UK Economy Weakens After Budget As Job Cuts Rise And Spending Slows Down

TLDR

• UK GDP grew only 0.1% in November, with weak December activity expected
• Over 33,000 jobs were planned to be cut in the four weeks to mid-December
• Barclays reported a 1.7% drop in card spending compared to last December
• Business confidence fell to its lowest level in three years after the budget

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The UK economy is showing signs of slowing down following Chancellor Rachel Reeves’s budget announcement in late November 2025. Official data is expected soon, but early indicators suggest minimal growth and weakening business and consumer confidence.

Economic Growth Slows as Spending Stalls

Analysts predict that the UK economy grew by only 0.1% in November 2025. This follows signs of weak activity during December, based on card spending and other real-time data. Barclays Plc reported that card spending fell by 1.7% in December compared to the same period last year.

The report also compared this fall to February 2021, when the UK was in lockdown, suggesting a sharper-than-expected decline in consumer activity. Consumers reportedly cut back on non-essential spending, especially on clothes and eating out, which hurt retail sales during the holiday season.

Labor Market Weakness Fuels Concern

In the four weeks leading up to December 14, over 33,000 job cuts were announced by UK companies. This marked the highest number of job reductions since early 2023, raising concerns over job security and its effects on consumer spending.

Economist Andrew Wishart from Berenberg stated, “Right now, it looks soft because we’re seeing weakness in the job market affecting spending.” As uncertainty grows, businesses are cautious about hiring, which could delay economic recovery in the coming months.

Business Confidence Drops After Budget Announcement

Following the Chancellor’s budget, business confidence dropped sharply. According to the Institute of Chartered Accountants in England and Wales, confidence reached its lowest level in three years in the fourth quarter of 2025.

This drop followed the announcement of an extra £26 billion in tax revenue, which many businesses feared would lead to future tax hikes. The concern over higher costs and reduced consumer demand has made companies more hesitant to invest or expand.

Cyberattack Adds Pressure to Recovery

One major event affecting the economy was the cyberattack on Jaguar Land Rover in 2025. The attack forced the company to stop global production for five weeks, which disrupted supply chains and caused financial losses.

This incident added more pressure on an already weak economy. It also raised concerns about the digital security of major industries, especially in the context of economic recovery. The production halt affected not only the automotive sector but also smaller suppliers linked to the company.

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