UK recession fears ease as economy grows by 0.1% in October-December – business live

The pound has hit a one-week high, after this morning’s GDP data beat expectations.

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Sterling is up over half a cent at just over $1.25.

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It has already been strengthening, as the markets welcomed the prospect of a peace deal between Ukraine and Russia.

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Chancellor of the Exchequer Rachel Reeves has responded to this morning’s GDP report, saying:

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“For too long, politicians have accepted an economy that has failed working people. I won’t.

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“After 14 years of flatlining living standards, we are going further and faster through our Plan for Change to put more money in people’s pockets.

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“That is why we are taking on the blockers to get Britain building again, investing in our roads, rail and energy infrastructure, and removing the barriers that get in the way of businesses who want to expand.”

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Worryingly, though, once you adjust for population changes you see that UK economic activity per person actually fell over the last two quarter.

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Real GDP per head is estimated to have fallen by 0.1% in Quarter 4 2024, the ONS says.

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Its first estimate shows that there was a slight fall in GDP per head of 0.1% in 2024.

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chart showing UK GDP per head”,”caption”:”A chart showing UK GDP per head”,”credit”:”Illustration: ONS”}}],”attributes”:{“pinned”:false,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1739430405000,”blockCreatedOnDisplay”:”02.06 EST”,”blockLastUpdated”:1739430906000,”blockLastUpdatedDisplay”:”02.15 EST”,”blockFirstPublished”:1739430906000,”blockFirstPublishedDisplay”:”02.15 EST”,”blockFirstPublishedDisplayNoTimezone”:”02.15″,”title”:”Real GDP per head falls for second quarter running”,”contributors”:[],”primaryDateLine”:”Thu 13 Feb 2025 02.22 EST”,”secondaryDateLine”:”First published on Thu 13 Feb 2025 01.40 EST”},{“id”:”67ad978f8f0890d10a89676a”,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

In December alone, UK GDP expanded by a faster-than-expected 0.4% – helping the economy to grow in the final quarter of 2024.

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ONS director of economic statistics Liz McKeown says:

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n

“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.

n

“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.”

n

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Newsflash: Britain’s economy has avoided dropping into recession, after posting modest growth at the end of last year.

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UK GDP rose by 0.1% in October-December, better than City economists had expected – they’d pencilled in a 0.1% fall in activity.

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This will be a relief for chancellor Rachel Reeves.

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That follows no growth in July-September, as previously reported.

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GDP grew 0.1% in Quarter 4 (Oct to Dec) 2024; services (+0.2%) and construction (+0.5%) both grew while production fell (-0.8%).

Read GDP first quarterly estimate ➡️ https://t.co/jdIMeoFUj8 pic.twitter.com/SVW6diYVcQ

— Office for National Statistics (ONS) (@ONS) February 13, 2025

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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

“,”elementId”:”b2d8276c-f6df-4d39-b431-c2f676ffb27c”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

We’re about to learn how the UK economy fared in the final three months of 2024.

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The first estimate of UK GDP for the October-December quarter is due to be released at 7am, but it may not make cheerful reading for the government.

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City economists are expecting to learn that the economy shrank by 0.1% in Q4 2024, which would Britain on the brink of a technical recession – defined as two quarterly contractions in a row.

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The economy stagnated in July-September, so expectations are that the economy hasn’t grown in the two quarters since Labour won the general election in July.

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Today’s data will also show how the economy performed in December. Earlier data has shown that GDP fell by 0.1% in October, followed by a 0.1% rise in November (these figures could be revised, though.)

“,”elementId”:”25b9e9cf-b76f-42d3-9d48-2d74f80ffaae”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

And there are tougher times ahead, as Donald Trump threatens to ignite a trade war.

“,”elementId”:”5599a6df-4b87-4ad5-a180-98e69ecc0331″},{“_type”:”model.dotcomrendering.pageElements.RichLinkBlockElement”,”prefix”:”Related: “,”text”:”Donald Trump sees his trade war as a show of strength. In fact, it’s the opposite | Larry Elliott”,”elementId”:”8b80e2ca-de2a-4423-b851-25873e6c5bf5″,”role”:”thumbnail”,”url”:”https://www.theguardian.com/commentisfree/2025/feb/13/donald-trump-trade-war-president-china”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Michael Field, chief equity strategist at Morningstar, says:

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n

Some sectors of the UK economy are clearly struggling, such as manufacturing and particularly areas like chemicals, as they are grappling with high energy prices relative to the US, making them less competitive. The danger is that US tariffs could also worsen the situation for exporters.

