06:55 AM EST, 02/13/2025 (MT Newswires) -- In a surprise twist, the United Kingdom economy beat expectations to end the year on a positive momentum, noted Sanjay Raja, Deutsche Bank's U.K. chief economist, after the release of data on Thursday.

December gross domestic product "shot up" 0.4% month over month, driven in large part by increases in retail, hospitality and information and communication services. Industrial production too saw a significant boost in large part due to a rebound in manufacturing (0.7% month over month).

Despite the stronger Q4 2024 and December output data, Thursday's stronger GDP report masks some underlying weakness in the economy, pointed out Raja.

Household spending moderated in Q4. Business investment retreated significantly to end the year. Net trade dragged on output -- its third-worst performance in the post-war period. Altogether, the U.K. economy is now estimated to have grown by 0.9%, added Deutsche economist.

This was the best set of GDP data one could have hoped for -- given survey data and hard data to end the year, said Raja. But "vulnerabilities" remain.

Moving into 2025, uncertainty remains rife. Survey data point to a sluggish rebound at the end of the year -- at best. The specter of a trade war looms large. Commodity prices have risen -- with energy bills now projected to rise meaningfully through the next few months, adding to the cost of living pressures.

The near-term U.K. recovery now rests on three pillars: less restrictive fiscal and monetary policy, a savings-led household consumption recovery, and a rebalancing in trade, according to the economist.

The good news is that the economy likely will maintain some positive footing, lifted by a stronger end to 2024. The bad news is that a downgrade to the bank's 2025 GDP growth forecast remains inevitable. Deutsche Bank will be updating its projections "shorty."