![\"Getty](\"https:\/\/ichef.bbci.co.uk\/news\/480\/cpsprodpb\/5c0e\/live\/53a9b9a0-aa6b-11f0-bb1a-bf07c7ad3691.jpg.webp\")
Getty Images<\/span><\/div>\n<\/div>\n<\/figure>\nThe UK economy has been slowing after a strong start to 2025.<\/p>\n
The latest figures show that the economy shrank by 0.1% in October, and also contracted by 0.1% in the August-to-October period.<\/p>\n
The rate of economic growth matters because it affects things like pay increases for workers and the amount of tax the government can raise to pay for services.<\/p>\n<\/div>\n
What is GDP and how is it worked out?<\/h2>\n<\/p>\n\nGDP stands for gross domestic product, and is a measure of all the economic activity of companies, governments, and people in a country.<\/p>\n
In the UK, the ONS publishes new GDP figures every month<\/a>. However, the quarterly figures – covering three months at a time – are considered more important.<\/p>\nMost economists, politicians, and businesses like to see GDP rising steadily.<\/p>\n
That’s because it usually means people are spending more, extra jobs are created, more tax is paid, and workers get better pay rises.<\/p>\n
When GDP is falling, it means the economy is shrinking – which can be bad news for businesses and workers.<\/p>\n
If GDP falls for two quarters in a row, that is known as a recession<\/a>, which can lead to pay freezes and job losses.<\/p>\n<\/div>\nWhat is happening to the UK economy?<\/h2>\n<\/p>\n\nMany economists and politicians are concerned that the UK economy is not growing fast enough. <\/p>\n
When the Labour government took power in July 2024, it made growth its top priority.<\/p>\n
Although the economy grew faster than expected at the start of 2025 – expanding by 0.7% in the January-to-March period – its performance has been slowing steadily as the year has progressed.<\/p>\n
The economy grew by 0.3% in the three months to the end of June, but then slowed to 0.1% for the third quarter covering July to September<\/a>.<\/p>\n<\/div>\n\n\n![](\"https:\/\/static.files.bbci.co.uk\/bbcdotcom\/web\/20251203-121739-f954f14c69-web-2.35.1-2\/grey-placeholder.png\")
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<\/div>\n<\/div>\n<\/figure>\n\nAt the time of November’s Budget, the Office for Budget Responsibility (OBR) – the government’s official forecaster – predicted that the UK’s economy would expand by 1.5% this year.<\/p>\n
However, it lowered its growth estimates to 1.4% in 2026 and 1.5% in all of the following four years.<\/p>\n
In October, the International Monetary Fund (IMF) predicted<\/a> the UK would grow by 1.3% this year, which it said would make it the second-fastest growing major economy in 2025.<\/p>\n<\/div>\nHow does GDP affect me?<\/h2>\n<\/p>\n\nIf GDP is going up steadily, people pay more in tax because they’re earning and spending more.<\/p>\n
This means more money for the government, which it can choose to spend on public services, such as schools, police and hospitals.<\/p>\n
When the economy shrinks and a country goes into recession, these things can go into reverse.<\/p>\n
Governments tend to get less money in tax, which means they may decide to freeze or cut public spending, or put taxes up.<\/p>\n
In 2020, the Covid pandemic caused the most severe UK recession for more than 300 years, which forced the government to borrow hundreds of billions of pounds to support the economy.<\/p>\n<\/div>\n
How is GDP measured?<\/h2>\n<\/p>\n\nGDP can be measured in three ways:<\/p>\n
\n- Output:<\/b> The total value of the goods and services produced by all sectors of the economy – agriculture, manufacturing, energy, construction, the service sector and government<\/li>\n
- Expenditure:<\/b> The value of goods and services bought by households and by government, investment in machinery and buildings – this also includes the value of exports, minus imports<\/li>\n
- Income:<\/b> The value of the income generated, mostly in terms of profits and wages<\/li>\n<\/ul>\n<\/div>\n
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Getty Images<\/span><\/div>\n<\/div>\n<\/figure>\n\nIn the UK, the ONS publishes one single measure of GDP, which is calculated using all three measurements.<\/p>\n
But early estimates mainly use the output measure, using data collected from thousands of companies.<\/p>\n<\/div>\n
Why does the GDP figure sometimes change?<\/h2>\n<\/p>\n\nThe UK produces one of the quickest estimates of GDP of the major economies, about 40 days after the quarter in question.<\/p>\n
At that stage, only about 60% of the data is available, so the figure is revised as more information comes in.<\/p>\n
The ONS publishes more information about this on its website<\/a>.<\/p>\n<\/div>\nWhat are the limitations of the GDP figure?<\/h2>\n<\/p>\n\nGDP doesn’t tell the whole story<\/a>:<\/p>\n\n- The hidden economy:<\/b> unpaid work such as caring for children or elderly relatives isn’t captured<\/li>\n
