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United Kingdom: Economic growth decelerates in the third quarter of 2025
Weaker-than-expected GDP reading: The United Kingdom’s GDP grew 0.1% on a seasonally adjusted quarter-on-quarter basis in Q3, following 0.3% growth in the previous quarter and below market expectations.
Broad-based softness: Relative to the prior quarter’s data, figures in Q3 softened for government consumption (+0.3% on a seasonally adjusted quarter-on-quarter basis vs +1.3% in Q2), exports of goods and services (-0.1% vs +0.4% in Q2) and imports of goods and services (-0.3% vs 0.0% in Q2). In contrast, readings picked up for private consumption (+0.2% vs +0.1% in Q2) and fixed investment (+1.8% vs +0.5% in Q2). The improvement in fixed investment was solely due to government spending though, as business capital formation fell for the second straight quarter.
On a year-on-year basis, the economy grew 1.3% in Q3, following a 1.4% expansion in the prior quarter.
Panelist insight: On the outlook, Goldman Sachs’ James Moberly said:
“ Looking ahead, we expect output in the transport equipment sector to recover in the coming months on the back of the Jaguar Land Rover production restart. At the same time, the weaker August and September GDP figures result in a lower starting point for GDP going into the fourth quarter. On net, we continue to forecast 0.2%qoq GDP growth in Q4. Taken together with the downside surprise in the Q3 numbers, our forecast for annual GDP growth in 2025 moves down to 1.4% (from 1.5%) on rounding.”
