UK Economy Surprises with Stronger-than-Expected 0.3% Growth in November
The UK economy defied expectations, growing by 0.3% in November, according to data from the Office for National Statistics (ONS). This figure surpasses the 0.1% growth predicted by economists surveyed by Reuters.
The ONS reported that services and production sectors both experienced growth in November, with services expanding by 0.3% and production by 1.1%. Conversely, construction saw a decline of 1.3% during the same period. Despite this positive growth, the pound sterling's value against the dollar remained relatively stable, trading at $1.3433.
This growth comes as a relief after the economy unexpectedly contracted by 0.1% in October, attributed to the aftermath of a cyber-attack at Jaguar Land Rover, which disrupted car production, and heightened consumer and business uncertainty leading up to the Autumn Budget. Jane Foley, head of FX Strategy at Rabobank, expressed relief at the latest data.
"We've witnessed a robust recovery in the manufacturing sector, surpassing expectations, and it's plausible that this had a positive impact on the retail sector, potentially boosting consumption and contributing to overall growth," she told CNBC's 'Squawk Box Europe.'
Economists anticipate the UK economy to improve in 2026, particularly with the Bank of England's anticipated continuation of interest rate cuts. Sanjay Raja, chief UK economist at Deutsche Bank, predicts a strong GDP rebound in the first quarter of 2026.
"Survey data are already showing signs of improvement as the budget's effects settle, and there are tentative indications that the labor market might be stabilizing," he said. "We expect households to increase their spending at the start of the year, and investment to continue its upward trend."
However, Deutsche Bank forecasts a slightly lower UK GDP growth this year compared to 2025 (1.1%), while expecting quarterly growth to be 0.35% quarter-on-quarter. Raja also cautioned about potential downside risks to the growth projection due to vulnerabilities in the labor market.
