Wes Streeting was bang on when he told Peter Mandelson the government had ‘no growth strategy at all’. The Health Secretary’s claim seems to have been confirmed by figures, just released by the Office for National Statistics (ONS), which show Britain’s economy grew by just 0.1 per cent in the last three months of 2025. On a per capita basis the numbers were even worse: we’re in recession.
What is worrying given the make up of our economy is that there was no services growth at all, and construction contracted by 2.1 per cent. The only area of the economy that expanded (by 1.2 per cent) was production.
Taken together, it means we’ve now experienced two consecutive quarters of falling GDP per head
Taken together, it means we’ve now experienced two consecutive quarters of falling GDP per head – a per capita recession. The figures also came in weaker than expected, with most economists having predicted growth of 0.2 per cent.
Today’s numbers mean we also have growth figure for the whole of 2025 which adds up to 1.3 per cent or just 1 per cent on a per head basis. These numbers – which are reflective of a year of uncertainty caused by both Donald Trump’s tariffs and, more importantly, Rachel Reeves’s budgetary flip flopping – are nothing to celebrate.
If there is any good news in the data it is that last year has now seen quite a jump in productivity. You can expect the government to celebrate this, perhaps citing the beginning of an AI rollout. But dig behind the numbers and the truth is these improvements are a mirage. Job losses in less productive sectors, such as hospitality, mounted up thanks to Reeves’s £25 billion raid on employer national insurance and minimum wage hikes and simply resulted in productivity across the economy increasing on average. Not actually a good news story at all, then.
If there is any silver lining it is that the early months of this year could herald better economic weather. If inflation does come back down to the Bank of England’s two per cent target in April – as the Bank now expects – then we could see faster and deeper rate cuts that will hopefully kick start Britain’s economic engine. Business uncertainty is improving too, with the industry praying for a spring statement that proves to be a non-event. If the country can stay on a clear path – and if the government can get out of the way – then a more convincing recovery could be possible. Lucky then that there’s no political turmoil at the moment!
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