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The UK economic system grew 0.1 per cent in November, undershooting analysts’ expectations however nonetheless marking the primary enlargement since August as chancellor Rachel Reeves tries to rebuild confidence in her fiscal plans.
The month-to-month determine was under the 0.2 per cent progress forecast by economists polled by Reuters and follows a 0.1 per cent contraction in each October and September, based on information printed on Thursday by the Workplace for Nationwide Statistics.
November’s enlargement was led by the dominant companies sector, which grew 0.1 per cent and offset a 0.3 per cent contraction in manufacturing. The development sector grew 0.4 per cent in November following a 0.3 per cent contraction in October.
Thursday’s information won’t dispel considerations over the efficiency of the UK economic system after fears of stagflation, by which sluggish progress is accompanied by persistent value pressures, contributed to a pointy rise in borrowing prices at the beginning of the yr.
“This disappointingly modest return to growth for the UK economy is unlikely to ease stagflation concerns,” mentioned Suren Thiru, Economics Director at The Institute of Chartered Accountants in England and Wales, ICAEW. “November’s uptick is unlikely to have sparked a more notable improvement in economic activity across the fourth quarter.”
The GDP figures observe official information launched on Wednesday displaying an sudden decline in inflation to 2.5 per cent in December from 2.6 per cent the earlier month.
Within the three months to November, the economic system registered no progress in contrast with the earlier three months. Output was additionally flat within the third quarter, which marked a pointy slowdown from the 0.4 per cent enlargement within the earlier quarter. Progress was 0.7 per cent between January and March final yr.
Following the discharge of the information on Thursday, Reeves mentioned: “I am determined to go further and faster to kickstart economic growth, which is the number one priority in our Plan for Change.”
In December, the Financial institution of England mentioned it anticipated no progress within the ultimate three months of the yr, down from a 0.3 per cent enlargement it had forecast in November.
The BoE left rates of interest unchanged at 4.75 per cent final month after chopping borrowing prices twice in 2024. Markets largely count on that the financial institution will reduce the coverage charge by a quarter-point in February.
Sterling, which has fallen over 2 per cent in opposition to the greenback this yr, was little modified $1.221 following the discharge of the information.
Consultants polled by the FT count on the UK economic system to outperform France and Germany, however warned that Reeves’ plans to extend employers’ nationwide insurance coverage contribution may harm the labour market. The chancellor introduced the rise in her October Funds however it would solely take impact in April.
