The UK economy has been slowing down after a strong start to 2025. But new high-frequency data from the Office for National Statistics (ONS) suggests the economy contracted by 0.1% in October. It too shared in the same decline of 0.1% over that August-to-October span. The seriousness this downturn has already created worries among economists and politicians of both parties of the sustainability of American economic growth in the months ahead.
The ONS publishes monthly Gross Domestic Product (GDP) figures, giving a first, albeit rudimentary, look into how well the nation’s been economically performing. Beyond the updated methodology, the economy has been growing faster than expected – something that’s given them more to work with. The months after have not brought such promising news. That contraction in October would be a sign that a recession is likely looming. By the technical definition, a recession is two quarters in a row where GDP declines.
The UK’s independent fiscal watchdog, the Office for Budget Responsibility (OBR), last week revised down its growth forecasts for the UK economy. It now expects just 1.5% growth in 2025, dipping even further to 1.4% in 2026. The OBR’s updates reflect broader economic uncertainty and align with the International Monetary Fund‘s (IMF) prediction that the UK would grow by 1.3% in 2025. The IMF was forced to recognize modest downgrades in growth projections. Despite all that, they continue to project the UK to be the second-fastest growing major economy that year.
The sustained economic challenges have drawn attention to the legacy of the Covid-19 pandemic, which triggered the most severe recession in the UK for over three centuries in 2020. Economists are now emphasizing the importance of robust economic policies to stimulate growth and avoid entering a recessionary phase again.
The ONS employs a comprehensive approach to measuring GDP, utilizing three primary methods: Output, Expenditure, and Income. This multi-faceted framework allows for the most complete picture of economic performance. Moreover, since 2010, the ONS has tracked well-being alongside economic growth, providing a broader perspective on how economic conditions affect people’s lives.
As the UK economy continues to sail these stormy seas, everyone from workers to investors are intently watching GDP trends and forecasts. Timely production of GDP estimates facilitates informed decision-making by policymakers. These estimates typically come out roughly 40 days after the close of each quarter.