UK GDP expected to show weak economic growth in Q4
Markets will be watching closely on Thursday, when the United Kingdom’s (UK) Office for National Statistics (ONS) will release the advance estimate of Q4 Gross Domestic Product (GDP).
If the data land in line with consensus, the UK economy would have continued to grow at an annualised pace of 1.2%, compared with 1.3% recorded the previous year. If forecasts match, it would suggest a steady but uninspiring outcome, hinting that momentum is starting to level off. On a QoQ basis, GDP is expected to show a modest expansion of 0.2%, slightly above the 0.1% in Q3, reinforcing the idea of an economy still growing, but doing so with less energy.
The Bank of England’s (BoE) Monetary Policy Committee (MPC) expressed a slightly more optimistic outlook, projecting growth of approximately 1.5% for the entire year.
That said, the policy outlook remains finely balanced. Given the cooling labour market and slowing domestic inflation, markets anticipate a further 25 basis point rate cut from the ‘Old Lady’ at its March 19 meeting, provided that incoming data continues to support this view.
Projections for the UK GDP
The ONS reported that the UK economy grew by 0.1% QoQ in Q3 2025, matching the previous quarter’s prints. On a monthly basis, GDP grew by a healthier 0.3% in November, but momentum is expected to fade again, with output seen rising by only 0.1% in the final month of 2025.
The BoE’s latest meeting echoed the softer tone. Policymakers have downgraded their growth outlook and now expect GDP to expand by 0.2% in Q4 2025, up from a flat reading previously pencilled in for December but still pointing to a very subdued end to the year.
Inflation remains the more uncomfortable part of the picture. The UK maintains its leading position in the inflation league table among its major peers. The latest ONS data showed headline Consumer Price Index (CPI) inflation rising to 3.4% YoY in December. Core CPI eased only marginally to 3.2% YoY, while services inflation remained stubbornly high at 4.5%, underlining why policymakers remain cautious despite the clear loss of growth momentum.(Cp)
Source: Fxstreet
