The UK economy grew fractionally during the final three months of 2024, according to early official figures, which ease the immediate risk of a recession.

The Office for National Statistics (ONS) reported a 0.1% rise in gross domestic product (GDP) during the fourth quarter, with only a recovery for growth in Christmas spending and manufacturing during December coming to the rescue.

Economists had been largely expecting a contraction of 0.1% for the three month period following a zero growth reading for the previous three months to September.

Money latest: Reaction as economy shows surprise growth

The risk of shallow recession is still there, however, because the margins between contraction and growth are so tight in the data that likely future revisions may tip the balance either way.

The wider ONS figures showed that across 2024 as a whole, total GDP grew by 0.9%.

But a closely-watched measure for living standards in the economy, GDP by head of population, showed a contraction for two consecutive quarters.

The figures maintain intense pressure on the government as it has made achieving economic growth its priority for the parliament.

Its term did not begin in a way that would bolster business and consumer confidence.

Analysis: Why relief over economy may be temporary

Prime minister Sir Keir Starmer and his chancellor were accused of an own goal last summer after warning of a tough budget ahead to bolster dire public finances.

While October’s measures were aimed at sparing pain from working people, companies argue that hikes to employer National Insurance contributions from April will knock investment, force job cuts, and impact pay rises.

Why relief over economy in Downing Street may be temporary

Ed Conway

Economics and data editor

@EdConwaySky

Yes there are all sorts of provisos. The UK economy is still flatlining. A 0.1% expansion, in one key measure, is about as close as you can get to zero.

Gross domestic product per head – a better measure of our living standards – is shrinking (indeed, it’s been shrinking for two quarters). And the UK remains far weaker than the leading G7 economy – the United States.

But even after taking all that into account, it’s hard not to conclude that the chancellor will be celebrating today’s GDP figures. After all, economists had expected the economy to shrink by 0.1% rather than growing. Thanks to a late spurt in growth in December, it actually grew.

Moreover, up until today’s figures, the profile of economic growth in the UK was frankly pretty dismal. There was zero cumulative growth since last year’s election. Now, thanks to that jump in December – an unexpected late Christmas gift for the chancellor – cumulative growth since the election is now up to 0.4%.

Of course, none of this changes the bigger economic picture. The UK economy is still stuck in a rut. The enormous growth in migration in recent years means that, once you take account of the growing population, there is considerably less income floating around for every family than there was a few years ago.

And vast swathes of the UK economy are in desperate trouble. Most notably, the industrial sectors that used to power much of the country’s growth, are contracting at a rapid rate. That is not just a UK problem – indeed, it’s shared with much of Europe. In Germany, the economy has contracted for two successive years. This deindustrialisation is one of the most significant issues facing the continent.

And that’s before one considers a few other awkward issues: the real impact of last October’s budget have yet to be felt in the economy. The Office for Budget Responsibility is widely expected to slash its growth forecasts next month, which could prompt the chancellor to further trim spending in the coming years.

Then there are other, even more profound challenges. What happens if and when the US imposes far-reaching tariffs on UK imports? How will the UK afford the dramatic increases in defence spending the White House is demanding? Now, more than ever before, it’s quite plausible that outside events cause outsize impacts on the UK economy.

In short, while today’s numbers will be a relief in Downing Street, it’s not altogether clear how long that sense of relief will last.

That backdrop is made more painful by the fact that inflation is on the increase again, with a slew of essential bills including those for water, energy and council tax all set to rise sharply in the spring too.

At the same time as the domestic difficulties, global growth is also being challenged by Donald Trump who had threatened at the time of his election victory that universal trade tariffs were imminent.

New projections from the Bank of England last week made for sobering reading, with inflation expectations for this year hitting 3.7% from the current 2.5%.

Growth, the forecast suggested, would come in at 0.75% for 2025.

In November, the Bank had expected a figure double that sum.

A lack of growth is a problem for chancellor Rachel Reeves as it typically hits potential tax receipts at a time when her budget rules over the public finances are already under strain.

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It emerged on Wednesday that the Treasury had ordered a leak inquiry following a Bloomberg report that updated Office for Budget Responsibility forecasts sent to ministers had downgraded UK growth expectations.

Ms Reeves said of the ONS data: “For too long, politicians have accepted an economy that has failed working people. I won’t.

“After 14 years of flatlining living standards, we are going further and faster through our Plan for Change to put more money in people’s pockets.

“That is why we are taking on the blockers to get Britain building again, investing in our roads, rail and energy infrastructure, and removing the barriers that get in the way of businesses who want to expand.”

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Shadow chancellor Mel Stride responded: “The chancellor promised the fastest-growing economy in the G7, but her budget is killing growth.

“Working people and businesses are already paying for her choices with ever-rocketing taxes, hundreds of thousands of job cuts and business confidence plummeting.

“It does not need to be this way.”

Yes there are all sorts of provisos.

The UK economy is still flatlining. A 0.1% expansion is about as close as you can get to zero.

Gross domestic product per head – a better measure of our living standards – is shrinking (indeed, it’s been shrinking for two quarters). And the UK remains far weaker than the leading G7 economy – the United States.

