The UK economy shrank by 0.1 percent in January 2025 after growing by 0.4 percent in December. Since a huge decline in GDP in April 2020, the UK economy has gradually recovered and is now around 3.4 percent larger than it was before the COVID-19 pandemic. After the initial recovery from the pandemic, however, the UK economy has effectively flatlined, fluctuating between low growth and small contractions since January 2022. Labour banking on growth to turn around fortunes in 2025 In February 2025, just over half a year after winning the last general election, the approval rating for the new Labour government fell to a low of -48 percent. Furthermore, the Prime Minister, Keir Starmer was not only less popular than the new Conservative leader, Kemi Badenoch, but also the leader of the Reform Party, Nigel Farage, whose party have surged in opinion polls recently. This remarkable decline in popularity for the new government is, in some part, due to a deliberate policy of making tough decisions early. Arguably, the most damaging of these policies was the withdrawal of the winter fuel allowance for some pensioners, although other factors such as a controversy about gifts and donations also hurt the government. While Labour aims to restore the UK's economic and political credibility in the long term, they will certainly hope for some good economic news sooner rather than later. Economy bounces back in 2024 after ending 2023 in recession Due to two consecutive quarters of negative economic growth, in late 2023 the UK economy ended the year in recession. After not growing at all in the second quarter of 2023, UK GDP fell by 0.1 percent in the third quarter, and then by 0.3 percent in the last quarter. For the whole of 2023, the economy grew by 0.4 percent compared to 2022, and for 2024 is forecast to have grown by 1.1 percent. During the first two quarters of 2024, UK GDP grew by 0.7 percent, and 0.4 percent, with this relatively strong growth followed by zero percent growth in the third quarter of the year. Although the economy had started to grow again by the time of the 2024 general election, this was not enough to save the Conservative government at the time. Despite usually seen as the best party for handling the economy, the Conservative's economic competency was behind that of Labour on the eve of the 2024 election.

The United Kingdom's economy grew by 0.9 percent in 2024, after a growth rate of 0.4 percent in 2023, 4.8 percent in 2022, 8.6 percent in 2021, and a record 10.3 percent fall in 2020. During the provided time period, the biggest annual fall in gross domestic product before 2020 occurred in 2009, when the UK economy contracted by 4.6 percent at the height of the global financial crisis of the late 2000s. Before 2021, the year with the highest annual GDP growth rate was 1973, when the UK economy grew by 6.5 percent. UK economy growing but GDP per capita falling In 2022, the UK's GDP per capita amounted to approximately 37,371 pounds, with this falling to 37,028 pounds in 2023, and 36,977 pounds in 2024. While the UK economy as a whole grew during this time, the UK's population grew at a faster rate, resulting in the negative growth in GDP per capita. This suggests the UK economy's struggles with productivity are not only stagnating, but getting worse. The relatively poor economic performance of the UK in recent years has not gone unnoticed by the electorate, with the economy consistently seen as the most important issue for voters since 2022. Recent shocks to UK economy In the second quarter of 2020, the UK economy shrank by a record 20.3 percent at the height of the COVID-19 pandemic. Although there was a relatively swift economic recovery initially, the economy has struggled to grow much beyond its pre-pandemic size, and was only around 3.1 percent larger in December 2024, when compared with December 2019. Although the labor market has generally been quite resilient during this time, a long twenty-month period between 2021 and 2023 saw prices rise faster than wages, and inflation surge to a high of 11.1 percent in October 2022.

Full Year GDP Growth in the United Kingdom increased to 0.90 percent in 2024 from 0.40 percent in 2023. This dataset includes a chart with historical data for the United Kingdom Full Year Gdp Growth.

In the fourth quarter of 2024, the quarterly gross domestic product of the United Kingdom was approximately, 641 billion British pounds, compared with around 632.4 billion pounds in the same quarter. The large dip in GDP that can be seen in the second quarter of 2020 saw the UK economy fall from 604.7 billion pounds to 481.8 billion, with more usual levels of output not recovering until well into 2021. The COVID-19 lockdowns enacted by the UK government at that time was the main reason for this large fall in GDP. Growth lagging as UK heads into 2025 After ending 2023 in recession, the UK economy started 2024 with the strongest quarterly GDP growth in several years, growing by 0.7 percent in the first quarter, and then by 0.4 percent in the second quarter. Economic growth in the second half of the year was, however, far less promising, with GDP flatlining in the third quarter, and monthly GDP shrinking by 0.1 percent in September and then again in October. Although GDP is still forecast to grow in 2025, the overall economic picture is precarious. In November, UK inflation rose to 2.6 percent, compared with just 1.7 percent in September, while the labor market continues to show signs of cooling after a period of high job vacancies and low unemployment. Labour pinning hopes on long-term growth After winning its first general election in 19 years in 2024, the Labour Government has seen its approval ratings plummet in its first few months in office. This shaky start is partly due to a government strategy of making unpopular decisions early in their tenure, which they hope will eventually encourage stable economic growth in the mid to long-term. By far the least popular policy was the withdrawal of winter fuel benefits for a significant number of pensioners, a cost-cutting measure deemed necessary due to the UK's vulnerable public finance position, with government debt at around 100 percent of GDP. A further measure introduced was a national insurance tax increase for employers, with almost half of UK firms citing increased taxes as their main external concern in Q3 2024. Avoiding any further tax rises or cuts to services will depend on if policies in other areas, such as planning reform, will kickstart the UK economy in time before the next election.

