UK economy posts 0.3% growth in November, beating estimates
Restaurants and bars on James Street in London, England on Friday, December 13, 2024.
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The UK economy grew by 0.3% in November, more than expected, according to data released by the Office for National Statistics (ONS) on Thursday.
Economists polled by Reuters had expected a very modest growth figure of 0.1 percent.
The ONS said both services and manufacturing rose by 0.3% and 1.1% respectively in November. Meanwhile, construction fell 1.3% in the same month. Following the data, the pound was largely flat against the dollar, last trading at $1.3433.
The latest data comes after the economy unexpectedly contracted by 0.1% in October; This figure was attributed to the effects of an ongoing cyber attack at Jaguar Land Rover affecting car production and consumer and business uncertainty as the Autumn Budget approaches.
Jane Foley, head of Currency Strategy at Rabobank, said the latest monthly growth data was a “huge relief”.
“We’ve seen this recovery in the manufacturing sector be much stronger than expected, and that’s likely to have some knock-on effect on the retail sector… so that’s probably leading to some growth in consumption as well, which is probably quite positive,” he told CNBC’s “Squawk Box Europe” on Thursday.
Economists expect the UK economy to recover in 2026, especially as the Bank of England is likely to continue cutting interest rates.
“Looking ahead, we expect GDP to rebound strongly in the first quarter of 2026,” Sanjay Raja, Deutsche Bank’s chief UK economist, said in emailed comments this week. he said.
“Survey data is already improving as the dust settles on the budget and tentative signs emerge that the labor market may be stabilizing,” he said.
“We expect households to spend slightly more to start the year and investment to remain on an upward trend,” he added. Deutsche Bank expects UK GDP growth this year to be slightly lower than in 2025 (at 1.1%), while quarterly growth is expected to be 0.35% compared to the previous quarter.
However, Raja warned that “given the fragilities in the labor market, there are more downside risks to our growth forecast.”