But even after taking all that into account, it’s hard not to conclude that the chancellor will be celebrating today’s GDP figures. After all, economists had expected the economy to shrink by 0.1%. Thanks to a late spurt in growth in December, it actually grew.

Moreover, up until today’s figures, the profile of economic growth in the UK was frankly pretty dismal. There was zero cumulative growth since last year’s election. Now, thanks to that jump in December – an unexpected late Christmas gift for the chancellor – cumulative growth since the election is now up to 0.4%.

Of course, none of this changes the bigger economic picture. The UK economy is still stuck in a rut. The enormous growth in migration in recent years means that, once you take into account the growing population, there is considerably less income floating around for every family than there was a few years ago.

And vast swathes of the UK economy are in desperate trouble. Most notably, the industrial sectors that used to power much of the country’s growth are contracting at a rapid rate. That is not just a UK problem – indeed, it’s shared with much of Europe. In Germany, the economy has contracted for two successive years. This deindustrialisation is one of the most significant issues facing the continent.

And that’s before one considers a few other awkward issues: the real impact of last October’s budget have yet to be felt in the economy. The Office for Budget Responsibility is widely expected to slash its growth forecasts next month, which could prompt the chancellor to further trim spending in the coming years.

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Then there are other, even more profound challenges. What happens if and when the US imposes far-reaching tariffs on UK imports? How will the UK afford the dramatic increases in defence spending the White House is demanding? Now, more than ever before, it’s quite plausible that outside events could cause outsized impacts on the UK economy.

In short, while today’s numbers will be a relief in Downing Street, it’s not altogether clear how long that sense of relief will last.

The government is continuing to put Post Office victims through “hell” in their fight for redress, Sir Alan Bates has told Sky News.

More than 240 former sub-postmasters are still waiting for financial compensation years after they won their High Court battle.

Sir Alan’s comments come after another former sub-postmaster, Terry Walters from Wilmslow in Cheshire, died without receiving financial redress. He is survived by his wife Janet.

Hundreds were wrongly accused of stealing from their Post Office branches between 1999 and 2015 as a result of faulty Horizon computer software.

Post Office campaigner Sir Alan Bates has described government officials as living in “ivory towers totally removed from the hell the victims have gone through day after day, year after year”.

He told Sky News they “haven’t the slightest inkling of what hell they continue to put the victims (through)”.

“It’s all well and good meeting a few of them every now and then, patting them on the head and making noises about how hard they are working to sort everything out,” he added.

“When the figures alone prove how badly they are able to finalise cases – that is unless victims want to sell themselves short for a quick settlement.”

Sir Alan wrote to the Post Office minister in January putting forward a proposal to help speed along redress delivered to victims who are part of the Group Litigation Order (GLO) scheme.

On behalf of the JFSA (Justice for Sub-postmasters Alliance) he suggested a “compulsory mediation scheme” that could be inserted into the process to “create an opportunity for early resolution”.

In his letter, seen by Sky News, he wrote that this should happen within four weeks from the point at which the initial offer of financial redress is rejected by a victim.

“Key to this proposal,” he continued, “is getting rid of the lawyers, for a whole host of reasons, not least the ridiculous amount being spent on them…”

He added that their input should be “kept to a minimum”.

Sir Alan said the mediations should also be “time limited” and undertaken by a “party neutral” law firm.

Describing the current situation on redress as “unacceptable”, he wrote: “We are not prepared just to sit back and let time pass as far too many have already died along the way, and this matter needs to be brought to completion now.”

He also described a 40-day “delay” to claims before victims receive their initial offer as “extremely unfair” and projected that at the “current rate” redress would not be paid to everyone until 2027.

Jonathan Reynolds, the business secretary, has since written to Sir Alan following on from his correspondence with the prime minister last year.

In his letter he said it is “likely” that all GLO claims will be “settled this year”.

“Ministers and civil servants in the department (for business and trade) will continue to do everything we can to ensure claims that we receive are handled in a prompt way,” he wrote.

The business secretary added that payments for “complete claims” received by the end of last year are expected to be paid before the end of March.

Sir Alan has previously said that victims may consider further legal action on financial redress and demanded a deadline of March 2025 for payment to all.

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In his letter, Mr Reynolds said that “setting a deadline” would “run counter” to “easing the strain” on the “most vulnerable claimants” who have “found it stressful to engage with the process”.

He continued: “It could be damaging to some GLO members’ mental health and might limit their ability to claim their full redress.”

The secretary of state added that the department shared Sir Alan’s view that the “victims of the horrendous scandal deserve closure as soon as possible”.

In addition, Mr Reynolds invited Sir Alan to a meeting to “discuss any ideas” for “practical ways in which we can improve matters for the GLO group”.

A spokesperson from the Department for Business and Trade said: “We pay tribute to Sir Alan Bates and the tireless campaigning he has done to get justice for the thousands of innocent postmasters affected by the Horizon scandal.

“Postmasters have already had to wait far too long for justice which is why we are working relentlessly to provide full and fair redress and have doubled the number of payments since July.”