The UK economy displayed an unexpected growth of 0.1% in the last quarter of 2024, defying predictions of contraction. Key contributors included improvements in the construction and service sectors, particularly in December. However, broader issues persist, including rising living costs and a potential slowdown due to upcoming tax increases scheduled for April. Analysts from the Bank of England have cut growth forecasts, citing concerns about hiring, investment, and overall economic sluggishness. Experts indicate that businesses are bracing for challenges ahead, undermining confidence and indicating that stagnation could continue in the short term.
Businesses have warned that paying more in National Insurance, along with minimum wages rising and business rates relief being reduced, could affect the economy's ability to grow.
Paul Dales, chief UK economist at Capital Economics, said the economy was "all-but stagnating" as businesses adjusted for higher costs and "more uncertainty overseas".
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