The UK economy has thrown a curveball, growing by 0.1% in the final stretch of 2024—defying predictions of a slight downturn. While it’s not a massive jump, it’s still a win in a tough economic climate and brings a bit of relief after months of uncertainty.
What’s Driving the Growth?
The services sector stepped up, growing by 0.2%, proving once again that the UK’s economy leans heavily on industries like finance, retail, and hospitality. The construction industry also had a solid quarter, expanding by 0.5%, likely fueled by new projects and government spending. However, production took a hit, dropping by 0.8%, highlighting ongoing challenges in manufacturing.
On the spending front, businesses stocking up on goods helped balance out weak trade and lower investment levels—a small but important boost.
GDP Per Person Takes a Dip
Here’s the catch—GDP per head fell by 0.1%, meaning that while the economy grew overall, the average person might not feel the benefits just yet. This is something policymakers will need to keep an eye on, as the cost of living and wages continue to be hot topics.
What’s Next for the UK Economy?
Economists have tweaked previous growth estimates, with early 2024 looking slightly better than first thought. Looking ahead, projections suggest the UK could see a 0.5% growth rate by 2026—not exactly a boom, but still moving in the right direction.
While this latest growth isn’t a game-changer, it’s a sign that the economy is holding its ground despite ongoing challenges. The real test will be whether this momentum can continue into 2025 and beyond. Stay tuned!
Author: Hassan Ahmad
