UK GDP rose by 0.1% in October-December, better than City economists had expected – they’d pencilled in a 0.1% fall in activity, which would have put the economy on the brink of a technical recession.
This will be a relief for chancellor Rachel Reeves.
That follows no growth in July-September, as previously reported.
The Office for National Statistics reports that the services and construction sectors grew, while production output fell.
However, the economy did shrink in Q4 on a per capita basis (GDP per head of population).
The UK economy was supported by growth in the services sector, and in construction, in the final quarter of last year.
Britain’s services sector grew by 0.2%, while construction expanded by 0.5%.The manufacturing sector contracted, though, with production output down by 0.8%.
In December alone, UK GDP expanded by a faster-than-expected 0.4% – helping the economy to grow in the final quarter of 2024.
ONS director of economic statistics Liz McKeown says: “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.”
Worryingly, though, once you adjust for population changes you see that UK economic activity per person actually fell over the last two quarter.
Real GDP per head is estimated to have fallen by 0.1% in quarter 4 2024, the ONS says.Its first estimate shows that there was a slight fall in GDP per head of 0.1% in 2024.
Britain’s production sector has shrunk for the last five quarters in a row, with activity declining by 0.8% in the fourth quarter of last year.
The fall in production was largely driven by a 0.7% decline in manufacturing and a 2.5% decline in mining and quarrying, the Office for National Statistics report.
The largest negative contributions came from the manufacture of transport equipment, which fell by 2.3%, and the manufacture of pharmaceuticals, which fell by 4.0%.
The ONS says: "The manufacture of transport has fallen for three consecutive quarters, mainly because of a decline in the manufacture of motor vehicles and motorcycles."
Data earlier this year showed that British car production fell in 2024 to its lowest level in seven decades – barring the coronavirus pandemic – as the industry struggles with weak demand and prepares to shift away from fossil fuels to electric vehicles.
The pound has hit a one-week high after the GDP data beat expectations.
Sterling is up over half a cent at just over $1.25.It has already been strengthening, as the markets welcomed the prospect of a peace deal between Ukraine and Russia.
The agenda
• 7am GMT: UK GDP report for October-December 2024
• 7am GMT: UK trade report for October-December 2024
• 9am GMT: IEA oil market report
• 9.30am GMT: Business investment in the UK: October to December 2024, provisional results
• 1.30pm GMT: US weekly jobless claims
We'll be tracking all the main events throughout the day … |
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