UK Economy Grows 0.1% in Q4 2024, Avoiding Predicted Contraction

The UK economy grew 0.1% in the fourth quarter of 2024, avoiding a projected contraction and improving from zero growth in the previous quarter, according to preliminary data from the Office for National Statistics (ONS). The modest expansion was driven by gains in the services and construction sectors, though declines in production weighed on overall growth.

Sector Performance

• Services Sector: Expanded by 0.2%, continuing to be a key driver of UK economic activity.
• Construction: Increased by 0.5%, contributing positively to GDP.
• Production: Declined 0.8%, dragging down the overall growth rate.

Expenditure and Trade Impact

On the expenditure side, the economy faced declines in net trade and gross fixed capital formation, signaling weakness in business investment and trade activity. However, these were offset by a large increase in inventories, which helped stabilize growth.

Outlook for the UK Economy

While the 0.1% GDP increase in Q4 signals resilience, the UK economy continues to face headwinds from high interest rates, weak consumer confidence, and global trade uncertainties. Analysts will be closely watching Q1 2025 data to assess whether the economy can sustain growth or if further policy support is needed.

Source: Office for National Statistics