by Jaguar Land Rover’s rebound in output following disruption caused by a cyber attack.

Over the final quarter of 2025, the economy expanded by 0.1%, unchanged from the July-to-September period. For the full year, U.K. growth came in at 1.0%, slightly below the 1.1% recorded in 2024 and modest by historical standards.

Manufacturing output declined by 0.5% in December, reversing November’s 1.9% gain, which had been revised from 2.1%. The earlier surge had been supported by continued normalization at Jaguar Land Rover’s production sites after last year’s cyber incident.

“Looking ahead, we’re more positive on the U.K.’s growth outlook, with the Autumn budget proving less of a headwind to near-term economic activity than we’d originally anticipated,” said Grant Slade, an economist at investment research firm Morningstar.

“Notwithstanding, economic growth appears set to soften sequentially in 2026, consistent with the BoE’s still restrictive policy stance and weakening labor market conditions.”

Chancellor Rachel Reeves raised taxes in her Autumn budget toward the end of last year, though the increases were not as severe as some had feared.

The Bank of England kept its benchmark interest rate unchanged at its first meeting of 2026, following six reductions since August 2024. The vote was narrowly split, with four of the nine Monetary Policy Committee members backing another cut, pointing to a strong possibility of further easing at the March meeting.

Governor Andrew Bailey stressed at the accompanying press conference that inflation has fallen sharply from its peak of more than 10% three years ago, and the central bank now expects it to return to the 2% target this spring, sooner than previously anticipated.