- UK economy delivered unexpected GDP growth of 0.1% in the last three months of 2024
- 0.9% growth for 2024 was lower than that achieved by several G7 countries including Canada and France
- When population growth is considered GDP per head was 0.1% lower than 2023
- The service sector was the main contributor to 0.4% GDP growth in December
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK GDP figures:
“Even this miniscule scrap of growth will be a relief for the Treasury, which could have been dealing with a very different set of headlines this morning.
“The economy is hardly in good health and another quarter bumping along the bottom is not the growth the government has promised. In fact when you compare the UK economy with that of other G7 countries the UK wasn’t at the front of the pack in 2024, it was stuck somewhere in the middle with Germany and Italy bringing up the rear.
“There’s always the possibility that these figures could be revised but right now it looks like the UK has dodged the confidence sapping label of a technical recession.
“After a bruising Budget and a halving of growth forecasts by the Bank of England, any bit of good news should be celebrated, and the government has shifted tack over the last month or so with backing for big infrastructure projects like Heathrow’s third runway putting meat on the bones of the chancellor’s growth plans.
“But this isn’t the kind of growth that will make people feel better off, something Keir Starmer has said will be the way we can judge the government’s success. Add in population growth and GDP per head actually fell in 2024 compared to the year before.
“Interest rates may be falling but that takes time to filter through to households and many are still wary of spending as company after company warns that changes to employer NI will supress wage increases and result in fewer jobs being created. Many more are still finding the impact of higher prices difficult to deal with, especially after a hike in the energy price cap, and warnings that inflation will nudge back up later in the year have further dented confidence.
“The big question that must be troubling the chancellor is how quickly this lacklustre economic performance can be turned around and in the near-term how much that fiscal headroom has shrunk since the OBR’s last workings.
“Today’s headlines will bring a degree of relief and miniscule growth is still growth – something the government can point to and say the plan is beginning to work. But with those tax increases still in the post and real concerns about trade if US tariffs gum up the global works, the government’s plans will face difficulties if the economic engine is still running on fumes.”
