We’ve avoided recession... but don’t celebrate just yet

The good news is true: we've officially avoided a recession. The economy grew (a little) in the last three months of 2024, which is ahead of what most forecasters, including the Bank of England, expected.

- JAMES MOORE

But I wouldn't crack open the champagne just yet when it comes to growth, Britain could be facing a false dawn.

To qualify for recession you have to have experienced two consecutive three-month quarters in negative territory. The third quarter of 2024 delivered zero (subject to revision, so it could still go down). But the fourth spluttered its way into positive territory, with growth of 0.1 per cent. UK plc also grew in 2024 as a whole, narrowly, by 0.9 per cent.

However, in the guts of the figures, there really isn’t much to celebrate. Let’s start with the uncomfortable fact that the positive result was down to the fact that the population grew. This meant that more people were contributing to the numbers, pushing them into the positive. However, when you consider GDP per head, all of us produced a little less. It fell by 0.1 per cent.

That is a poor result and there is no hiding from that. Nor was it the only shark lurking in the numbers – it wasn’t even the biggest. Credit to the consultancy Capital Economics for identifying the big nasty: business investment declined by 3.2 per cent in the fourth quarter when compared to the third. That is the first fall in more than a year and bodes ill for the future.