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º£½ÇÊÓÆµ economy grows as Chancellor Rachel Reeves avoids recession

Chancellor Rachel Reeves has avoided slipping into a recession as the economy grew unexpectedly at the end of the year

Chancellor Rachel Reeves(Image: PA)

Chancellor Rachel Reeves was given a minor lift as the economy unexpectedly expanded at the end of last year, staving off an immediate recession.

The Office for National Statistics (ONS) reported that output grew by 0.1 per cent in the final quarter of the year, following a 0.4 per cent rise in GDP in December, as reported by .

Economists had predicted a 0.1 per cent contraction, with month-on-month growth expected to be just 0.1 per cent in December.

"The economy picked up in December after several weak months, meaning, overall, the economy grew a little in the fourth quarter of last year," said Liz McKeown, ONS Director of Economic Statistics.

The º£½ÇÊÓÆµ's crucial services sector saw a 0.2 per cent growth over the quarter, while construction activity increased by 0.5 per cent. This compensated for a 0.8 per cent drop in production.

December's figures were bolstered by strong performances from pubs and bars, as well as the "often-erratic" pharmaceutical sector, according to McKeown.

"In a surprise twist, the º£½ÇÊÓÆµ economy beat expectations to end the year on a positive momentum," stated Sanjay Raja, chief º£½ÇÊÓÆµ economist at Deutsche Bank.

Over the entire year, GDP is estimated to have grown by 0.9 per cent, up from 0.1 per cent in a recession-hit 2023. However, GDP per head – a more accurate measure of living standards – fell 0.1 per cent across the final quarter, having dropped 0.3 per cent in the third quarter.