UK economy grows by 0.1% in November

The UK economy managed a modest return to growth in November 2024, breaking a two-month streak of contraction, according to the latest data from the Office for National Statistics (ONS). Gross Domestic Product (GDP) increased by 0.1% compared to the previous month, a result that was below economists’ expectations of 0.2%.

The growth was primarily driven by gains in services and construction, offsetting continued declines in manufacturing and production. Pubs, restaurants, and the construction industry performed particularly well, buoyed by seasonal demand and increased trade activity. However, production output fell by 0.4%, reflecting ongoing challenges in the manufacturing sector.

The construction industry, a bright spot in November, saw output rise by 0.4% after a revised decline of 0.3% in October. Meanwhile, services, the dominant sector of the UK economy, grew by 0.1%, reversing a 0.1% drop in October.

In contrast, production output remained a drag on the economy, with a 0.7% decline in the three months leading up to November, largely due to a slump in manufacturing activity.

The marginal growth provides some relief for the government, which has been grappling with economic uncertainty and the aftermath of market turbulence that pushed borrowing costs to multi-year highs and weakened the pound. However, November’s figure highlights the fragility of the UK’s economic recovery. Over the three months to November, GDP showed no growth, indicating the broader economy remains stagnant.

While the return to growth offers a sliver of optimism, it falls short of providing a robust boost to the government’s economic agenda. The lower-than-expected expansion underscores the headwinds facing the economy, including weak business investment, ongoing challenges in manufacturing, and inflationary pressures.

The government has placed economic growth at the heart of its policy agenda, but achieving sustained momentum will likely require addressing underlying structural issues. Declines in manufacturing and business rentals highlight the uneven nature of the recovery, while high borrowing costs and uncertainty surrounding the global economy add further complexity.