Partial construction restarting at the cyber-hit Jaguar Land Rover plant and an uplift in services has led to a surprise return to growth for the UK economy, which expanded 0.3 per cent in November.
Official figures from the Office for National Statistics (ONS) show an uplift despite uncertainty heading into the Budget, while revised earlier figures now means the three months to November saw the economy grow 0.1 per cent.
The news is a slight boost to the government, which has made economic growth one of its key goals, but more specifically to businesses primarily working in the services industry.
ONS noted consumer-facing services output increasing by 0.5 per cent in the quarter-year to November, compared with the three months to August. In particular, travel agents and tour operators saw the biggest growth, but retail trade and sport or recreation services also picked up.
“The economy grew slightly in the latest three months, led by growth in the services sector, which performed better in November following a weak October,” explained ONS director of economic statistics Liz McKeown.
“This was partially offset by a fall in manufacturing, where three-monthly growth was still affected by the cyber incident that impacted car production earlier in the Autumn. However, data for the latest month show that this industry has now largely recovered.
“Construction contracted again, registering its largest three-monthly fall in nearly three years.”
Alice Haine, personal finance analyst at BestInvest, pointed out that early numbers for December suggest weaker than usual trading data, making this unexpected uplift for November all the more important for consumer confidence.
“The uplift in activity comes despite the uncertainty caused by the late Autumn Budget, with the painful and protracted build-up to the fiscal event on November 26 mired by rampant speculation over potential tax changes. This left many businesses and households in limbo, delaying major spending decisions until they had clarity on which taxes would be targeted,” she said.
“Growth in November was largely driven by an uplift in the services and production sectors, which was partly attributed to the phased restart for manufacturing at Jaguar Land Rover following the cyber-attack in the Autumn.
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
ADVERTISEMENT
Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
ADVERTISEMENT
“The positive GDP data will deliver some relief for Chancellor Rachel Reeves at the start of the year, particularly as early indicators for December point to softer jobs data, subdued card spending and fragile business sentiment – though some of this can be attributed to the typical seasonal slowdown over the festive period.”
Stuart Morrison, research manager at the British Chambers of Commerce (BCC), added that businesses still needed further support to ensure strong economic growth in the year ahead.
“Better than expected GDP data suggests the impact of pre-Budget jitters among businesses may have been less than predicted. Firms will welcome confirmation that the economy bounced back to growth in November itself, with the more reliable three-month average showing more modest growth of 0.1 per cent.
“The reality of the Chancellor’s statement, when it came, was no significant new taxes for firms, but a lack of game changing measures to properly kickstart the economy. Firms are telling us they’re still cautious about investing and recruiting, meaning growth will stay limited for the foreseeable.
“Our latest economic forecast suggests a challenging year ahead for businesses, with a projected expansion in GDP of just 1.2 per cent. Businesses are ambitious to drive forward better growth, but they need help.”
