Retail sales up 1% in February, UK GDP confirmed at 0.1% in Quarter 4

The UK economy is growing as much as artificial grass at the moment, with the damaging impacts of the tax on jobs still to hit after April. There are some real challenges for the economy in the next few months and it doesn’t appear the government has any solutions.

The 0.1% GDP crawl and the savings spike point to a battening down of the hatches. The 0.1% figure, barely a pulse, shows the economy’s treading water rather than charging ahead in a clear sign of caution. Who can blame businesses and households for the caution when we know all too well the tax and utility bill rises coming in April? On top of that you have the IFS already warning of further tax rises on the horizon in October’s budget? Last one out, please switch off the lights.

GDP growing, albeit barely, is clearly a positive but we have yet to see the impact of the October budget tax rises that are coming in next week. The government is driving for growth but we’re at risk of stagflation where any growth is eaten away by inflation. It is good to see the combination of retail sales being up as well as the household saving rate. Spending today keeps the economy going but saving helps strengthen it for the future.

October to December is widely regarded as the “golden quarter” for retail, driven by seasonal peaks in consumer spending around back-to-school shopping, Black Friday, Cyber Monday, and the Christmas and New Year period. During this time, households typically increase spending on essentials such as food and beverages for festive gatherings, clothing and footwear for colder weather, and gifts and decorations. The modest 0.1% increase in UK GDP in Q4 2024, alongside a recovery in retail sales volumes in early 2025—rising by 1.0% in February following a 1.4% increase in January—reflects the economic importance of this quarter, underpinned by both necessity-based and sentiment-driven consumer activity.