Britain returned to growth at the end of last year easing fears of a “technical recession” over the winter. Latest official figures from the Office of National Statistics (ONS) reveal that GDP grew by 0.1% % in the final quarter in a boost to Keir Starmer and Rachel Reeves who have made delivering growth their top priority. Growth had stalled to a halt in the third quarter. The ONS figures show that growth was an unexpectedly strong 0.4% in December with the dominant services sector also powering ahead by 0.4%.
However GDP per head fell by 0.1% in the fourth quarter so most people will not have felt much better off. Although the growth is far from stellar it will at least allow the government to claim that it is steering the economy away from “stagflation.”. Some City economists had forecast a small fall in output in the fourth quarter putting the UK on course for a second shallow recession in little more than a year.
A recession is defined by economists of two consecutive quarters of negative growth. The UK suffered a shallow “Rishi recession” in the second half of 2023, its third in 16 years, although growth returned relatively robustly in the first half of 2024. The latest figures follow the Bank of England’s shock downgrade of its growth forecasts for 2025, halving its projection from 1.5% to 0.75%. City economists have also slashed their forecasts for this year.
ONS director of economic statistics Liz McKeown said: “The economy picked up in December after several weak months, meaning, overall, the economy grew a little in the fourth quarter of last year. Across the quarter, growth in services and construction were partially offset by a fall in production. GDP per head, in contrast, fell back slightly in the quarter. “In December wholesale, film distribution and pubs and bars all had a strong month, as did manufacturing of machinery and the often-erratic pharmaceutical industry. However, these were partially offset by weak months for computer programming, publishing and car sales.”.
The Chancellor said:"For too long, politicians have accepted an economy that has failed working people. I won’t. "After 14 years of flatlining living standards, we are going further and faster through our Plan for Change to put more money in people's pockets. “That is why we are taking on the blockers to get Britain building again, investing in our roads, rail and energy infrastructure, and removing the barriers that get in the way of businesses who want to expand.”.
