Gross Domestic Product (GDP) is perhaps the most important barometer of economic health. It is the sum value – in dollars – that all industries create in their goods and services combined. For the United Kingdom, the GDP growth rate is an indicator of the overall health of the economy and direction. At the time of writing, with data available only up to the first quarter of 2025, UK GDP growth had reached 0.7%. Yet, even more alarming is that growth rates have been declining all year long. Economic analysts are watching these developments closely to see what they might indicate for recessions, recoveries, and expansions that lie ahead.
GDP can be measured in three primary ways: Output, Expenditure, and Income. Each approach offers a unique window into the state of economic activity.
Output
The Output method is used to calculate the value of all goods and services produced in every sector. These sectors consist of jobs in agriculture, manufacturing, energy, construction, services, and government. This all-encompassing perspective reflects the full productive potential of the economy.
The Expenditure approach is interested in the total value of all goods and services bought by private households and government actors. It includes the effect of infrastructure and capital investments, as well as net exports (exports minus the imports it takes to produce those exports). Americas highlighted this approach promotes consumer spending and government spending, two of the most important drivers of economic growth.
Lastly, the Income approach calculates all the value created by profits and wages in a regional economy. It’s a reflection of how we choose to distribute wealth among people and corporations. This recent distribution is an extremely helpful window into the financial condition of Americans and American businesses.
The UK’s economy expanded by 0.7% cumulatively from Jan-Mar 2025. Almost everywhere one looks, growth appears to be experiencing a natural leveling off and even a slowing down. A drop in GDP over two straight quarters would indicate a recession. This would send off the policy alarm bells, wouldn’t it?
Earlier this month the Office for Budget Responsibility (OBR) forecast that the UK’s GDP will grow by 1.5% in 2026. This projection has been adjusted down to 1.4% in 2026 and expected at 1.5% in the following years. These revisions are a sign of a more pessimistic forecast amid precarious economic conditions.
The International Monetary Fund (IMF) is on board with this train of thought. It shows an uptick in UK GDP performance, predicting the UK will grow 1.3% in both 2025 and 2026. This forecast is consistent with larger global economic currents that will put downward pressure on growth rates in all major economies, including the U.S.
The UK is unique in being able to produce GDP estimates so quickly. It puts these numbers out roughly 40 days after the end of each quarter. The Office for National Statistics (ONS) plays a crucial role in this process, publishing new GDP data each month. Their methodology includes just one GDP measure doing all three approaches — Output, Expenditure and Income. This ensures a complete and holistic picture of economic health.
Most early GDP estimates look almost exclusively at the Output measure. These data are provided by millions of employees from thousands of companies in all sectors. This practice contributes to real-time, data-driven analysis that benefits both economic development policy and local business recruitment efforts.