GDP expected to grow by 0.3% in the first quarter of 2026

Gross domestic product (GDP) growth was 1.3% in 2025, driven by investment and government consumption.

Private consumption growth was weak last year, while net trade weighed on growth.

Growth in the fourth quarter of last year was driven by the production sector, which saw strong outturns earlier in the quarter. Services showed no growth while construction saw the largest quarterly contraction since mid-2021.

The National Institute of Economic and Social Research (NIESR) expect GDP growth to be 0.3% in the first quarter of 2026, consistent with survey evidence that business activity picked up at the start of the year. We expect services to drive growth this quarter.

Fergus Jimenez-England, Associate Economist at NIESR, said, “Today’s GDP figures show that growth in 2025 was 1.3%, coming in slightly below expectations.

“The fourth quarter only just scraped together a positive growth figure, with services disappointingly showing no growth.

“That said, surveys point toward a recovery in business sentiment in the New Year after months of damaging speculation in the run up to the Autumn Budget.

“With the Spring Statement upcoming in March, the Chancellor should look to support this change in sentiment by avoiding a repeat of last year and refrain from further policy changes.”