The UK economy expanded by 0.1% in the three months to September, official data from the Office for National Statistics confirmed today, showing a subdued pace of growth as higher borrowing costs and weak demand continued to weigh on output. The figure, unchanged from the initial estimate, follows a downward revision to second-quarter growth from 0.3% to 0.2%, leaving overall momentum flat heading into winter.
ONS data show services and construction provided the only meaningful contributions to third-quarter growth, while production output contracted due to lower manufacturing activity. On an annual basis, GDP was 1.3% higher than the same period in 2024, but per-capita growth was effectively zero, reflecting continued strain on household finances.
An ONS spokesperson said the figures pointed to “little change in the overall pace of activity”, noting that the service sector remained the main driver of output. “Manufacturing and production continued to underperform, while construction saw modest recovery following summer weakness,” the spokesperson added.
The data align with private sector surveys showing a sharper slowdown in late-year business activity. The Confederation of British Industry this week reported falling orders and weakening sentiment among manufacturers and services firms, with hiring intentions at their lowest point since 2020. Labour market data from Adzuna also showed job vacancies falling for a fifth consecutive month in November, while unemployment rose to 5.1%.
Monetary policymakers have begun to ease conditions in response. The Bank of England last week cut its base interest rate by 25 basis points to 3.75%, its first reduction since the spring, citing easing inflation and a clear loss of economic momentum. Governor Andrew Bailey said the Bank would “support activity where appropriate” but warned that inflation risks remained.
The broader picture remains one of stagnation. Consumer spending, retail activity, and business investment all softened through the autumn, with the ONS noting weaker output across manufacturing, transport, and professional services. The trade balance improved slightly as imports fell, but external demand remained subdued.
The latest data underline the persistence of low growth and the need for caution in planning for 2026. With domestic demand weak and borrowing costs still above historical norms, investment decisions are likely to remain constrained. Companies are expected to focus on productivity gains and cost control rather than expansion, while households continue to face pressure from high living costs and modest wage growth.
Despite incremental signs of stability in services, the UK’s overall growth path remains fragile. The final quarter will test whether recent policy adjustments can offset slowing private-sector momentum, or whether the economy is entering 2026 with only limited capacity for recovery.
