Bulletin: UK growth loses momentum

UK growth loses momentum

The latest provisional ONS data shows that UK real GDP grew by just 0.1% in Q4 2025, bringing annual growth for 2025 to 1.3%. Year‑on‑year, GDP in Q4 was up 1.0%, but momentum clearly weakened as the year progressed.

Weakness in Q4 was driven in large part by a soft services sector, reflecting subdued high street spending in the run‑up to Christmas. Uncertainty surrounding the 2025 Budget also likely contributed, delaying spending decisions for both households and businesses.

With the UK population continuing to grow rapidly, real GDP per capita increased by just 1.0% in 2025, implying that around a quarter of last year’s economic growth came simply from population expansion, rather than improved economic performance.

A focus on driving good growth within the food system will be key for food businesses.

See our latest Viewpoint report: Inflation persists as risks grow.

IGD opinion

Overall, these GDP figures are lacklustre. To put them in context:

• Average real GDP growth from 2000–2019 (pre‑Covid) was 1.9%,

• Or 2.1% if the Credit Crunch recession years are excluded.

This underscores how far the UK remains from returning to its historic growth trend.

Looking ahead, productivity growth must be a central part of any credible economic recovery plan. With the cost of labour rising and demographic pressures intensifying, generating more value from each hour worked is essential.

Historically, boosting productivity has proven difficult. But the rapid evolution of technology -particularly AI tools capable of automating routine administrative work - offers genuine potential. Increasingly, these tools are accessible even to small businesses.

However, true step‑change improvements will require bringing AI and physical automation closer together. Connecting AI with robotics will be crucial to improving efficiency in manual and operational tasks across the economy.

IGD will continue to track developments closely as this landscape evolves.

Pivotal moment for apprenticeships

The UK faces a pivotal moment for apprenticeships as rising numbers of young people fall into NEET (young adults not in employment, education, or training) status, nearing one million. Government reforms aim to boost opportunities through redirected applications, improved vacancy visibility and stronger pathways equivalent to university routes.

For the food and drink industry, struggling with frontline and technical recruitment, apprenticeships remain vital.

IGD is stepping up support through employer partnerships, skills programmes and National Apprenticeship Week initiatives.

See our latest article, A crucial moment for apprenticeships in the UK.

Healthy and sustainable diets

Discover how leading organisations are driving healthier, more sustainable diets through IGD’s video series. From policy and sector alignment with The Food Foundation to business transformation at Whitworths, these short videos show practical, scalable levers that help reshape diets and accelerate meaningful food‑system change.

Welfare reform update

The Government has set out plans to reform the welfare system, laying out new Universal Credit legislation in Parliament. The changes aim to reduce differences between payments for jobseekers and those on health‑related benefits, with a new £217.26 monthly rate for future health‑related claimants.

Existing claimants and those with severe or lifelong conditions will continue on the higher rate. The reforms include £3.5bn for employment support and an above‑inflation rise to the standard Universal Credit allowance for nearly four million households.