UK economy grows for first time in three months

January 16, 2025
UK economy grows

For the first time in three months, the UK economy expanded, partly due to an increase in business for restaurants, bars, and the building sector.

Following two months in which the GDP fell, official numbers indicated a 0.1% expansion.

The government will be happy to see growth resume after recent financial market volatility caused the value of the pound to decline and its borrowing costs to reach their highest level in years.

However, because of decreases in manufacturing and company leasing and rentals, the number was lower than economists had anticipated.

Chancellor Rachel Reeves reiterated her pledge to go "further and faster" to improve economic growth in order to boost living standards, declaring it was the "number one priority" for the government.

"That means generating investment, driving reform and a relentless commitment to root out waste in public spending," she said.

However, with tax rises set to come into effect in April, businesses have repeatedly warned the extra costs faced through hikes in National Insurance, as well as the minimum wage, could impact the economy's ability to grow, with employers expecting to have less cash to give pay rises and create new jobs.

In the three months to November, the economy is estimated to have shown no growth. "The economy continues to be broadly flat," said Liz McKeown, director of economic statistics at the Office for National Statistics (ONS).

In a bid to turn the tide, Reeves will meet representatives from some of the country's biggest regulators later, including energy watchdog Ofgem and the Competitions and Markets Authority, to get ideas for growing the economy.

Reeves is understood to have decided to meet them in-person rather than wait to read submissions, with a Treasury source describing the meeting as "a kick up the backside".
The ONS said the construction and services sectors drove the marginal growth in November.

Construction was led by new commercial developments, but Ms McKeown said production continued to decline in November with "further falls across several manufacturing industries and oil and gas extraction companies".

"Services grew a little, with wholesaling, pubs and restaurants and IT companies all doing well, partially offset by falls in accountancy and business rental & leasing."