FTSE 100 Live Surges Above 10,500 as UK GDP Growth Sends Mixed Signals to Markets

London shares and broader European markets leaned into risk on Thursday as fresh UK growth numbers landed with a “good news, not great news” flavour. The UK economy expanded by 0.1% in the final quarter of 2025, matching the previous quarter’s pace but coming in softer than many forecasts. Investors, meanwhile, focused on what the details said about the shape of growth — and what it might mean for rates, earnings, and the FTSE 100’s march into fresh record territory.

The headline quarterly GDP reading may look tame, but the composition mattered. Official estimates showed output growth in the quarter was driven by a 1.2% rise in production, while construction fell 2.1% and the vast services sector showed no growth. On an annual basis, UK GDP was estimated to have increased by 1.3% in 2025, up from 1.1% in 2024. Yet the more politically charged detail was the squeeze on living standards: real GDP per head fell 0.1% in the quarter, marking a second consecutive quarterly decline.

That fragility is exactly why the “rates narrative” matters so much right now. When growth is positive but underwhelming, markets tend to treat it as a nudge toward easier financial conditions — not because things are booming, but because policymakers may have more room to support demand if inflation pressures allow. That can be supportive for equities, especially for rate-sensitive corners of the market, even while it keeps the macro conversation tense for households watching real incomes.

The UK data also arrived in a wider European session that looked risk-on. German and French benchmarks rose strongly, and the broad STOXX 600 advanced alongside them. In that context, the FTSE 100’s push above 10,500 points wasn’t just about domestic GDP — it was also about cross-border sentiment, currency moves, and the reality that many large UK-listed companies earn a significant share of revenues overseas. When the pound steadies near the mid-1.36s versus the dollar, it can reshape how investors think about global earnings translation, import costs, and the relative appeal of international-facing UK names.

Politically, the details in today’s figures were always likely to draw heat. Union leaders argued the numbers underline how underinvestment can keep growth stuck in low gear, and the household picture remains sensitive after estimates showed real household disposable income fell across 2025. For markets, the practical question is whether the next phase of growth becomes broader and more resilient — or whether the UK stays in a stop-start pattern where a handful of sectors do the heavy lifting.

One of the quieter but important angles in today’s update is the contrast between “total GDP up” and “GDP per person down.” For many readers, that gap is where the economy starts to feel real: modest national expansion doesn’t automatically translate into better living standards, particularly when population growth and cost pressures are part of the story. Markets don’t price living standards directly, but they do price what it implies for consumer spending, wage dynamics, and ultimately the earnings outlook for retailers, banks, and domestic cyclicals.

For global investors watching from outside the UK, there was also a relative-growth point: the UK’s 2025 expansion outpaced several large European economies on the annual comparison. That doesn’t eliminate the UK’s structural questions — but it helps explain why the tone in European equities can stay constructive even when the day’s GDP headline feels merely “okay.”

If you want to read the official release in full, the GDP figures and breakdowns are published by the Office for National Statistics in its bulletin on UK output and quarterly growth here.