The UK’s newest gross home product (GDP) figures are set to be launched on Friday, offering yet one more indication concerning the path of the economic system.
At 7:00 a.m. tomorrow, the Office for National Statistics (ONS) will release its monthly GDP estimates, which signal the size and growth of the UK economy across recent months.
Although the first quarterly UK figures for 2025 revealed that GDP grew by 0.7 per cent on the previous quarter, there are concerns that the UK economy simply isn’t growing fast enough.
Tumultuous US trade tariffs, a weakening pound sterling and rising inflation could recommend that the financial final result is trying unsure.
The newest GDP announcement comes simply over a month after economists revealed that the UK economic system had shrunk greater than anticipated, which Chancellor Rachel Reeves expressed on the time as being “clearly disappointing”.
“Our primary mission is delivering development to place extra money in folks’s pockets by way of our Plan for Change, and whereas these numbers are clearly disappointing, I am decided to ship on that mission,” she instructed the BBC.
She additionally added: “We’re investing in Britain’s renewal to make working folks higher off”.
So what precisely is GDP and the way does it impression spending and the cost of living?
Right here’s all the things that you must know.
What’s Gross Home Product (GDP)?
GDP stands for gross home product and is a measure of the scale and well being of a rustic’s economic system over a time frame (normally one quarter or one 12 months). It is usually used to check the scale of various economies at totally different deadlines.
Items are issues equivalent to a brand new washer, or milk that’s purchased within the grocery store. Companies embrace a haircut from a hairdresser or repairs to your own home by your plumber.
Nonetheless, gov.uk explains that it’s solely the ultimate items and companies which are offered that matter for total GDP.
For instance, if tyres roll off a manufacturing line, and are offered to a automobile producer, the worth of the tyres isn’t included in GDP, it’s mirrored within the worth of the automobile.
The extra you pay, or the market worth of that good or service, is what’s necessary, as these quantities are added collectively, so as to get total GDP.
When GDP goes up, the economic system is rising, that means individuals are spending extra and companies are increasing. For that reason, GDP development, which can be known as financial development, or just “development” — is a key measure of the general power of an economic system.
What’s Labour going to do to spice up the economic system?
Final 12 months, Ms Reeves stated that “a decade of nationwide renewal has begun” and hoped that is the primary of many items of excellent information heading her approach.
However by July 2024, Reeves had adopted a extra sobering stance, saying: “I additionally simply must be actually clear and trustworthy concerning the scale of the problem that we’ve inherited with the general public funds.”
“We’re going to must make troublesome selections. We have to repair the foundations earlier than we will begin rebuilding issues in Britain.
“However not like the earlier authorities, I’m going to be trustworthy concerning the scale of the problem. I’m going to stage with folks.”
The financial outlook has been fraught with challenges because the nation entered 2025, with the economic system not trying as sturdy as many had hoped.
Authorities debt is rising, and the Office for Budget Responsibility just lately warned that: “The UK public funds are in an unsustainable place in the long term. The UK can’t afford the array of guarantees that it has made to the general public.”
GDP impacts unusual Brits in a number of methods, together with by way of employment alternatives and the price of dwelling.
Indicators that the economic system is rising are normally welcomed, nevertheless it’s not at all times essentially excellent news.
In a interval of GDP development, companies are inclined to do effectively and, on paper, usually tend to make use of new folks, so there’s an opportunity that it contributes to job development.
But when the announcement reveals that GDP has risen, this additionally alerts to companies that there’s demand for the product, so they could additionally increase their costs (inflation).
GDP development can be normally related to rising wages, however once more, the truth is much from clear-cut. In 2025, actual wages within the UK haven’t elevated as a lot as GDP, and lots of households are struggling.
With simply 50 households proudly owning extra wealth than half of the UK inhabitants, GDP development doesn’t are inclined to translate into even distribution amongst Brits and doesn’t assure improved dwelling requirements.
By itself, GDP development can sound promising, nevertheless it doubtless doesn’t imply a lot for normal voters who proceed to see their payments improve however their wages stagnate.