The statistic shows the growth rate in the real GDP in the United Kingdom from 2019 to 2023, with projections up until 2029. In 2023, the rate of GDP growth in the United Kingdom was at around 0.34 percent compared to the previous year.The economy of the United KingdomGDP is used an indicator as to the shape of a national economy. It is one of the most regularly called upon measurements regarding the economic fitness of a country. GDP is the total market value of all final goods and services that have been produced in a country within a given period of time, usually a year. Inflation adjusted real GDP figures serve as an even more telling indication of a country’s economic state in that they act as a more reliable and clear tool as to a nation’s economic health. The gross domestic product (GDP) growth rate in the United Kingdom has started to level in recent years after taking a huge body blow in the financial collapse of 2008. The UK managed to rise from the state of dark desperation it was in between 2009 and 2010, from -3.97 to 1.8 percent. The country suffered acutely from the collapse of the banking industry, raising a number of questions within the UK with regards to the country’s heavy reliance on revenues coming from London's financial sector, arguably the most important in the world and one of the globe’s financial command centers. Since the collapse of the post-war consensus and the rise of Thatcherism, the United Kingdom has been swept along in a wave of individualism - collective ideals have been abandoned and the mass privatisation of the heavy industries was unveiled - opening them up to market competition and shifting the economic focus to that of service.The Big Bang policy, one of the cornerstones of the Thatcher government programs of reform, involved mass and sudden deregulation of financial markets. This led to huge changes in the way the financial markets in London work, and saw the many old firms being absorbed by big banks. This, one could argue, strengthened the UK financial sector greatly and while frivolous and dangerous practices brought the sector into great disrepute, the city of London alone brings in around one fifth of the countries national income making it a very prominent contributor to wealth in the UK.

Monthly GDP MoM in the United Kingdom decreased to -0.10 percent in January from 0.40 percent in December of 2024. This dataset includes a chart with historical data for the United Kingdom Monthly GDP MoM.

Monthly GDP YoY in the United Kingdom decreased to 1 percent in January from 1.50 percent in December of 2024. This dataset includes a chart with historical data for the United Kingdom Monthly GDP YoY.

Forecast: Contribution to GDP of Manufacturing in the UK 2024 - 2028 Discover more data with ReportLinker!

Key information about United Kingdom Investment: % of GDP

• United Kingdom Investment accounted for 18.2 % of its Nominal GDP in Sep 2024, compared with a ratio of 18.3 % in the previous quarter.
• UK investment share of Nominal GDP data is updated quarterly, available from Mar 1955 to Sep 2024, with an average ratio of 18.8 %.
• The data reached an all-time high of 26.2 % in Mar 1989 and a record low of 12.9 % in Jun 2020.

CEIC calculates Investment as % of Nominal GDP from quarterly Nominal Gross Capital Formation and quarterly Nominal GDP. Gross Capital Formation is calculated as the sum of Gross Fixed Capital Formation, Changes in Inventories and Acquisition less Disposals of Valuables. Office for National Statistics provides Nominal Gross Capital Formation in local currency and Nominal GDP in local currency.


Related information about United Kingdom Investment: % of GDP

• In the latest reports, UK GDP expanded 0.2 % YoY in Mar 2023.
• UK Nominal GDP reached 786.4 USD bn in Mar 2023.
• Its GDP deflator (implicit price deflator) increased 6.6 % in Dec 2022.
• UK GDP Per Capita reached 45,308.8 USD in Dec 2022.
• Its Gross Savings Rate was measured at 16.4 % in Sep 2024.

The economy of the United Kingdom shrank by 0.1 percent in January 2025, after growing by 0.4 percent in December. As of the most recent month, the UK economy is around 3.4 percent larger than it was in February 2020, just before the start of COVID-19 lockdowns. After a record 19.6 percent decline in GDP in April 2020, the UK economy quickly returned to growth in the following months, and grew through most of 2021. Cost of living crisis lingers into 2025 As of December 2024, just over half of people in the UK reported that their cost of living was higher than it was in the previous month. Although this is a decline from the peak of the crisis in 2022 when over 90 percent of people reported a higher cost of living, households are evidently still under severe pressure. While wage growth has outpaced inflation since July 2023, overall consumer prices were 20 percent higher in late 2024 than they were in late 2021. For food and energy, which lower income households spend more on, late 2024 prices were almost 30 percent higher when compared with late 2021. According to recent estimates, living standards, as measured by changes in disposable income fell by 2.1 percent in 2022/23, but did start to grow again in 2023/24. Late 2023 recession followed by growth in 2024 In December 2023, the UK economy was approximately the same size as it was a year earlier, and struggled to achieve modest growth throughout that year. Going into 2023, a surge in energy costs, as well as high interest rates, created an unfavorable environment for UK consumers and businesses. The inflationary pressures that drove these problems did start to subside, however, with inflation falling to 3.9 percent in November 2023, down from a peak of 11.1 percent in October 2022. Although relatively strong economic growth occurred in the first half of 2024, with GDP growing by 0.7 percent, and 0.4 percent in the first two quarters of the year, zero growth was reported in the third quarter of the year. Long-term issues, such as low business investment, weak productivity growth, and regional inequality, will likely continue to hamper the economy going forward.

