The UK’s economy unexpectedly eked out minuscule growth in the final three months of last year, and in 2024 as a whole rose by just shy of 1%.
Official figures showed gross domestic product (GDP), the term typically used to describe the size of a nation’s economy, edged 0.1% higher between October and December, defying forecasts by analysts and the Bank of England for a contraction in the quarter.
It follows zero growth in the previous three months, which had led to fears that the UK was on the brink of recession.
The Office for National Statistics (ONS) estimated that the economy expanded by 0.4% in December, which is better than most analysts expected, and marked a pick up following a 0.1% rise in November and a 0.1% fall in October.
It eases the immediate pressure on under fire Chancellor Rachel Reeves, but there are still worries over whether she will meet her fiscal rules, as well as the impact on businesses and jobs from recent Budget measures.
Growth in the quarter was driven by a range of industries, from pubs and bars to machinery manufacturers, having a strong December.
But the figures also indicated living standards last year were slightly lower than in 2023 on average.
The fourth quarter figures and an upward revision to first quarter output – to 0.8% growth from 0.7% previously – means the economy grew by 0.9% overall in 2024, up from 0.4% growth in 2023.
But experts said the economy was not out of the woods yet, with the Bank last week halving its forecast for growth to just 0.75% for 2025.
Warnings are mounting that moves to hike national insurance contributions and the minimum wage at last October’s budget will see businesses raise prices and slash jobs.
The latest data also showed living standards under pressure, with real GDP per head – the volume of goods and services available to the average person, according to the ONS – falling by 0.1% in the last quarter and by 0.1% across 2024 overall.
Shadow chancellor Mel Stride said Ms Reeves’ budget was “killing growth” and working people and businesses were “already paying for her choices”.
Economist James Smith at ING cautioned that “tweaks to future spending plans look likely in March”.
He said: “The lacklustre end to 2024 will only cement the loss of fiscal headroom the Treasury must now grapple with.
“The OBR has predicted 2% growth this year. It now looks likely it will be around half that.”
