UK Economy “Drifting in the Doldrums” as GDP Misses Growth Forecasts

The government’s primary mission of economic growth has come under intense scrutiny today after official figures revealed a stagnant end to 2025, leaving total annual growth significantly lower than official forecasts.

The latest data from the Office for National Statistics (ONS) shows the UK economy grew by a marginal 0.1% in the final quarter of last year. While the year began with the joint-fastest growth in the G7, that momentum evaporated in the second half, with the economy effectively flatlining.

Across 2025 as a whole, GDP increased by just 1.0% —a clear miss against the 1.4% growth forecasted by the Office for Budget Responsibility (OBR) just two and a half months ago.

The figures have prompted a sharp warning from the Joseph Rowntree Foundation (JRF), which cautioned that the government’s over-reliance on growth to fix the cost-of-living crisis is a high-risk strategy that is failing to reach millions of households.

“Painfully High” Costs Remain
JRF Chief Economist Chris Belfield described the UK as “drifting in the economic doldrums,” pointing out that the modest quarterly growth has done nothing to abate the effects of the increased cost of living.

“We have seen no movement in numbers unable to afford the essentials,” Belfield warned. “Numbers struggling to keep warm and fed and able to afford a decent home remained around 7 million in October.”

The data highlights a growing disconnect between high-level GDP figures and the lived experience of families. While Chancellor Rachel Reeves insisted today that the government “has the right plan” and pointed to falling inflation, critics argue that a 0.1% growth rate is insufficient to deliver the improved living standards the Treasury has promised.

A Call for Direct Investment
The JRF argued today that to improve living standards, the government needs to “beat these forecasts, not miss them.” The foundation is calling for a more interventionist approach, shifting focus from abstract growth targets to direct support for economic security.

“The government needs to build economic security so households are supported if they face an income shock like unemployment and businesses can invest with confidence,” Belfield said.

The JRF’s roadmap for recovery includes:
• Lowering Essential Costs: Reducing the price of energy and housing to increase household productivity.
• Tax Reform: A fairer and more efficient tax system to raise revenue.
• Public Service Investment: Funnelling resources into social security and public services to promote long-term growth.

Westminster Reaction
The figures have provided fresh ammunition for the opposition parties. Shadow Chancellor Mel Stride accused the government of being “distracted by scandals” and taking its “eye off the ball,” leading to a fall in GDP per head for the second consecutive quarter.

Meanwhile, the Liberal Democrats claimed the government has “killed off” the recovery with “anti-growth Budgets,” calling for a dedicated Department for Growth to end the cost-of-living crisis.

As the UK navigates an uncertain global landscape, the pressure on the Treasury to do more than just “hold the line” is mounting. For the 7 million people still unable to afford the essentials, the 1.84 million unemployed and 9 million economically inactive people, the promise of growth remains a distant prospect in an economy that—for now—is barely keeping its head above water.