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The UK economy grew by 0.6 percent in the first quarter of 2026, compared with 0.1 percent in the previous quarter. After ending 2023 in recession, the UK economy grew strongly in the first half of 2024, growing by 0.7 percent in Q1 and 0.6 percent in Q2, with growth slowing in the second half of the year. In the third quarter of 2020, the UK experienced record-setting growth of 17percent, which itself followed a 20 percent contraction in Q2 2020.

Growing economy key to Labour's plans

Since winning the 2024 general election, the UK's Labour Party have seen their popularity fall substantially. In December 2025, the government's approval rating was at -60 percent, giving them a lower approval rating than the Conservatives just before the last election. A string of unpopular policies since taking office have taken a heavy toll on support for the government. Labour hope they can reverse their declining popularity by growing the economy, which has underperformed for several years, and when measured in GDP per capita, fell in 2023, and 2024.

Labor market problems

After a robust 2022, the UK labor market remained resilient throughout 2023 and 2024, but has shown signs of weakness in 2025. The unemployment rate in September 2025 was five percent, up from 4.4 percent at the start of the year. In addition, the average number of job vacancies has been falling since a May 2022 peak. Another concerning aspect of the labor market, from the government's perspective, are the high levels of economic inactivity due to long-term sickness, which reached a peak of 2.84 million in late 2023, and remained at high levels throughout 2024 and 2025.