Chancellor ‘still not satisfied’ despite surprise economic growth at end of 2024

Britain’s economy unexpectedly eked out growth in the final three months of last year, but Chancellor Rachel Reeves said she was “still not satisfied” as fears remain over a lacklustre performance.

Official figures showed gross domestic product (GDP) edged 0.1% higher between October and December, defying forecasts by analysts and the Bank of England for a contraction in the quarter.

It follows zero growth in the previous three months, which had led to fears that the UK was on the brink of recession.

The Office for National Statistics (ONS) estimated that the economy expanded by 0.4% in December, which is better than most analysts expected, and marked a pick up following a 0.1% rise in November and a 0.1% fall in October.

Speaking to broadcasters following the figures, Ms Reeves said: “The growth numbers have come in higher than many expected, but I’m still not satisfied with the level of growth that our economy is achieving.

“And that’s why I am determined to go further and faster in delivering the economic growth and the improvements in living standards that our country deserves.”

The ONS said growth in services and production drove the growth in December, which was the fastest monthly growth since March last year.

But experts said the economy was not out of the woods yet, with the Bank last week halving its forecast for growth to just 0.75% for 2025.

Warnings are mounting that moves to hike national insurance contributions and the minimum wage at last October’s budget will see businesses raise prices and slash jobs.

The latest data also showed living standards under pressure, with real GDP per head – the volume of goods and services available to the average person, according to the ONS – falling by 0.1% in the last quarter and by 0.1% across 2024 overall.

Ms Reeves has vowed to spur on economic growth and make it the Government’s top priority, recently paving the way for a third runway at London’s Heathrow airport as part of this ambition.

However, Britain’s independent forecaster, the Office for Budget Responsibility (OBR), is expected to reveal downgrades to growth forecasts in the spring statement on March 26, which it has reportedly warned the Chancellor this will wipe out her £10 billion “headroom” — spare money against its spending plans.

This will put Ms Reeves under pressure to cut spending or even resort to potential tax rises to keep her on track with fiscal rules, according to economists.

Economist James Smith at ING cautioned that “tweaks to future spending plans look likely in March”.

He said: “The lacklustre end to 2024 will only cement the loss of fiscal headroom the Treasury must now grapple with.

“The OBR has predicted 2% growth this year. It now looks likely it will be around half that.”