Recent GDP data indicate the UK economy closed out 2025 on weak footing, with the construction sector and business investment both recording notable softness. Analysts at ING highlighted the lacklustre results, noting the figures largely confirmed previously available data for October and November rather than offering fresh guidance for policymakers.
ING pointed specifically to a fall in business investment, a portion of which the firm attributed to the impact of a cyberattack that affected a major UK car manufacturer at the end of the third quarter. The institution emphasized that the broader slowdown in activity was not unexpected.
Central bank implications
The Bank of England had already signalled a weaker economic backdrop in late 2025, and the newly published GDP numbers reinforced that assessment. ING has incorporated this outlook into its policy expectations, projecting interest-rate reductions from the BoE in March and again in June, conditional on continued weakness in hiring and a further slowdown in wage growth.
ING noted that upcoming labour-market and inflation releases due next week will likely play a larger role in shaping monetary policy moves than the GDP print itself.
Market reaction and currency view
On the currency markets, ING maintained a bullish view on the euro against the pound, citing the bank's anticipated BoE rate cuts. The firm identified 0.88 for EUR/GBP as "a very realistic short-term target." In early European trading the euro edged marginally lower against sterling, with EUR/GBP recorded at 0.8710 at 09:19 GMT after a 0.01% easing.
What this means for sectors
- Construction: data point to weakness in activity that is weighing on headline growth.
- Business investment: the decline was pronounced and was partly linked to a cyber incident affecting a major carmaker.
- Financial markets: currency moves and expectations for BoE policy are being adjusted in light of the data.
While the GDP release confirmed recent indicators of a softer economy, ING and market participants will be watching next week’s jobs and inflation numbers closely for clearer signals on the Bank of England’s policy path.