UK Economy Ekes Out 0.1% Growth in The Fourth Quarter

• The U.K. economy grew by 0.1% in the fourth quarter of 2024, beating expectations, according to a preliminary estimate from the U.K.’s Office for National Statistics (ONS) on Thursday, February 13, 2025. Economists polled by Reuters had expected the country’s GDP to contract by 0.1% over the period.
• The services and construction sectors contributed to the better-than-expected performance in the economy, up 0.2% and 0.5%, respectively, but production fell by 0.8%, the ONS said.
• The British economy had recorded zero growth in the third quarter and lacklustre monthly GDP data since then, with a 0.1% contraction in October and a 0.1% expansion in November. The ONS noted that growth had picked up in December, with an estimated 0.4% month-on-month expansion thanks to growth in services and production.
• Sluggish growth and a recent drop in inflation prompted the Bank of England last week to make its first interest rate cut of the year, bringing its benchmark rate down to 4.5%.
• The central bank signalled further rate trims were coming as inflationary pressures wane but noted that higher global energy costs and regulated price changes are expected to push up headline inflation to 3.7% in the third quarter of 2025, “even as underlying domestic inflationary pressures are expected to wane further.”
• The BOE expected the inflation rate to fall back to its 2% target by 2027. The central bank also halved the U.K.’s economic growth forecast from 1.5% to 0.75% this year.

(Source: Reuters)