The UK economy unexpectedly grew by 0.1% in the final three months of 2024, easing pressure on Chancellor Rachel Reeves after flatlining in the summer. The Office for National Statistics reported that GDP rose slightly, beating forecasts of a decline. The growth was fueled by a better-than-expected 0.4% increase in December, driven by the services sector. Reeves, despite the positive growth, emphasized the need for further economic improvement.
However, the manufacturing sector continued to struggle, declining for the fifth consecutive quarter, with car production hitting a seven-decade low due to weak demand and the shift to electric vehicles. Shadow Chancellor Mel Stride criticized Reeves for allegedly hindering growth with her tax policies. Economists predict sluggish growth in the short term, urging for continued support and investments in the economy.
The UK’s GDP performance placed it mid-table among G7 nations, with the economy outpacing Eurozone countries but falling behind the US and Canada. Despite the positive growth, concerns remain over the impact of UK’s tax policies on businesses and consumers. The pound strengthened on the news of the GDP growth, reaching a one-week high. The government is looking to boost growth by initiating the construction of new towns and infrastructure projects. Overall, while the growth figures offer some relief, challenges and uncertainties persist in the UK economy.
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