Weak GDP data is raising expectations of interest rate cuts that could ease borrowing costs but squeeze savers as the economy loses momentum.The UK economy stalled in the three months to September, growing by just 0.1% compared with the previous quarter.

Office for National Statistics (ONS) data show real gross domestic product (GDP) rose by 0.1% in the three months to September 2025 compared with the three months to June, down from growth of 0.2% in the previous period.

Monthly GDP is estimated to have fallen by 0.1% in September.

The details reveal further weakness beneath the surface. The production sector shrank by 0.5% in the three-month period and by 2.0% in September alone.

Services output rose by just 0.2%, while construction grew by just 0.1%.

What the weak data mean for interest rates

The weak economic performance strengthens the case for the Bank of England (BoE) to consider cutting interest rates further in the months ahead.

In its current policy framework, the BoE says that if inflation remains on track, it expects to be able to gradually reduce rates into 2026.

With demand slackening and GDP growth barely positive, markets and analysts see a higher probability of a cut to the bank rate, currently at 4%.

That said, the BoE remains cautious. It has stressed that inflation is still above its 2% target and that stronger evidence of disinflation is needed before moving.

Implications for households

For households, the heightened possibility of rate cuts carries a mix of implications.

Borrowers could benefit. If the BoE cuts rates, mortgage lenders may pass on lower borrowing costs. Homeowners remortgaging or taking out new mortgages may see lower monthly payments or improved affordability.

However, savers may see slower gains or even declining interest rates on deposit accounts, as banks often reduce savings rates following central bank cuts.

Cost of living relief could arrive. Lower borrowing costs for households and businesses may reduce financial stress and support spending, which could help ease the pressure on budgets.

The impact of interest rate changes take time to feed through into the wider economy however, meaning any relief won’t be immediate for most households.

Caution remains if jobs and wages stay weak. A fragile growth environment could limit the upside of any policy loosening, meaning households might still face risks from weaker incomes despite cheaper credit.

While the BoE has signalled the possibility of gradual rate reductions, it remains guarded because inflation has not yet returned to target.

Households unsure how shifting economic conditions and potential rate cuts might affect their savings, borrowing or long-term plans should consider speaking to a qualified financial planner who can assess their circumstances and provide tailored help.