{"id":104337,"date":"2025-02-17T12:30:00","date_gmt":"2025-02-17T12:30:00","guid":{"rendered":"https:\/\/en.econostrum.info\/uk\/?p=104337"},"modified":"2025-02-17T12:21:44","modified_gmt":"2025-02-17T12:21:44","slug":"uk-economy-avoid-recession-struggle-momentum","status":"publish","type":"post","link":"https:\/\/en.econostrum.info\/uk\/uk-economy-avoid-recession-struggle-momentum\/","title":{"rendered":"UK Economy Avoids Recession but Struggles to Gain Momentum"},"content":{"rendered":"\n

The UK economy<\/strong> managed to avoid a recession at the end of 2024, recording a 0.1% growth<\/strong> in the fourth quarter. This modest expansion defied earlier predictions of a contraction, yet concerns remain over sluggish long-term performance. Chancellor Rachel Reeves<\/strong> acknowledged the improvement but stressed that growth remains below expectations.<\/p>\n\n\n\n

Economic Growth and Sectoral Performance<\/h2>\n\n\n\n

The final quarter of 2024 provided a modest but crucial boost<\/strong> to the UK economy, easing immediate fears of a technical recession<\/strong>. Although GDP growth remained weak, the latest figures suggest a gradual recovery<\/strong> compared to the zero growth recorded in Q3 2024<\/strong>.<\/p>\n\n\n

\n
\"\"
(PA Graphics). Source: ONS<\/figcaption><\/figure><\/div>\n\n\n

Analysts note that while the economy is showing resilience, structural challenges <\/strong>such as stagnant productivity and weak consumer demand continue to weigh on long-term prospects<\/strong>.<\/p>\n\n\n\n

A Better-Than-Expected End to 2024<\/h3>\n\n\n\n

Data from the Office for National Statistics (ONS)<\/strong> showed that GDP grew by 0.4% in December<\/strong>, following a 0.1% increase in November<\/strong> and a 0.1% contraction in October<\/strong>. This was the strongest monthly growth since March 2024<\/strong>, driven primarily by expansion in the services and production sectors<\/strong>.<\/p>\n\n\n\n

Additionally, an upward revision of first-quarter growth from 0.7% to 0.8%<\/strong> contributed to a full-year GDP increase of 0.9% in 2024<\/strong>, a significant improvement from 0.4% in 2023<\/strong>.<\/p>\n\n\n\n

Despite this progress, real GDP per capita declined by 0.1% in the last quarter and by 0.1% across 2024<\/strong> as a whole, indicating that while the economy grew overall, many individuals have not experienced direct financial benefits.<\/p>\n\n\n\n

Fiscal Challenges and Government Response<\/h3>\n\n\n\n

The Bank of England<\/strong><\/a> has halved its growth forecast for 2025 to 0.75%<\/strong>, citing concerns over sluggish consumer spending, <\/strong>business investment, and fiscal constraints<\/strong>.<\/p>\n\n\n\n

The Office for Budget Responsibility (OBR)<\/strong> is expected to lower its growth projections in the upcoming spring statement on 26 March<\/strong>, potentially eliminating Chancellor Reeves\u2019 \u00a310 billion fiscal headroom<\/strong>.<\/p>\n\n\n\n

This could force the government to adjust its spending plans or consider tax increases<\/strong>. According to economist James Smith at ING<\/strong>, \u201ctweaks to future spending plans look likely in March.\u201d<\/p>\n\n\n\n

Policy Impacts and Opposition Criticism<\/h2>\n\n\n\n

The UK economy finds itself at a crossroads, balancing growth with fiscal stability, as government policies continue to face intense scrutiny. The tax and wage measures introduced in October 2024<\/strong> have sparked significant debate about their long-term effects on businesses and employment<\/strong>.<\/p>\n\n\n\n

Although aimed at boosting wages<\/strong> and funding public services, these policies pose potential risks, especially for small and medium-sized enterprises (SMEs)<\/strong>, which may struggle to absorb increasing costs.<\/p>\n\n\n\n

\"\"
(PA Graphics) Source : ONS<\/figcaption><\/figure>\n\n\n\n

On top of this, consumer confidence<\/strong> remains weak, as households continue to deal with recession fears<\/strong>, inflationary pressures, and stagnant real wage growth<\/strong>.<\/p>\n\n\n\n

Impact of Fiscal Policies on Businesses and Households<\/h3>\n\n\n\n

Economic pressures have been compounded by budget measures introduced in<\/strong> October 2024, including higher national insurance contributions and an increase in the minimum wage<\/strong>.<\/p>\n\n\n\n

While these changes were designed to improve wages and fund public services, critics warn that they could lead businesses to raise prices <\/strong>or reduce jobs<\/strong>.<\/p>\n\n\n\n

Concerns persist that these measures, combined with a weaker-than-expected economic outlook<\/strong>, could limit the government\u2019s ability to stimulate further growth in the near term.<\/p>\n\n\n\n

Political and Economic Reactions<\/h3>\n\n\n\n

Shadow Chancellor Mel Stride<\/a><\/strong> has strongly criticised Reeves\u2019 economic strategy, stating that her budget is \u201ckilling growth\u201d<\/strong> and that workers and businesses are already suffering from her policy choices<\/strong>.<\/p>\n\n\n\n

In response, Reeves has reaffirmed the government\u2019s commitment to economic growth and infrastructure investment<\/strong>, citing her recent decision to approve a third runway at Heathrow Airport<\/strong> as an example of the government\u2019s ambition to enhance connectivity and boost long-term growth<\/strong>.<\/p>\n\n\n\n

The UK\u2019s unexpected growth<\/strong> in late 2024 has provided some reassurance, but the economy remains under pressure. With recession<\/strong> fears still looming, Slower-than-expected <\/strong>expansion in 2025, combined with fiscal challenges and cost-of-living concerns<\/strong>, means that significant uncertainty persists<\/strong>.<\/p>\n\n\n\n

With the government gearing up for its spring statement, the emphasis will be on finding a balance between economic support<\/strong> and fiscal responsibility<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

The UK economy narrowly avoided a recession in late 2024, but growth remains fragile. Despite a slight recovery, challenges persist for the year ahead.<\/p>\n","protected":false},"author":9,"featured_media":104342,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-104337","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33","no-featured-image-padding"],"_links":{"self":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/104337","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/comments?post=104337"}],"version-history":[{"count":3,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/104337\/revisions"}],"predecessor-version":[{"id":104349,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/posts\/104337\/revisions\/104349"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/media\/104342"}],"wp:attachment":[{"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/media?parent=104337"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/categories?post=104337"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/en.econostrum.info\/uk\/wp-json\/wp\/v2\/tags?post=104337"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}