THE UK economy is estimated to have fallen by 0.1% in both October and in the three months to October 2025, compared with the three months to July 2025 — the first three monthly fall in real Gross Domestic Product (GDP) since December 2023.
This follows growth of 0.1% in the three months to September 2025 and 0.2% in the three months to August 2025, official data published today by the Office for National Statistics (ONS) shows.
There were falls in two of the three main sectors in the three months to October 2025, with a fall of 0.5% in the production sector.
This, the ONS says, was largely because of a 17.7% fall in the manufacture of motor vehicles, trailers and semi-trailers, which made the largest contribution to the decrease in GDP during this period.
Construction output also fell, by 0.3%, while services output showed no growth over this period. This continues the recent trend of slowing growth in the service sector since March 2025.
In the month to October 2025, monthly GDP is estimated to have fallen by 0.1%, following a fall of 0.1% in September 2025 and no growth in August 2025. Services fell by 0.3% and construction fell by 0.6%, whereas production grew by 1.1%, in October 2025.
Services flat
Liz McKeown, Director of Economic Statistics at the ONS, said: “The economy contracted slightly in the latest three months, as production fell again and services growth stalled.
“Within production, there was continued weakness in car manufacturing, with the industry only making a slight recovery in October from the substantial fall in output seen in the previous month.
“Overall services showed no growth in the latest three months, continuing the recent trend of slowing in this sector. There were falls in wholesale and scientific research, offset by growth in rental and leasing and retail.”
But while countless sectors of the UK economy are struggling, not helped by Labour’s tax hikes, AI consultants are busier than ever as businesses increasingly turn to automation to drive efficiencies.
“Most profitable quarter”
Speaking to Newspage, one AI strategist, Mitali Deypurkaystha, at Newcastle upon Tyne-based Impact Icon AI, said the final three months of the year have been her “most profitable quarter because hiring people is getting more expensive” under Labour.
Another AI specialist, Colette Mason of London-based Clever Clogs AI, also says the tax changes implemented by Labour since it got into power have helped her business.
Mason says: “Commercially, as an automation specialist, the Budget’s been brilliant for my business: make workers more expensive, add some inflationary pressure on inputs and suddenly everyone needs automation systems.
“But as a citizen, watching the economy stutter for months while this fiscal fandango played out has been deeply frustrating.
“Businesses and individuals made critical decisions based on figures the Chancellor massaged to suit the government’s backbench welfare agenda, not economic reality. This mishandling is making all businesses wary and that always adds downward pressure on growth.
“There will be winners and losers next year, and the Chancellor’s decided small businesses are in the loser camp before they even left the starting blocks.”
Survival mode
Sarah Gatford, a wellbeing coach and mental health expert, said business owners are in “survival mode”: “The daily grind has lost its spark. What felt purposeful now feels like survival mode. People are coming to me saying they’re exhausted. Properly worn down. They’re saying ‘I used to love what I do. Now I feel trapped’.
“Business owners tell me they’re firefighting constantly, whilst their motivation evaporates. Financial stress doesn’t stay in the spreadsheet. It seeps into sleep, relationships and the sense of self. It’s heartbreaking to watch talented people lose touch with why they started. Purpose gets buried under pressure.”
Gatford says staff are also feeling the challenges in the economy: “The cost of living means staying in jobs that don’t light people up because they can’t afford the risk of change. That’s brutal for wellbeing.”
UK economy in spin cycle
Portfolio landlord and entrepreneur, Kundan Bhaduri of London-based The Kushman Group, said it has been a turbulent fourth quarter and what the country most needs, but what it isn’t getting under Labour, is “basic economic competence”.
Bhaduri says: “This fourth quarter has felt like operating a business inside a washing machine on the spin cycle. Labour costs have spiked thanks to Budget generosity that businesses get to fund, interest rates remain punitive for anyone wanting to invest or expand, and regulatory compliance now requires a dedicated compliance officer rather than a filing cabinet.
“What would help the UK economy right now is not another government initiative with an acronym and a press release, but basic economic competence — lower business rates, predictable tax policy and interest rates that reflect economic reality rather than inflation paranoia.
“As for 2026 confidence, that depends entirely on whether this government grasps that businesses create wealth and jobs, not Treasury departments with ambitious spreadsheets.”
Surviving 2026
Looking ahead into next year, Patricia McGirr, Founder at Burnley-based Repossession Rescue Network, a debt specialist, warned that 2026 will be about survival for many people and small firms.
She said: “Families are stretched, SMEs are squeezed, and GDP figures cannot capture the strain behind the stats. 2026 won’t be about confidence, it will be about survival for many families and small businesses.”
Meanwhile, forex broker Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, said he is not confident about the year ahead: “My outlook for 2026 is cautiously wary. Only my international clients seem upbeat, reporting good opportunities overseas, helped by a weakening Pound.
“Domestic-oriented businesses expect another tough year in 2026, with the economy continuing to slow down, driven by the full impact of current high rates and continued global headwinds. Any economic growth will be on the low side and fragile.”
