Monthly GDP rose by 0.4 per cent in December, following a growth of 0.1 per cent in November, mainly driven by the dominant services sector. This brings GDP growth for Q4 2024 to 0.1 per cent ? a modest return to growth after it stalled in the third quarter.
This respite in growth momentum suggests that the Chancellor might have gained slight flexibility around her announced fiscal rules, which allows her to avoid putting up taxes or cutting spending.
Given the softening in signals from the purchasing managers’ index and recent business and confidence surveys, it will be important to monitor how these sentiments translate into business investment, hiring decisions, and consumer spending patterns as the year continues. We project GDP to grow by 0.4 per cent in the first quarter of 2025, with growth coming from the Production and Services sectors.