The UK economy unexpectedly grew by 0.1% in the final quarter of 2024, providing a boost for Chancellor Rachel Reeves after months of stagnant growth. The growth beat forecasts of a decline of 0.1% and was driven by strong performance in the services sector. Despite the positive data, there are concerns about the manufacturing sector, which has been declining for five consecutive quarters. The UK government is looking to spur growth by constructing up to 12 new towns with at least 10,000 homes each.
While the growth figures have been welcomed, there are still calls for further action to improve the economy. Reeves stated that she is not satisfied with the level of growth and is determined to deliver economic improvements. Economists predict that the UK economy will continue to face challenges in the short term, with sluggish growth expected. Despite the positive growth in December and the overall increase in GDP, real GDP per head has fallen, indicating a decline in living standards for Britons.
The UK economy’s performance in the final quarter of 2024 places it mid-table among G7 nations, behind the US and Canada but ahead of European rivals. The pound rose on the back of the GDP data, reaching a one-week high. Despite the better-than-expected growth figures, there are concerns about the impact of Chancellor Reeves’ budget on growth, with some critics accusing her of “killing growth.” Overall, while the growth figures are a positive sign, there is still work to be done to improve the UK economy and address underlying challenges.
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