- Inequality:<\/b> rising GDP could result from the richest getting richer, rather than everyone becoming better off, and some people could be worse off<\/li>\n
- Living standards:<\/b> if the population is also growing, increased GDP can still mean less money per person, which can reduce people’s living standards. This is why the GDP per capita measure is important<\/li>\n<\/ul>\n<\/div>\n
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Getty Images<\/span><\/div>\n<\/div>\nOfficial GDP figures don’t take into account unpaid work like looking after children<\/figcaption><\/p>\n<\/figure>\n\nSome critics also argue that GDP doesn’t take into account whether the economic growth it measures is sustainable, or the environmental damage it might do.<\/a><\/p>\nAlternative measures have been developed which try to capture this.<\/p>\n
GDP stands for gross domestic product, and is a measure of all the economic activity of companies, governments, and people in a country.<\/p>\n
In the UK, the ONS publishes new GDP figures every month<\/a>. However, the quarterly figures – covering three months at a time – are considered more important.<\/p>\n Most economists, politicians, and businesses like to see GDP rising steadily.<\/p>\n That’s because it usually means people are spending more, extra jobs are created, more tax is paid, and workers get better pay rises.<\/p>\n When GDP is falling, it means the economy is shrinking – which can be bad news for businesses and workers.<\/p>\n If GDP falls for two quarters in a row, that is known as a recession<\/a>, which can lead to pay freezes and job losses.<\/p>\n<\/div>\n Many economists and politicians are concerned that the UK economy is not growing fast enough. <\/p>\n When the Labour government took power in July 2024, it made growth its top priority.<\/p>\n Although the economy grew faster than expected at the start of 2025 – expanding by 0.7% in the January-to-March period – its performance has been slowing steadily as the year has progressed.<\/p>\n The economy grew by 0.3% in the three months to the end of June, but then slowed to 0.1% for the third quarter covering July to September<\/a>.<\/p>\n<\/div>\n At the time of November’s Budget, the Office for Budget Responsibility (OBR) – the government’s official forecaster – predicted that the UK’s economy would expand by 1.5% this year.<\/p>\n However, it lowered its growth estimates to 1.4% in 2026 and 1.5% in all of the following four years.<\/p>\n In October, the International Monetary Fund (IMF) predicted<\/a> the UK would grow by 1.3% this year, which it said would make it the second-fastest growing major economy in 2025.<\/p>\n<\/div>\n If GDP is going up steadily, people pay more in tax because they’re earning and spending more.<\/p>\n This means more money for the government, which it can choose to spend on public services, such as schools, police and hospitals.<\/p>\n When the economy shrinks and a country goes into recession, these things can go into reverse.<\/p>\n Governments tend to get less money in tax, which means they may decide to freeze or cut public spending, or put taxes up.<\/p>\n In 2020, the Covid pandemic caused the most severe UK recession for more than 300 years, which forced the government to borrow hundreds of billions of pounds to support the economy.<\/p>\n<\/div>\n GDP can be measured in three ways:<\/p>\n In the UK, the ONS publishes one single measure of GDP, which is calculated using all three measurements.<\/p>\n But early estimates mainly use the output measure, using data collected from thousands of companies.<\/p>\n<\/div>\n The UK produces one of the quickest estimates of GDP of the major economies, about 40 days after the quarter in question.<\/p>\n At that stage, only about 60% of the data is available, so the figure is revised as more information comes in.<\/p>\n The ONS publishes more information about this on its website<\/a>.<\/p>\n<\/div>\n GDP doesn’t tell the whole story<\/a>:<\/p>\n Some critics also argue that GDP doesn’t take into account whether the economic growth it measures is sustainable, or the environmental damage it might do.<\/a><\/p>\n Alternative measures have been developed which try to capture this.<\/p>\nWhat is happening to the UK economy?<\/h2>\n<\/p>\n
<\/div>\n<\/div>\n<\/figure>\nHow does GDP affect me?<\/h2>\n<\/p>\n
How is GDP measured?<\/h2>\n<\/p>\n
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Getty Images<\/span><\/div>\n<\/div>\n<\/figure>\nWhy does the GDP figure sometimes change?<\/h2>\n<\/p>\n
What are the limitations of the GDP figure?<\/h2>\n<\/p>\n
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Getty Images<\/span><\/div>\n<\/div>\n