Economists polled by Reuters had forecast a 0.1% decline. Growth was driven by the services sector, which expanded by 0.2%, and construction, which saw a 0.5% rise. However, production output fell by 0.8%.

This positive result follows zero growth in the third quarter and fluctuating monthly figures, including a 0.1% contraction in October and a 0.1% expansion in November. December saw a 0.4% month-on-month increase, boosted by services and production.

Following the data release, the pound sterling rose 0.4% against the dollar and remained stable against the euro.

Guy Foster, chief strategist at RBC Brewin Dolphin, said: “A survey showed two-thirds of forecasters expected UK GDP to have declined during the fourth quarter, but their pessimism was confounded – for now. The UK economy appears to have grown modestly in the final quarter, by 0.1%.

“Obviously that sounds pretty underwhelming, but it was achieved with a very strong December. Although some surveys have shown diminishing activity, retail sales have been on an upward trend, housing demand is very strong and the bank of England seems keen to provide monetary support.

“This is important, as there are greater hurdles ahead with employment growth slowing in the face of the steep increase in employment taxes and increases in stamp duty due in April.”

Kevin Brown, savings specialist at Scottish Friendly, said: “There has been plenty of doom and gloom about the prospects for the UK economy. This GDP data gives a glimmer of hope that a revival is possible. Economists had widely been expecting a fall, but thankfully the UK economy didn’t get the memo.

“This is a very small break from the pervasive pessimism about the UK, and it’s still a tough hand for Chancellor Rachel Reeves, particularly if it makes the Monetary Policy Committee more hawkish on future rate cuts. Inflationary pressures remain and her headroom still looks vanishingly small.

“The government’s ‘Plan for Change’ could further move the growth dial, but sadly not in the short-term. For that, consumers need to get back in the shops and businesses need to start investing again. That takes confidence and, despite the better-than-expected GDP figures today, confidence is still very much in short supply.”