UK Avoids Recession but Only Just with 0.1% GDP Surprise Rise

Chancellor Rachel Reeves’ blushes were saved today as UK Gross Domestic Product (GDP total economic output) increased in the last 3 months of 2024 by 0.1%.

This puts UK annual GDP at 1.5% pa but at just 0.1% for Q4, it was so close to a technical recession.

The Chancellor has set her stall out on UK economic growth to bring additional revenue into Treasury coffers but with firms now planning for:

Huge National Living Wage and National Minimum Wage increases that will in turn will increase:

• Wages/payroll bills overall.
• Minimum pension contriubutions.
• Staff holiday costs.
• Staff sickness pay costs.
• Employers National Insurance Contributions on higher payroll plus
• The increase in Employers NIC rate to 15%.
• The lowering of the Employers NIC payment threshold to start at salaries of just £5,000 pa.

In addition, tariffs from the USA are also going to hurt UK businesses.  Stubborn inflation may also mean higher interest rates for longer despite the 0.25% reduction on 6^th February.

Comment

We have long been forecasting recession and we suggest we are closer than ever to this.  Chancellor Reeves needs to do something in the coming Spring Statement (mini-Budget) to support UK businesses over the coming year or two.