Prime Highlights:
UK GDP rose by 0.1% in the fourth quarter of 2024, surpassing forecasts of a 0.1% decline. This follows zero growth in Q3.
December saw a 0.4% monthly growth, largely fueled by strong performances in wholesale, film distribution, and hospitality industries.
Key Background:
Britain’s economy demonstrated an unexpected resilience in the final quarter of 2024, with gross domestic product (GDP) rising by 0.1%. This positive result defied forecasts of a 0.1% decline, offering relief to the Labour Party after a stagnant summer period. Official data from the Office for National Statistics (ONS) showed that, following zero growth in the third quarter, the UK economy experienced modest expansion in the final three months of the year.
The figures provide a much-needed boost for Shadow Chancellor Rachel Reeves, as the economy surpassed predictions from both City economists and the Bank of England, who had anticipated a slight contraction. Economic performance improved further in December, with monthly growth of 0.4%, primarily driven by a strong showing in the services sector, particularly business-facing services.
While the fourth-quarter growth was positive, it was somewhat uneven across sectors. Services and construction contributed to overall growth, but this was partially offset by a decline in the production sector, including manufacturing and energy, which contracted for the fifth consecutive quarter. GDP per capita also experienced a slight decline during the period. The December performance of several industries, including wholesale, film distribution, and hospitality, played a pivotal role in the better-than-expected outcome. Conversely, sectors such as computer programming, publishing, and car sales underperformed.
Reeves responded to the GDP results by acknowledging the surprise growth, but stressed that she remained dissatisfied with the pace of economic recovery. She reaffirmed her commitment to driving more significant and sustainable growth. Meanwhile, the Confederation of British Industry (CBI) expressed cautious optimism, noting that the rebound in December indicated the economy might be recovering from a mid-year slowdown rather than slipping into stagnation. Despite the positive data, ongoing challenges persist, including rising inflation and business concerns over taxation, as outlined by critics of the Chancellor’s fiscal policies.
