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

GDP — gross domestic product — is the single most-watched number in British economic life, and right now it’s telling a complicated story. The UK economy has been growing, but slowly, and many households aren’t feeling it yet.

What GDP actually measures

GDP tracks the total value of everything produced in a country over a set period — goods made, services sold, money spent. It’s the broadest snapshot we have of whether an economy is expanding or shrinking. The UK measures it quarterly, with the Office for National Statistics publishing updates that can move markets and shape government policy almost overnight.

But raw GDP doesn’t tell you everything. A number can go up while wages stagnate or while a small group captures most of the gains. So economists also watch GDP per capita — output divided by population — which gives a better sense of how ordinary people are faring.

Where the UK stands right now

The UK economy grew by 0.7% in the first quarter of 2025, according to the latest ONS figures. That’s better than many analysts expected after a sluggish end to 2024. Still, it remains modest compared to the United States and several European peers.

Services — which account for roughly 80% of UK output — drove most of the growth. Manufacturing had a harder time, weighed down by weak global demand and lingering supply chain pressures. Construction also struggled, held back partly by higher borrowing costs that have cooled the housing market.

“We’re seeing resilience in parts of the economy, but it’s uneven,” a Treasury spokesperson said. “The government remains focused on creating the conditions for sustained, long-term growth.”

Why growth has been so hard to come by

Britain has faced a brutal combination of headwinds over the past few years. High inflation eroded real incomes. Interest rates climbed sharply as the Bank of England fought to bring prices down. Business investment stayed cautious. And post-Brexit trade friction added costs that didn’t disappear quietly.

Productivity — how much workers produce per hour — remains the UK’s deepest structural problem. It’s grown at barely half the rate of France or Germany since the 2008 financial crisis. Without stronger productivity, raising living standards in any lasting way becomes almost impossible.

That’s the number that keeps economists up at night.

What comes next

Most forecasters expect the UK to keep growing through 2025, but at a pace that feels more like a slow jog than a sprint. The International Monetary Fund projects full-year growth of around 1.1%. The Bank of England is a touch more optimistic at 1.2%.

Whether that translates into real improvement for workers and families will depend on what happens to wages, inflation, and whether businesses start investing more seriously. The GDP headline might tick upward. But for millions of people, the more important question is when — and whether — that growth shows up in their bank accounts.