UK economy grew 0.1% in November

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The UK economy grew 0.1 percent in November, undershooting analysts’ expectations but still marking the first expansion since August as Chancellor Rachel Reeves tries to rebuild confidence in her fiscal plan.

The monthly figure was below forecasts of a 0.2 percent rise by economists polled by Reuters and followed a 0.1 percent contraction in both October and September, according to data released by the Office for National Statistics on Thursday.

November’s expansion was led by the dominant services sector, which grew 0.1 percent and offset a 0.3 percent contraction in manufacturing. The construction sector expanded 0.4 percent in November after contracting 0.3 percent in October.

Thursday’s data will not allay concerns about the UK economy’s performance after fears of stagnation, where sluggish growth has been accompanied by continued price pressures, contributing to a sharp rise in borrowing costs at the start of the year.

Liz McKeown, director of economic statistics at the ONS, said: “The economy is set to be broadly flat, picking up slightly in November after two small falls in the previous month.”

The GDP figures followed government data released on Wednesday that showed inflation unexpectedly eased to 2.5 percent in December from 2.6 percent in the previous month.

There was no growth in the economy in the three months to November compared to the previous three months. Output was also flat in the third quarter, marking a sharp slowdown from the 0.4 percent expansion in the previous quarter. Growth was 0.7 percent between January and March last year.

After the data was released on Thursday, Reeves said: “I am determined to go further and faster to jump-start economic growth, which is the number one priority in our turnaround plan.”

In December, the Bank of England said it expected no growth in the final three months of the year, down from the 0.3 percent expansion forecast in November.

The BoE last month left interest rates unchanged at 4.75 percent after cutting borrowing costs twice in 2024. Markets largely expect the bank to cut policy rates by a quarter-point in February.

Experts polled by the FT expect the UK economy to outperform France and Germany, but warn that Reeves’ plans to increase employers’ National Insurance contributions could damage the labor market. The Chancellor announced the increase in his October Budget but it will come into force in April.