"UK GDP returned to growth after two consecutive months of decline, with growth potentially accelerating in 2025. Household balance sheets remain healthy and coupled with continued strong wage growth, this could spur further pick-up in consumer spending. Government spending could also become a key driver of growth this year, given the front-loaded nature of its spending plans announced last autumn.
"Nonetheless, downside risks to the outlook could dampen growth this year. Financial conditions have tightened considerably in recent weeks, driven by concerns over global trade and rising inflation which could see interest rates remain higher for longer. Tighter financial conditions and a gloomy business mood on the back of higher taxes and a potential escalation in trade conflicts could set back business investment, a notable bright spot in 2024..
“GDP growth in November was driven by a recovery in construction output and the food and beverages sector. Today’s data likely signals the end of the sluggish activity seen in the economy over the previous two months. We expect growth momentum to have continued into December, which together with a weaker October could lead to overall growth of 0.1% in the final quarter of 2024.”
