UK Gross Domestic Product QoQ: November 2025 Release and Macro Outlook
The UK’s latest GDP growth slowed to 0.10% QoQ in Q3 2025, below estimates and prior quarters. This marks a notable deceleration from mid-year peaks of 0.70%. Monetary tightening, fiscal consolidation, and external uncertainties weigh on momentum. Financial markets reacted cautiously, pricing in a slower growth trajectory. Structural challenges and geopolitical risks cloud the outlook, though a modest recovery remains possible if inflation eases and global trade stabilizes.
Table of Contents
The UK economy expanded by 0.10% quarter-on-quarter in Q3 2025, according to the latest release from the Sigmanomics database. This figure undershot the consensus estimate of 0.20% and represents a slowdown from the previous quarter’s 0.30% growth. The deceleration follows a strong first half of the year, where GDP growth peaked at 0.70% in both May and June. The current reading is the slowest quarterly growth since early 2025, signaling a cooling phase in economic activity.
Drivers this month
- Services sector growth softened, contributing 0.05 percentage points (pp) to GDP.
- Manufacturing output remained flat, adding negligible growth.
- Construction activity contracted slightly, subtracting -0.02 pp.
- Consumer spending growth slowed amid tighter credit conditions.
Policy pulse
The Bank of England’s monetary policy remains restrictive, with the base rate steady at 5.25%. Inflation has moderated but remains above the 2% target, limiting scope for easing. The subdued GDP growth reinforces the cautious stance, as the central bank balances inflation control against growth risks.
Market lens
Immediate market reaction saw the GBP/USD currency pair dip 0.30% post-release, reflecting disappointment versus expectations. UK 2-year gilt yields edged lower by 5 basis points, signaling a modest easing in growth concerns. Breakeven inflation rates held steady, indicating stable inflation expectations despite the slowdown.
The GDP print aligns with other core macroeconomic indicators showing a mixed UK economic picture. Retail sales volumes grew by a modest 0.20% in September, down from 0.50% in August. The unemployment rate held steady at 4.10%, near historic lows, but wage growth slowed to 3.40% year-on-year, reducing real income gains. Inflation eased to 4.50% in October from 5.10% in September, but remains elevated.
Monetary Policy & Financial Conditions
The Bank of England’s restrictive monetary stance has tightened financial conditions. Credit spreads widened slightly, and mortgage approvals fell 2.50% month-on-month. The Monetary Policy Committee’s recent statements emphasize vigilance against inflation persistence, limiting near-term rate cuts.
Fiscal Policy & Government Budget
Fiscal consolidation continues with the government targeting a budget deficit reduction to 3.80% of GDP in 2025/26, down from 4.20% last year. Public investment remains focused on infrastructure but faces constraints amid spending caps. Tax policy remains broadly neutral, with no major stimulus planned.
This chart highlights a clear downward trend in UK GDP growth since mid-2025, reversing the strong rebound seen earlier in the year. The slowdown signals rising risks to the economic outlook, with potential spillovers to labor markets and inflation dynamics.
Market lens
Immediate reaction: GBP/USD dropped 0.30%, UK 2-year gilt yields fell 5 bps, and inflation breakevens remained stable. The market priced in a slower growth trajectory, raising expectations for a prolonged period of monetary restraint.
Looking ahead, the UK economy faces a complex mix of risks and opportunities. The baseline scenario forecasts GDP growth averaging 0.20% per quarter over the next year, supported by easing inflation and stable financial conditions. However, downside risks include persistent inflation, tighter global financial conditions, and geopolitical tensions impacting trade.
Scenario analysis
- Bullish (20% probability): Inflation falls rapidly below 3%, prompting monetary easing. Consumer spending rebounds, lifting GDP growth to 0.40%+ quarterly.
- Base (55% probability): Inflation moderates slowly, monetary policy remains tight but stable. GDP growth hovers around 0.20% per quarter.
- Bearish (25% probability): Inflation remains sticky, global trade disruptions intensify, and fiscal tightening deepens. GDP growth stalls or contracts.
Structural & Long-Run Trends
Longer-term challenges include productivity stagnation, demographic shifts, and Brexit-related trade frictions. These factors constrain potential growth and complicate policy responses. Investment in technology and skills will be critical to reversing the slowdown.
The UK’s Q3 2025 GDP growth of 0.10% signals a clear slowdown from earlier in the year. While not alarming, it underscores the fragility of the recovery amid monetary tightening and external uncertainties. Policymakers face a delicate balancing act between controlling inflation and supporting growth. Financial markets have priced in this cautious outlook, with currency and bond yields reflecting tempered optimism.
Continued monitoring of inflation trends, consumer behavior, and global developments is essential. Structural reforms and targeted fiscal support could help sustain growth over the medium term. Investors should prepare for a range of outcomes, with volatility likely to persist in the near term.
Key Markets Likely to React to Gross Domestic Product QoQ
The UK GDP QoQ release is a critical barometer for economic health, influencing currency, bond, equity, and commodity markets. The following tradable symbols historically track UK growth dynamics and monetary policy shifts:
- GBPUSD – The primary currency pair reflecting UK economic sentiment and monetary policy divergence with the US.
- FTSE100 – UK’s benchmark equity index, sensitive to domestic growth and global risk appetite.
- EURGBP – Reflects relative economic performance between the UK and Eurozone.
- BTCUSD – Bitcoin’s price often reacts to macro risk sentiment and liquidity conditions influenced by growth data.
- HSBA – HSBC Holdings, a major UK bank, sensitive to credit conditions and economic cycles.
Insight: UK GDP vs. GBPUSD Since 2020
Since 2020, quarterly UK GDP growth and GBPUSD have shown a positive correlation. Periods of accelerating GDP growth, such as mid-2021 and early 2023, coincided with GBPUSD rallies above 1.40. Conversely, GDP slowdowns have pressured the pound lower. This relationship underscores the currency’s sensitivity to domestic economic momentum and monetary policy expectations.
| Quarter | GDP QoQ (%) | GBPUSD Close |
|---|---|---|
| Q1 2020 | -2.00 | 1.30 |
| Q2 2021 | 1.20 | 1.42 |
| Q4 2022 | 0.30 | 1.22 |
| Q2 2025 | 0.70 | 1.35 |
| Q3 2025 | 0.10 | 1.31 |
FAQ
- What does the latest UK GDP QoQ figure indicate?
- The 0.10% growth in Q3 2025 signals a slowdown in economic momentum, reflecting weaker domestic demand and external headwinds.
- How does UK GDP growth affect monetary policy?
- Slower GDP growth reduces pressure on the Bank of England to raise rates, but persistent inflation may keep policy tight.
- Why is GDP growth important for investors?
- GDP growth signals economic health, influencing currency strength, bond yields, and equity market performance.
Key takeaway: The UK’s slowing GDP growth highlights a cautious economic phase, with monetary policy and external risks shaping the near-term outlook.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The latest UK GDP growth of 0.10% QoQ compares to 0.30% last quarter and a 12-month average of 0.35%. This marks a clear deceleration from the mid-year peak of 0.70% in May and June 2025. The trend line shows a gradual slowdown since summer, reflecting weaker domestic demand and external headwinds.
Sectoral contributions reveal that services, which typically drive UK growth, have lost momentum. Manufacturing and construction sectors have stalled or contracted, further weighing on overall output. The chart below illustrates the quarterly GDP growth trajectory over the past year.