Britain’s Economy Squeezes Out 0.1% Growth

The British economy eked out growth at the end of last year, data published on Thursday showed, slightly easing the pressure on the government as it tries to quicken the pace of economic growth.

Gross domestic product increased 0.1 percent in the last three months of 2024, following zero growth in the previous quarter.

Most economists, including at the Bank of England, had expected another quarter of stagnation at the end of the year, but the economy grew faster than expected in December because of a jump in activity in the service sector.

The Labour Party, which came to power last summer, has said economic growth is its No. 1 mission. But so far growth has been mostly elusive, with the economy staying roughly the same size since last spring.

Lawmakers have vowed to shore up public finances, increase investment and fix public services to bolster economic growth and improve living standards.

Some of the government’s early measures have been criticized by business groups, particularly for the decision to raise taxes on employers. For much of last year, the government also spread bleak warnings about the state of the economy, which weighed on consumer and business confidence. In recent weeks, there was a shift to a more optimistic tone.

“For too long, politicians have accepted an economy that has failed working people,” Rachel Reeves, the chancellor of the Exchequer, said in a statement on Thursday. “I won’t.”

She added that the government was going “further and faster” to deliver economic reforms.

The government has laid out a series of measures that economists say could lead to stronger economic growth over time, including overhauling the planning system to make it easier to build housing and critical infrastructure, such as wind farms and data centers.

Cabinet ministers have also tried to persuade regulators that rules need to also consider how they will improve the economic outlook, not just mitigate risks.

But there is a growing sense of urgency and concern that these changes will take too long to lead to higher growth, when the global economy is at risk of being upended by a trade war prompted by President Trump.

There is also uncertainty about how companies will respond to higher taxes when they come into effect in April. Last week, the Bank of England said there was a greater risk that companies will adapt by reducing employment.

For some firms, this has begun already. The supermarket chain Sainsbury’s said last month that it was cutting thousands of jobs, citing the recent tax increases.

Still, the budget also included a large increase in public spending for the next two years, a move that is expected to help lift economic growth. But most economists agree that will only have a short-term effect.

The central bank said economic growth should start to pick up midyear, even as it downgraded its forecast for the year to 0.75 percent. The National Institute of Economic and Social Research has been more bullish, forecasting this week that the economy would grow by 1.5 percent this year.

Weak economic growth has put pressure on the central bank to lower rates but it is unclear how far that will go amid rising energy prices. Last week, the central bank said it expected inflation to accelerate this year, peaking at 3.7 percent in the third quarter, and policymakers said they would approach rate cuts carefully.