The UK economy's gross domestic product (GDP) has now been confirmed to have only grown 0.1 per cent between July and September 2025, matching earlier forecasts, according to the Office for National Statistics (ONS).
Chancellor Rachel Reeves has made economic growth central to her fiscal agenda but economists have criticised her tax and spending policies for being contrary to this mission.
Among the more controversial tax raids introduced by the Chancellor over the past year include the hike to National Insurance contributions for employers, which has been blamed for contributing to the lack on jobs on offer for young people.
Earlier forecasts had projected growth over the third quarter of 2025 to be a meager 0.1 per cent hike but today's figure from the ONS confirms a notable slowdown in GDP.
The Chancellor's tax policies have been criticised
| GETTYAccording to the ONS, GDP grew by 0.2 per cent in the three months to June, which is revised down from the previous estimate of 0.3 per cent growth.
However, the body also revised up growth for the final quarter of last year, to 0.3 per cent from 0.2 per cent previously recorded, although the out-turn for 2024 as a whole was left unchanged at 1.1 per cent growth.
Earlier this month, it was revealed that GDP for the 12 months to October 2025 fell to 0.1 per cent, primarily driven by a drop in motor-vehicle manufacturing over the period.
This signals the continuous direction of economic growth since many of the Chancellor's tax policies came into effect in early April of this year.
£26billion in tax raids has seen the UK's tax burden projected to rise to a post-war record 38 per cent of GDP by 2030, according to the OBR | GB NEWS/OBRDavid Morrison, senior market analyst at Trade Nation, noted that sterling "fell sharply" following the data's publication.
He shared: "Yet another disappointing economic number for the UK, and one which now puts investors on recession watch. Sterling fall sharply on the news, before recovering around half of its losses."
Last week, the Bank of England projected zero per cent GDP growth in the October-to-December period but estimated that the underlying pace of economic growth was around 0.2 per cent per quarter. Compared to last year, UK's GDP in Q2 is 1.3 per cent higher while being 0.9 per cent higher than in 2024 on a per capita basis.
Liz McKeown, ONS director of economic statistics, said: "Today’s updated figures paint the same picture as our initial estimate, with growth continuing to slow in the third quarter. Growth in services were partially offset by falls in production, with a marked drop in car manufacturing.”
Despite the second quarter revision, the UK economy remained the joint fastest growing economy in the G7 group of countries, alongside Japan, with growth of 0.9 per cent followed by the US.
Figures from the ONS also showed that GDP per person in the UK showed no growth in the three months to September, ending six quarters of expansion in a row.
A more detailed breakdown of the economy in the latest data revealed that the household savings ratio fell to 9.5% – its lowest level since the second quarter of 2024. This came as household income fell sharply by 0.8 per cent, driven by a £6billion increase in taxes, according to the ONS.
Matt Swannell, chief economic adviser to the EY Item Club, said: “The outlook for the private sector remains subdued. Real household income growth is now slowing sharply, and although the household saving ratio decreased in the third quarter, it remains high compared to historical standards.”
"Given that fiscal policy is tightening and the effects of borrowers refinancing cheap fixed-rate mortgages will more than offset cuts to bank rate, another year of sluggish growth for the UK economy is expected in 2026."
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