The UK economy showed signs of recovery at the close of last year, with official data released Thursday offering some relief to the Labour government as it grapples with US tariffs. According to the Office for National Statistics (ONS), the nation’s gross domestic product (GDP) grew by 0.1% in the October-December period, following zero growth in the third quarter of 2024.
Analysts had predicted a slight contraction in the fourth quarter, making this modest growth a positive surprise.
This development provides a boost to Prime Minister Keir Starmer’s government, which has prioritized economic growth since Labour’s victory in July’s general election, ending 14 years of Conservative rule. However, economic performance in the early months of the new administration had been sluggish, with inflation remaining high.
Last week, the Bank of England revised its growth forecast for 2025, predicting a modest 0.75% increase in GDP. This marks a slowdown from last year’s growth of 0.9%, according to ONS data, with December showing a 0.4% increase in activity. The central bank attributed the revision to global risks, including tariffs on US imports imposed by President Donald Trump.
“The economy picked up in December after several weak months, resulting in slight growth for the quarter,” noted Liz McKeown, director of economics at ONS. “While growth in services and construction helped, it was partially offset by a decline in production.”
– Tariff Concerns –
In response to the data, Finance Minister Rachel Reeves emphasized her commitment to growing the economy, focusing on reducing regulations to facilitate new infrastructure projects.
“For too long, politicians have accepted an economy that has failed working people,” Reeves said in a statement. “After 14 years of stagnating living standards, our plan for change is moving us faster towards a future that puts more money in people’s pockets.”
However, her economic plans may face challenges due to the ongoing tariff threat from the US. On Tuesday, the UK government stated it was “engaging” with the US over the details of President Trump’s steel tariffs, unlike the more robust responses from Canada and the European Union. Seeking to maintain strong ties with the US, Starmer told parliament on Wednesday:
“The US and the UK share a strong and balanced trading relationship. We invest heavily in each other’s economies, and we will continue to work closely with President Trump to foster growth and create jobs.”
