Today, the UK Office for National Statistics reported GDP for Q4 2024 at 0.1%. Although rather tepid, it topped the expectations of no growth or an economic contraction. In Q3 2024, GDP delivered no growth in the UK.
The data indicated that the services sector increased by 0.2% in output terms for Q4 2024, and construction grew by 0.5%, but production fell by 0.8%. GDP is estimated to have grown by 0.4% ruing the month of December 2024. Real GDP increased by 0.9% across all of 2024.
In comparison, French GDP contracted by 0.1% in Q4, and Germany’s GDP delivered the same. The US, in contrast, saw GDP expand by 2.4% in 2o24 and 2.3% in Q4.
Benjamin Craig, Associate Director of R&D Incentives at Ayming UK, said in spite of the meager growth, there remains pressure on the Labour government to help businesses scale and innovate.
Commenting on the UK’s latest GDP figures, Benjamin Craig, Associate Director of R&D Incentives at Ayming UK, said:
“SMEs are the lifeblood of the UK economy, but many are struggling to absorb the impact of tax burdens like the National Insurance hike. Many of the Chancellor’s recently announced measures such as the pension fund reforms are smart and sensible, but unlocking investment is only the first step. It’s about targeting the right areas of our economy – such as STEM skills development and high growth sectors like green tech and manufacturing – that can boost productivity and efficiency.”
Craig said their in-house research indicates many firms are focusing on survival instead of innovation.
“We need to see more collaboration with businesses to truly understand their pain points and what they need to grow.”
Group CEO of Manx Financial Group, Douglas Grant, described the UK GDP figures as providing some reassurance to businesses and consumers. At the same time, the broader economic outlook remains challenging, particularly for SMEs.
“Persistent cost pressures, driven by high input prices and compounded by geopolitical factors such as trade tariffs and fiscal measures continue to squeeze costs and consumer spending. This environment heightens pressure on businesses, amplifying investment hesitancy and emphasising the need for adaptable lending strategies to navigate this turbulent economic landscape,” said Grant. “Research from Manx Financial Group reveals that nearly a third of UK SMEs have paused or scaled back operations due to financial constraints. Although this marks an improvement from 40% in the previous year, significant hurdles persist. Access to external financing remains a challenge for around 10% of SMEs, highlighting the need for a more stable and inclusive lending environment. With the SME lending landscape rapidly shifting, Labour must urgently recalibrate its policies to better support these essential businesses.
Grant stated that Labour must create a stable lending environment for smaller firms, but the government’s growth ambitions have yet to deliver legislation designed to improve access to capital.
“Both traditional and alternative lenders are key to this, as inadequate financing could hinder recovery amid rising taxes, geopolitical tensions, and cost-of-living pressures.’