UK GDP explained: how fast is the British economy growing?

GDP — gross domestic product — is the single number that politicians, investors and households keep coming back to when they want to know how well the UK economy is actually doing. And right now, that number is telling a complicated story.

What GDP actually measures

At its simplest, GDP adds up the total value of everything produced in a country over a given period. That means goods manufactured, services provided, everything from a new car rolling off a production line to a haircut in a Birmingham barbershop. The Office for National Statistics publishes the UK’s figures monthly and quarterly, giving economists a running scorecard of economic health.

There are three ways to calculate it — by looking at output, expenditure, or income — and in theory they all arrive at the same number. In practice, statisticians revise the figures constantly as better data comes in.

Where the UK stands right now

The UK economy grew by 0.7% in the first quarter of 2025, a figure that surprised some forecasters who had expected a more sluggish performance. But that headline number hides a patchwork picture. Services, which account for roughly 80% of UK output, drove most of the gain. Construction dragged. Manufacturing stayed essentially flat.

Annual growth is running at around 1.3%, which is modest by historical standards. It’s not a recession, but it’s not the kind of expansion that makes life noticeably easier for most people either.

“The economy is showing resilience, but it remains fragile in key areas,” a Treasury spokesperson said this week. “We’re focused on the conditions for sustained, long-term growth.”

Why GDP doesn’t tell the whole story

Here’s the tension that economists have wrestled with for decades. GDP can be rising while living standards fall, or vice versa. If the population grows faster than the economy, GDP per head — per capita — actually shrinks. That’s been part of the UK’s problem. Real GDP per person has barely budged since 2022.

So when politicians point to growth, it’s worth asking: growth for whom?

Critics also argue GDP ignores unpaid work, environmental damage, and inequality. A country could log impressive GDP figures while simultaneously exhausting its natural resources or widening the gap between rich and poor.

What comes next for the UK

The Bank of England is forecasting full-year growth of around 1% for 2025, a downgrade from earlier projections. Global trade uncertainty — particularly the ripple effects of US tariff policy — is one reason officials have turned more cautious. Higher borrowing costs haven’t fully worked their way through the system yet either.

Still, some economists point to falling inflation and a relatively tight labour market as reasons for cautious optimism heading into 2026.

GDP won’t capture all of what’s happening in British towns and households. But it remains the closest thing the world has to an economic vital sign, and right now, the UK’s is steady — if not exactly strong.