The UK economy has grown for the first time since November, driven by a boost in trades for pub, restaurants and the construction industry.
Official figures from the Office for National Statistics (ONS) show an expansion of 0.1% after the economy shrank in the two months previous.
UK inflations also unexpectedly dipped in December for the first time in three months, down from 2.6% the month before, raising expectations of an interest rate cut next month.
The return to growth comes after recent turmoil in the financial market which saw the UK's borrowing costs hit its highest level in years. The value of the pound also fell which eased mounting pressure on the Chancellor Rachel Reeves.
The Bank of England decided to hold interest rates at 4.75% last month, after policymakers said the UK economy had performed worse than expected, with no growth at all between October and December.
Ruth Gregory, deputy chief UK economist at Capital Economics, said the inflation figure "strengthens the case" for a cut to 4.5% in February.
Ms Reeves reiterated her pledge to go "further and faster" to improve economic growth, declaring it was the "number one priority" for the government.
However, economic figures were lower than expected with declines in manufacturing and business rentals and leasing.
Reacting to the latest GDP data released this morning, Stuart Morrison, research manager at the British Chambers of Commerce, said: “With no growth in the three months to November 2024, and a very limited uptick for the month itself, it’s clear that the UK economy continues to be stuck in a worrying rut.
“Our latest forecast expects GDP to pick up slightly in 2025 and 2026, but this is driven largely by increased government spending. Right now, firms are struggling to deal with a raft of extra costs following the Budget. Investment levels are likely to remain low for the foreseeable future, as businesses try to balance their books.
“We urgently need to see government action to ease cost-pressures and spark investment. Ministers should focus on business rates reform, infrastructure projects and promoting trade to unlock economic growth.”