UK economy unexpectedly grows in final months of 2024

The UK economy unexpectedly grew in the final three months of last year following a boost to the construction and services sectors.

The economy expanded by 0.1% between October and December, according to official figures, despite analysts predicting it would contract.

Growth in the quarter was driven by a range of industries, from pubs and bars to machinery manufacturers, having a strong December.

However, with tax rises coming into force in April, concerns remain that the economic growth will remain sluggish for sometime.

Businesses have warned that paying more in National Insurance, along with minimum wages rising and business rates relief being reduced, could affect the economy’s ability to grow in the coming months, with employers expecting to have less cash to give pay rises and create new jobs.

The Bank of England has also halved its growth forecast the UK for this year, amid concerns that higher costs for employers could hit hiring, profits, investment – and push up prices.

But the figures showing a return to growth at the end of 2024 will be welcome news for the government, which has made growing the economy its top priority in its effort to improve living standards.

Chancellor Rachel Reeves said the government was going “further and faster” 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,” she added.

Liz McKeown, director of economic statistics at the Office for National Statistics, said the economy picked up in December following “several weak months”, which meant overall it grew in the final part of the year.

“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,” she said.

However, this was offset by weak months in trade for computer programming, publishing and car sales businesses.

Figures also showed income per person was slightly lower in 2024 as a whole than in 2023.