UK avoids a recession by a whisker as economy grows 0.1%

Figures released by the Office for National Statistics (ONS) on Thursday morning shows the UK narrowly avoided a recession as the economy shows a modest growth of 0.1% increase in GDP in the three months to December.

The modest growth is better than analysts had projected and were expecting a 0.1% contraction.

ONS director of economic statistics Liz McKeown said: “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.”

Yael Selfin, chief economist at KPMG UK, said: “While today’s GDP data came in stronger than expected, the OBR is still poised to downgrade its growth forecast next month.

“This will be an additional blow for the chancellor and will add pressure to already tight fiscal plans, which may require reining in some of the scheduled public spending this year.”

Lindsay James, investment strategist at Quilter Investors, said: “The UK economy is still expected to see an improvement in growth as we move through 2025, but high levels of uncertainty remain. The impact of US tariffs is one of the largest risks as even if British goods are not targeted, many British firms contribute to global supply chains that will be affected. In addition, higher energy costs, with European natural gas recently hitting two year highs, will not help matters.”