Economy shows surprise growth at end of 2024 – but living standards hit
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 services 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
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Starmer defends handling of economy
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
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.
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Bank governor on “depressing” growth outlook
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.”
Heathrow was among a number of major airports across Europe hit by delays after a suspected cyber attack that targeted a service provider for check-in and boarding systems.
The “technical issue” affecting Collins Aerospace, which provides check-in and boarding services for various airlines, resulted in 14 flights being cancelled at Brussels Airport on Saturday, and several more being delayed at London Heathrow, Berlin, and Dublin, among others.
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Passengers have reported being unable to check in online, instead queuing for hours for staff to deal with them manually at desks and departure gates, only to be told their flights are not taking off.
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Helen Steel, 49, left Dorset for Heathrow at 3am to travel home to Oslo, with her cat Thomas – but was “shouted at by staff” who told her she would not be able to fly until Sunday.
Describing the situation as an “absolute nightmare”, she said: “I’ve got an animal here, so I’m very concerned about his welfare.
“I’ve been shouted at twice and I broke down in tears because I was worried about him. None of us have had any information whatsoever. Whenever we ask ground staff, they shout at us.”
Ms Steel says she spent two hours in the queue on the phone to customer service and is now having to find a hotel to stay in overnight.
Sam arrived at Heathrow expecting to drop his girlfriend off for her flight to Rio de Janeiro – but was still at the airport seven hours later.
Sam has been at Heathrow for seven hours after his girlfriend’s flight to Rio was cancelled
When they arrived, it was “chaos everywhere”, he told Sky News, with “nobody seeming to know what was going on”.
The couple say they were not told about the cyber attack by airport staff, finding out about it online instead.
After queuing for three hours, they made it to the front, only to be told the plane was not taking off, he adds.
“Her flight was at 8.40am and it was held back until 10.15am. At 10.10am they sent everyone away and told them to contact the airline. But there are no representatives for any airlines whatsoever. It’s been a bit of a farce.
“Nobody knew where they were going – and they were sending people left, right, and centre.
“She’s going tomorrow now, but we’ve got to find a hotel, and no one is here to give us any hotel vouchers. They just give you a piece of paper and say ‘you’ve got to pay for it yourself’.”
Passengers wait for news at Heathrow Terminal 4. Pic: PA
‘Insane queues’ and ‘skeleton staff’
Passenger Tereza Pultarova waited around 10 hours at Heathrow after she arrived at 4.30am for her flight to Cape Town via Amsterdam.
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Tereza Pultarova had to wait 10 hours at Heathrow
“We were kind of stranded here because KLM wasn’t able to issue us boarding passes digitally, and requested us to collect them at the check-in desk,” she said.
“And then they told us that there is some sort of global issue with the system they’re using for check-in and boarding, and they have to do everything manually. So then they were checking in people at the rate of, like, one person per 10 minutes.
“I’m not exaggerating. It was just insane, the queue wasn’t moving. And then suddenly they said, ‘Oh, the flight will be departing, we’re closing the gate’.
Maria Casey was due to fly to Thailand with Etihad Airways – but had to wait three hours to drop off her luggage at Heathrow, with staff taking between five and 10 minutes to deal with each passenger.
Queues at Heathrow. Pic: PA
“The queues are terrible,” she told Sky News. “It was an absolute skeleton staff. Out of six of the desks there were probably two people”.
A Heathrow spokesperson advised people to arrive no more than three hours early for a flight and apologised for any inconvenience.
It is understood British Airways at Terminal 5 remains unaffected and is operating as normal.
Collins Aerospace said it is working to resolve the issue as soon as possible.
“We have become aware of a cyber-related disruption to our Muse (Multi-User System Environment) software in select airports, the firm said in a statement.
“The impact is limited to electronic customer check-in and baggage drop and can be mitigated with manual check-in operations. We are actively working to resolve the issue and restore full functionality to our customers as quickly as possible.”
An elderly British couple who have arrived back in the UK after being detained in a maximum security Taliban prison are “delighted to be free”, their son has told Sky News.
Barbie Reynolds, 76, and her husband Peter, 80, were arrested in February after spending decades in Afghanistan, where they have dual citizenship.
They had been held without charge before being released from detention on Friday and flown to Qatar, where they were reunited with their daughter, before flying back to Heathrow Airport on Saturday.
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Freed couple reunites with daughter
The couple’s son, Jonathan Reynolds, told Sky News: “They’re just delighted to be free… they’re very excited to see their kids and grandkids and great grandkids, people they’ve just been wanting to catch up with and wondered if they’d ever see them again.”
Jonathan, who spoke to his parents from Wyoming in the US in a FaceTime call with some of his siblings, said: “I’ve seen photographs of them in hospital beds getting checked. I’ve seen them having full English breakfasts. So they’re jumping on that.”
Peter Reynolds enjoys breakfast after his release
He described some of the conditions his parents had been kept under in a “big maximum security prison with thousands of inmates”.
“My dad described being handcuffed or chained to other criminals. And, one point he had his chest hairs ripped out,” he said.
“He was hit in the head. And, then they were moved, to more of a safe house.”
Peter Reynolds gets hospital check-up
But Jonathan said his parents retained their British politeness even when calling him from a payphone in the prison yard, with his dad asking: “Is now a good time?”.
“It was totally, ‘Yeah, not too bad. Where’s the queue to get out of here?'”
The UK government advises British nationals not to travel to Afghanistan.
Abdul Qahar Balkhi, a spokesperson at the Taliban government’s foreign ministry, said in a statement posted on X that the couple “violated Afghan law” and were released from prison after a court hearing.
He did not say what law the couple were alleged to have broken.
Sky correspondent Cordelia Lynch was at Kabul Airport as the freed couple arrived and departed.
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Sky’s Cordy Lynch speaks to released couple
Mr Reynolds told her: “We are just very thankful.”
His wife added: “We’ve been treated very well. We’re looking forward to seeing our children.
“We are looking forward to returning to Afghanistan if we can. We are Afghan citizens.”
The couple have lived in Afghanistan for 18 years and run an organisation called Rebuild, which provides education and training programmes.
They have been together since the 1960s and married in the Afghan capital in 1970.
An elderly British couple who were detained in a maximum security Taliban prison have arrived in the UK.
Barbie Reynolds, 76, and her husband Peter, 80, landed at Heathrow Airport on Saturday.
The couple were detained by the Taliban’s interior ministry on 1 February as they travelled to their home in Bamyan province, central Afghanistan.
They had been held without charge before being released from detention on Friday and flown to Qatar, where they were reunited with their daughter.
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Freed couple reunites with daughter
Richard Lindsay, the UK’s special envoy to Afghanistan, previously told Sky News it was “unclear” on what grounds the couple had been detained.
The UK government advises British nationals not to travel to Afghanistan.
Abdul Qahar Balkhi, a spokesperson at the Taliban government’s foreign ministry, said in a statement posted on X that the couple “violated Afghan law” and were released from prison after a court hearing.
He did not say what law the couple were alleged to have broken.
Sky correspondent Cordelia Lynch was at Kabul Airport as the freed couple arrived and departed.
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Sky’s Cordy Lynch speaks to released couple
Mr Reynolds told her: “We are just very thankful.”
His wife added: “We’ve been treated very well. We’re looking forward to seeing our children.
“We are looking forward to returning to Afghanistan if we can. We are Afghan citizens.”
The couple have lived in Afghanistan for 18 years and run an organisation called Rebuild, which provides education and training programmes.
They have been together since the 1960s and married in the Afghan capital in 1970.
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