UK economic growth shows a repeated seasonal slump for the fourth consecutive year, raising alarms among economists regarding the reliability of data from the Office for National Statistics (ONS).
- UK economic growth shows a repeated seasonal slump for the fourth consecutive year, raising alarms among economists regarding the reliability of data from the Office for National Statistics (ONS).
This week’s data release highlighted a pattern that has persisted since 2022, with economic growth peaking in the first quarter and declining through the year. According to the ONS, growth in the first quarter of 2025 was a robust 0.7%, but this fell to a mere 0.1% in the fourth quarter, mirroring trends from previous years.
Concerns about the ONS’s data quality have been mounting, especially following criticism last year over labour force figures. While that scrutiny focused on response rates, the current issues appear to stem from the seasonal adjustments made to the Gross Domestic Product (GDP) figures.
Economists have pointed out that the patterns observed in the UK’s economic growth data since the COVID-19 pandemic have made forecasting increasingly challenging. Matt Swannell, chief economic adviser at EY ITEM Club, noted, “It’s very clear that, since the pandemic, the first quarter and second quarter have been much stronger than the third and fourth quarter. This gives a distorted pattern of how the UK economy is performing, complicating the growth outlook for policymakers.”
This trend is unusual and not seen in other major economies, leading experts to question whether the ONS’s seasonal adjustment processes are still effective. The adjustments are designed to account for regular fluctuations, such as those caused by Christmas shopping or summer tourism, but the pandemic has seemingly disrupted these patterns.
James Smith, a developed markets economist at ING, suggested that inflation could also be a contributing factor. He remarked, “It’s very hard to pin down … but somewhere in there, I think the data is just not being properly adjusted for the fact that price hikes have been more heavily weighted towards the first half of the year.”
The ONS remains steadfast in its assertions, stating that an internal report published in September found no underlying issues with its methodology. An ONS spokesperson explained, “We didn’t find any cause for concern, but continue to keep our methods under close review. There have been a number of one-off events in recent years that have led to the first half of the year looking strong, and the second half less so.”
Swannell, however, remains sceptical, believing that one-off events alone cannot account for the observed seasonal discrepancies. He pointed out that the apparent strength of the UK economy in the first half of the year could be misleading, obscuring the reality of economic performance.
In addition to the seasonal patterns, the uncertainty surrounding tax changes before finance minister Rachel Reeves’ annual budgets has also played a significant role in the fluctuations of economic growth. Exports to the US surged in the first quarter of last year, contributing to the initial growth but subsequently tapering off as the year progressed.
Despite the ongoing concerns about the reliability of economic data, both Swannell and Smith anticipate a rebound in the first quarter of this year, consistent with historical trends. The ongoing scrutiny of the ONS’s methods underscores the importance of accurate data in shaping fiscal policy and guiding economic recovery.
