Introduction
The latest official data confirms that UK economic growth has stalled, with GDP expanding by just 0.1 per cent between July and September 2025. The Office for National Statistics (ONS) released figures matching preliminary forecasts, signalling persistent stagnation in the post-pandemic recovery phase.
Chancellor Rachel Reeves has made economic growth a central feature of her fiscal agenda, but a series of tax and spending decisions enacted in the 2025 Budget are now under heightened scrutiny for their role in shaping the UK’s economic prospects.
Economists are increasingly debating whether these measures, particularly changes to employer National Insurance contributions, may be contributing to weaker growth and softer labour market conditions.
GDP Figures Confirm Sluggish Growth
According to the ONS, the UK’s gross domestic product rose by only 0.1 per cent in the third quarter of 2025, in line with estimates published earlier in the year. This follows a period of moderate expansion, and falls short of growth rates expected by some analysts.
The ONS also reported that GDP rose by 0.2 per cent during the previous quarter, a downward revision from its earlier 0.3 per cent estimate. Despite efforts by the government to stabilise the post-pandemic recovery, official statistics indicate little progress in accelerating economic expansion.
The confirmed figures highlight continued subdued activity, adding to concerns about the underlying strength of the UK economy.
Fiscal Policy and Economic Strategy Under Review
Chancellor Rachel Reeves has repeatedly emphasised the need for sustainable economic growth. However, independent commentators and some economists argue that recent fiscal choices, especially regarding taxation and government spending, may be undermining these objectives.
Reeves has stated that her government remains committed to a balanced approach, saying: 'Long-term prosperity requires disciplined fiscal policy alongside investment in opportunity'.
Policy critics claim that decisions taken in the 2025 Budget, such as the increase in employer National Insurance contributions, are discouraging job creation and investment. The debate comes amid mounting calls for strategies to support both public finances and growth.
National Insurance Changes and Job Market Effects
One of the most discussed fiscal measures is the recent rise in employer National Insurance contributions. While intended to fund essential public services, critics suggest the change may have made it more expensive for businesses to hire staff, especially younger workers.
This, according to some labour market experts, could be limiting opportunities for jobseekers and slowing hiring rates. Government representatives have maintained that the measures are necessary to fund public priorities and address fiscal challenges.
Businesses and trade groups, however, have warned that higher employment costs risk dampening recruitment and suppressing wage growth, particularly in sensitive sectors.
Revised Data Sheds Light on Recent Trends
The ONS has also revised its estimates for other recent periods. Growth for the three months to June 2025 stands at 0.2 per cent, compared to the previously reported 0.3 per cent gain. Meanwhile, data for the last quarter of 2024 has been revised upwards to 0.3 per cent from 0.2 per cent, confirming a marginally stronger end to last year.
However, overall growth for 2024 remains unchanged at 1.1 per cent. These revisions provide a clearer picture of the UK’s fluctuating recovery and ongoing difficulties in returning to pre-pandemic growth trajectories. The small adjustments underscore the sensitivity of economic recovery to policy changes and external factors.
Manufacturing Sector’s Role in Slowdown
A significant contributor to the weak growth has been a decline in motor-vehicle manufacturing, with the ONS attributing the dip in 12-month GDP to October 2025 largely to this sector.
The automotive industry has faced ongoing challenges, including supply chain disruptions, changing consumer demand, and rising operational costs. Persistently soft performance in key manufacturing segments has contributed to the broader picture of economic stagnation.
Policymakers are facing calls to provide targeted support to struggling industries in an effort to reinvigorate production and create jobs.
Final Summary
The confirmation of sluggish GDP growth in the third quarter of 2025 reinforces concerns regarding the strength and resilience of the UK economy. Recent tax measures, in particular those affecting employers, have triggered a vigorous policy debate about the trade-offs between fiscal discipline and economic expansion.
With downward revisions to earlier growth estimates and a challenging outlook in manufacturing, policymakers face complex decisions in pursuing a sustained and broad-based recovery. As the economic landscape evolves, viewers can track developments and insights using the Pie app for the latest updates and analysis.