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Interest rates have fallen by 75 basis points from the peak, with the market expecting another 65 basis points of cuts this year. The cuts may be coming at a slower pace than markets would like, but over time these cumulative cuts should help create a more supportive economic environment for businesses.”

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The agenda

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  7am GMT: UK GDP report for October-December 2024

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  7am GMT: UK trade report for October-December 2024

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  9am GMT: IEA oil market report

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  9.30am GMT: Business investment in the UK: October to December 2024, provisional results

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  1.30pm GMT: US weekly jobless claims

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Key events

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Pound rises over $1.25

The pound has hit a one-week high, after this morning’s GDP data beat expectations.

Sterling is up over half a cent at just over $1.25.

It has already been strengthening, as the markets welcomed the prospect of a peace deal between Ukraine and Russia.

Reeves: I won’t accept failing economy

Chancellor of the Exchequer Rachel Reeves has responded to this morning’s GDP report, saying:

“For too long, politicians have accepted an economy that has failed working people. I won’t.

“After 14 years of flatlining living standards, we are going further and faster through our Plan for Change to put more money in people’s pockets.

“That is why we are taking on the blockers to get Britain building again, investing in our roads, rail and energy infrastructure, and removing the barriers that get in the way of businesses who want to expand.”

Real GDP per head falls for second quarter running

Worryingly, though, once you adjust for population changes you see that UK economic activity per person actually fell over the last two quarter.

Real GDP per head is estimated to have fallen by 0.1% in Quarter 4 2024, the ONS says.

Its first estimate shows that there was a slight fall in GDP per head of 0.1% in 2024.

Economy picked up in December

In December alone, UK GDP expanded by a faster-than-expected 0.4% – helping the economy to grow in the final quarter of 2024.

ONS director of economic statistics Liz McKeown says:

“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.”

The UK economy was supported by growth in the services sector, and in construction, in the final quarter of last year.

Britain’s services sector grew by 0.2%, while construction expanded by 0.5%.

The manufacturing sector contracted, though, with production output down by 0.8%.

UK beats forecasts as GDP rises 0.1% in October-December

Newsflash: Britain’s economy has avoided dropping into recession, after posting modest growth at the end of last year.

UK GDP rose by 0.1% in October-December, better than City economists had expected – they’d pencilled in a 0.1% fall in activity.

This will be a relief for chancellor Rachel Reeves.

That follows no growth in July-September, as previously reported.

GDP grew 0.1% in Quarter 4 (Oct to Dec) 2024; services (+0.2%) and construction (+0.5%) both grew while production fell (-0.8%).

Read GDP first quarterly estimate ➡️ https://t.co/jdIMeoFUj8 pic.twitter.com/SVW6diYVcQ

— Office for National Statistics (ONS) (@ONS) February 13, 2025

“}}”>

The UK government is hoping to spur growth by starting construction up to 12 new towns by the next election.

Each new town will have the potential for at least 10,000 homes with accompanying infrastructure, as the government promised to sweep away red tape and overcome environmental objections to get them built.

More here:

Introduction: UK GDP report in focus

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

We’re about to learn how the UK economy fared in the final three months of 2024.

The first estimate of UK GDP for the October-December quarter is due to be released at 7am, but it may not make cheerful reading for the government.

City economists are expecting to learn that the economy shrank by 0.1% in Q4 2024, which would Britain on the brink of a technical recession – defined as two quarterly contractions in a row.

The economy stagnated in July-September, so expectations are that the economy hasn’t grown in the two quarters since Labour won the general election in July.

Today’s data will also show how the economy performed in December. Earlier data has shown that GDP fell by 0.1% in October, followed by a 0.1% rise in November (these figures could be revised, though.)

And there are tougher times ahead, as Donald Trump threatens to ignite a trade war.

Michael Field, chief equity strategist at Morningstar, says:

Some sectors of the UK economy are clearly struggling, such as manufacturing and particularly areas like chemicals, as they are grappling with high energy prices relative to the US, making them less competitive. The danger is that US tariffs could also worsen the situation for exporters.

Interest rates have fallen by 75 basis points from the peak, with the market expecting another 65 basis points of cuts this year. The cuts may be coming at a slower pace than markets would like, but over time these cumulative cuts should help create a more supportive economic environment for businesses.”

The agenda

• 7am GMT: UK GDP report for October-December 2024

• 7am GMT: UK trade report for October-December 2024

• 9am GMT: IEA oil market report

• 9.30am GMT: Business investment in the UK: October to December 2024, provisional results

• 1.30pm GMT: US weekly jobless claims