Today’s growth figures make for familiarly depressing reading. The UK economy grew by just 0.1% in the final quarter of 2025, the same anaemic rate as the previous quarter. Overall the economy grew by 1.3% in 2025. But GDP per head fell for a second consecutive quarter. If you feel poorer, it is because you are.
I think there are three main takeaways from these numbers.
1 - This is Groundhog Day for growth.
As my colleague Kristian Niemietz points outs on this week’s podcast, ‘this is all a bit Groundhog Day’. Every few months we assemble to pore over microscopic changes in GDP, debating whether 0.1% growth constitutes meaningful progress, or how bad a 0.1% shrink is. The very fact that we are having these conversations tells its own story about the scale of Britain’s stagnation. As Looking for Growth have artfully pointed out, we’ve been here too many times before. The economy has been barely above flatlining for too long, but unfortunately it yet to sink in for the majority of our political leadership.
2 - The Government is failing on its own terms
If the anaemic growth isn’t bad enough in itself, the response from the Government makes it yet more depressing.
The Prime Minister celebrated that the economy is ‘heading in the right direction’ which is technically true, in that the overall size of the economy isn’t getting smaller, but completely meaningless at the scales we’re seeing. He also said the economy growing means ‘more money in your pocket’ which is technically and meaningfully false with these figures. GDP per capita, the share of the growth between individual citizens, fell in the second half of 2025.
The Chancellor celebrated being the highest growing economy in the G7 (a low bar) and claimed the government has ‘created the conditions for growth’, another lie.
Both PM and Chancellor acknowledged there is ‘more to do’, which is a colossal understatement and entirely depressing in the context of the rhetoric they were using earlier in their premiership. This was going to be the government of economic growth, we were told. They were going to clear up the mess left by the Tories and boost living standards for all by returning energy and dynamism to Britain. A government that declared growth its “number one mission” is now celebrating 0.1% growth. The bar could hardly be lower.
It is now too late to shift all of the blame on their inheritance, or global factors, too. They have delivered two budgets now, plus a swathe of new regulations, and the impact has been the opposite of what they promised. They should look at these numbers and be spitting with frustration, doubling down on their mission and pledging to go further and faster. As Lord Frost has said today, these figures are an utter failure of government.
3 - There is no growth strategy, anywhere
In private messages to Peter Mandelson, of all places, Wes Streeting has said what we are all thinking: the government has no growth strategy. But does anyone? It doesn’t feel like it. There is a depressing lack of bold, ambitious vision across the political spectrum.
The Tories have made some positive noises, particularly on stamp duty and spending reduction. However, the scale of their ambition doesn’t match what is required to either turn our economy around, or persuade voters that the Tories will do things sufficiently differently to their fourteen years in power to have a meaningful difference. Reform’s economic philosophy remains a huge question mark, to put it lightly. Meanwhile, the Liberal Democrats have made a big pledge to break up the Treasury. Not necessarily a bad idea in itself, but rearranging the stationary in Whitehall only matters if you have a plan to deliver with it.
The bottom line is the choices this government are making are costing the economy. The prescription does not have to be complicated. The tax and spending burden needs to fall. Business tax rises and the Employment Rights Act need to be reversed. Then a serious programme of deregulation and supply-side reform is required to unlock the economy and get Britain growing again.
Unfortunately there remains little suggestion that the government, or any of the parties, have the inclination, let alone the courage and the plan, to take that path. And so we wait for the next quarter, and the next set of dismal figures, and the next round of hollow reassurances from ministers who appear to have mistaken treading water for swimming.