GDP grew by 0.1% in the last quarter of 2024 – industry reaction

The UK economy grew by 0.1% in the final months of 2024 according to the Office for National Statistics (ONS).

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

Responding to the figures, 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.”

Martin McTague, National Chair of the Federation of Small Businesses (FSB) said “News that there was a modest up-tick in growth in the weeks running up to Christmas is far preferable to the alternative, but flat growth registered across the final quarter will not come as a surprise to many small firms.

“The fall in production in the last quarter shows that evidence of a feel-good factor from the end of last year is sadly lacking, with members telling us they are finding trading conditions difficult, to say the least.

“With tax changes coming up in April, and the looming Employment Rights Bill which is set to put a big dampener on small businesses’ willingness to take on staff, any economic uplift that has been carried over from last year will be a help, but more must be done to offset turbulence.

“The recent cut in the base rate is a good sign, but will not by itself be enough to give small businesses the confidence they need to choose to invest in their operations, which is what is needed for long-term, substantial and sustainable growth in GDP.

“The Government has loudly stated its commitment to growth, which we agree with, but we need to see words turned into actions in the shortest possible timeframe, so that this positive momentum can snowball into a virtuous circle of investment, productivity gains, and greater prosperity in every part of the UK.”

George Lagarias, Chief Economist at Forvis Mazars said “December growth significantly surprising on the upside may be good news, but we wouldn’t pop the champagne just yet. The spectre of stagflation is very much alive. The upside came mainly from the service sector, and in particular professional services. However, the more forward-looking January PMI data on British services suggest that orders remain soft, corporate risk aversion high and employment conditions are deteriorating. While we can’t totally dismiss a good growth number, we don’t think that it alone will move the needle for the Bank of England which is on a dovish path.”

TUC General Secretary Paul Nowak said “It’s good news that the economy returned to growth at the end of 2024. There is a lot of work still to do, but the Government’s approach is taking us in the right direction.

“After years of stagnation and falling living standards, families and businesses desperately need change. The government must remain laser-focused on creating secure, decently paid jobs, which are the bedrock of a strong and resilient economy. This is the best way to keep building confidence and boost household spending.”

“These figures show the importance of investing in growth. Boosting our essential infrastructure and public services will deliver the improvements our economy urgently needs and it is the best way to sustainable public finances.”

Ben Jones, Lead Economist, CBI, said “The rebound in activity in December is encouraging. Although growth over Q4 as a whole was still lacklustre, the data supports our view that the loss of momentum in the second half of last year will prove to be a soft patch for the economy rather than a slide back into stagnation.

“But our recent forecast for a return to moderate growth over 2025 will require consumers to abandon some of their recent caution. And it assumes that businesses won’t see their headroom for investment squeezed any further.

“Today’s figures underline how important the government’s renewed focus on growth is. Much of the innovation and investment necessary to drive economic growth will come from business leaders across the UK.  

“They want to see a government fired up to move from positive words to ambitious delivery, working with business to create the right environment for investment and expansion. Whether that’s the Industrial Strategy, or reforms to business rates and the Apprenticeship Levy. By prioritising these the government can unlock much needed private sector investment and deliver on its clear vision to kickstart the economy in 2025.”

Stuart Morrison, Research Manager at the British Chambers of Commerce said “Confirmation that the economy grew slightly in Q4 is a small bit of relief for businesses in challenging times. However, regardless of the headline data, it’s clear that many firms faced a chill of uncertainty in the final months of last year.

“Our research shows the Autumn budget created a challenging menu of cost pressures for businesses to try and stomach. The national insurance and minimum wage hikes are pushing firms to make tough decisions simply to balance the books. Changes to the employment rights legislation in the coming months are adding further costs and concern for businesses.

“Boosting business investment is fundamental for the UK to achieve stronger growth in the long term. Our immediate solutions for government are clear – accelerate business rate reform, green light more infrastructure projects and boost exports. Business need support to get the UK thriving, working and trading.”

Suren Thiru, ICAEW Economics Director said “These figures confirm a better-than-expected end to 2024 as the loss of confidence following the budget was more than offset by a bumper December where strong services activity helped boost overall output.

“Despite this positive outturn, the drop-off in economic activity in the second half of last year suggests that the big picture remains one of stagnation amid the loss of confidence following the budget and longstanding difficulties, including poor productivity.

“The UK economy could well see slightly stronger growth this quarter with the boost to consumer spending amid decent real wage growth likely to help offset the squeeze on sentiment from geopolitical uncertainty and looming tax rises.

“Despite these more positive figures, with rate setters currently more worried about a stagnating economy than rising inflation, another rate cut sooner rather than later remains on the table.”