In July 2024, the UK's gross value added (GVA) increased by 1.2 percent when compared with the same period in 2023. During this time period, the fastest growth was in the transportation and storage sector, which grew by 8.2 percent. By contrast, GVA in the sector 'other service activities' shrank by 4.7 percent.

Forecast: Contribution to GDP of Construction in the UK 2024 - 2028 Discover more data with ReportLinker!

Forecast: Energy Intensity of GDP in the UK 2024 - 2028 Discover more data with ReportLinker!

Gross National Product in the United Kingdom increased to 702109 GBP Million in the third quarter of 2024 from 696603 GBP Million in the second quarter of 2024. This dataset provides the latest reported value for - United Kingdom Gross National Income - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.

As of January 2025, UK construction output as measured by gross value added was 3.2 percent larger than it was in 2022, while services output has grown by 2.3 percent, and agriculture by 2.7 percent. By comparison, production output has fallen by 3.1 percent.

Key information about United Kingdom Government Debt: % of GDP

• United Kingdom Government debt accounted for 101.1 % of the country's Nominal GDP in Sep 2024, compared with the ratio of 100.9 % in the previous quarter.
• UK government debt to GDP ratio data is updated quarterly, available from Mar 1966 to Sep 2024.
• The data reached an all-time high of 107.5 % in Mar 2021 and a record low of 28.3 % in Dec 1990.

CEIC calculates quarterly Government Debt as % of Nominal GDP from quarterly Government Debt and rolling sum of quarterly Nominal GDP. The Office of National Statistics provides Government Debt in local currency. The Office for National Statistics provides Nominal GDP in local currency.


Related information about United Kingdom Government Debt: % of GDP

• In the latest reports, UK National Government Debt reached 3,810.9 USD bn in Sep 2024.
• The country's Nominal GDP reached 786.4 USD bn in Mar 2023.

Graph and download economic data for Gross Domestic Product: All Industry Total in the New England BEA Region (NENGNQGSP) from Q1 2005 to Q3 2024 about New England BEA Region, GSP, industry, GDP, and USA.

In 2024, gross domestic product per capita in the United Kingdom was 36,977 British pounds, compared with 37,028 pounds in the previous year. This was the second-consecutive year that GDP per head has fallen in the UK, with the measure shrinking by 0.9 percent in 2023. In general, while GDP per capita has grown quite consistently throughout this period, there are noticeable declines, especially between 2007 and 2009, and between 2019 and 2020, due to the Global Financial Crisis, and COVID-19 pandemic, respectively. Why is GDP per capita falling when the economy is growing? During the last two years that GDP per capita fell in the UK, the overall economy grew by 0.4 percent in 2023 and 0.9 percent in 2024. While the overall UK economy is therefore larger than it was in 2022, the UK's population has grown at a faster rate, resulting in the lower GDP per capita figure. The long-term slump in the UK's productivity, as measured by output per hour worked, has meant that the gap between GDP growth and GDP per capita growth has been widening for some time. Economy remains the main concern of UK voters As of February 2025, the economy was seen as the main issue facing the UK, just ahead of immigration, health, and several other problems in the country. While Brexit was seen as the most important issue before COVID-19, and concerns about health were dominant throughout 2020 and 2021, the economy has generally been the primary facing voters issue since 2022. The surge in inflation throughout 2022 and 2023, and the impact this had on wages and living standards, resulted in a very tough period for UK households. As of January 2025, 57 percent of households were still noticing rising living costs, although this is down from a peak of 91 percent in August 2022.

Key information about United Kingdom M2 Growth

• United Kingdom Money Supply M2 increased 3.7 % YoY in Jan 2025, compared with a growth of 2.2 % in the previous month
• UK Money Supply M2 growth data is updated monthly, available from Dec 1987 to Jan 2025
• The data reached an all-time high of 74.3 % in Dec 1987 and a record low of -5.7 % in Sep 2023

CEIC calculates M2 Growth Rate from monthly M2. The Bank of England provides M2 in local currency.


Further information about United Kingdom M2 Growth

• In the latest reports, UK Foreign Exchange Reserves was measured at 112.5 USD bn in Jan 2025
• The Foreign Exchange Reserves equaled 1.7 Months of Import in Dec 2024
• UK Domestic Credit reached 4,866.2 USD bn in Dec 2024, representing an drop of 1.3 % YoY
• The country's Non Performing Loans Ratio stood at 1.0 % in Dec 2022, compared with the ratio of 1.0 % in the previous year
• Household Debt of UK reached 3,076.4 USD bn in Sep 2024, accounting for 81.6 % of the country's Nominal GDP