Brits get poorer beneath Labour’s ‘no progress’ technique: Economy successfully flatlining with GDP per head falling for final six months – as Budget chaos and tax ache crushes companies

Brits have suffered six months of getting poorer amid chaos over Labour’s Budget and tax hikes.

Official figures showed GDP effectively flatlining in the final quarter of 2025, with just 0.1 per cent expansion.

But even that minimal progress masked a bleak picture, with activity now seen as having gone into reverse in the three months to November – the lead-up to Rachel Reeves delivering her fiscal package. 

Worryingly for the government, construction output showed its worst performance since 2021, dropping by 2.1 per cent in the quarter. The crucial services sector stalled entirely. 

It seems the limited growth recorded by the ONS was only down to immigration driving up the population. On a per head basis, GDP fell by 0.1 per cent in the latest quarter, following an equivalent decline in the previous three month period.

The fourth quarter figures means the economy grew by 1.3 per cent overall in 2025, up from 1.1 per cent in 2024 and the highest growth since 2022 – but lower than the 1.4 per cent expected by the Bank of England and most economists.

Chancellor Rachel Reeves said: ‘Thanks to the choices we have made, we’ve seen six interest rate cuts since the election, inflation falling faster than predicted and ours is the fastest growing G7 economy in Europe.

‘The Government has the right economic plan to build a stronger and more secure economy, cutting the cost of living, cutting the national debt and creating the conditions for growth and investment in every part of the country.’

Official figures showed GDP effectively flatlining in the final quarter of 2025, with just 0.1 per cent expansion

On a per head basis, GDP fell by 0.1 per cent in the latest quarter, following an equivalent decline in the previous three month period

Real GDP is estimated to have increased by 0.1 per cent in the fourth quarter of last year

Chancellor Rachel Reeves leaves 11 Downing Street in London on February 4

It follows a volatile end to 2025 for the British economy, with output declining by 0.1 per cent in October and then rebounding by a downwardly revised 0.2 per cent in November as the manufacturing sector was boosted by recovering production at Jaguar Land Rover after its major cyber attack.

Budget uncertainty added to pressure in the quarter, with the long lead-up and rumours over the level of tax cuts widely seen holding back growth ahead of the November 26 fiscal event.

ONS director of economic statistics Liz McKeown said: ‘The economy continued to grow slowly in the last three months of the year, with the growth rate unchanged from the previous quarter.

‘The often-dominant services sector showed no growth, with the main driver instead coming from manufacturing. Construction, meanwhile, registered its worst performance in more than four years.

‘The rate of growth across 2025 as a whole was up slightly on the previous year, with growth seen in all main sectors. Initial estimates show GDP per head was up on the previous year despite it contracting slightly in each of the last two quarters.’

Eight out of 14 services subsectors contributed positively to growth in the final quarter of 2025

Growth in nominal GDP was mainly driven by a rise in pay of employees in the final quarter

Seven out of 13 manufacturing subsectors contributed positively to growth in the final quarter

Real GDP per head is estimated to have fallen by 0.1 per cent in the final quarter of last year

The figures showed the UK’s dominant services sector flatlined in the fourth quarter with zero growth, while production expanded by 1.2 per cent and construction fell by 2.1 per cent, marking the sector’s worst growth for over four years.

Scott Gardner, investment strategist at JP Morgan Personal Investing, said the UK economy ‘ended 2025 firmly in the slow lane, undershooting expectations and remaining in a low gear in the final quarter of the year as businesses and consumers digested the Chancellor’s November budget’.

‘This marks a clear reversal in fortunes for the economy after strong growth shown in the first half of the year failed to carry over into the rest of 2025,’ he added.

It comes a week after the Bank of England said it believes the economy grew by 1.4 per cent last year, reducing its previous estimate of 1.5 per cent.

It also cut its growth forecast for 2026, from 1.2 per cent to 0.9 per cent, and for 2027, from 1.6 per cent to 1.5 per cent.