UK growth beats forecasts in November

The UK economy expanded by 0.3 per cent in November, exceeding expectations and marking a rebound after output contracted in October. The stronger-than-forecast reading provided a short-term lift to sentiment, although economists cautioned that underlying growth momentum remains fragile as the country moves into 2026.

Data from the Office for National Statistics showed that growth was driven primarily by a recovery in industrial production and a modest improvement in services. Manufacturing output rose sharply, supported by a significant increase in motor vehicle production. This reflected the staged return to operations at Jaguar Land Rover after a cyber-attack forced a full shutdown of its UK plants in September, with output continuing to normalise through October and November.

Services activity also contributed positively, helped by increased demand linked to the late-November Budget. Professional services, including accounting and tax consultancy, saw higher activity as firms responded to fiscal announcements after delaying decisions in the run-up to the Budget. The November expansion was stronger than economists had expected, following an initial estimate of a 0.1 per cent contraction in October, which reinforced perceptions of a modest year-end recovery.

However, broader indicators point to continued weakness. On a three-month basis, which is considered a more reliable measure of underlying trends, the economy grew by just 0.1 per cent compared with the previous quarter. Analysts warned that monthly GDP data can be volatile and that November’s performance may reflect a temporary rebound rather than a sustained acceleration.

Construction remained a notable drag on activity. Output in the sector fell by 1.3 per cent during the month, registering its largest three-month decline in almost three years. Economists attributed much of the weakness to unseasonably wet weather, though higher borrowing costs and subdued investment continue to weigh on construction more generally.

Looking ahead, forecasts suggest growth will remain modest rather than robust. While easing post-Budget uncertainty and tentative signs of improving business investment may support activity, consumer confidence remains weak and cost-of-living pressures persist. The stronger data may also reduce pressure on the Bank of England to cut interest rates quickly, as policymakers assess whether the late-2025 rebound can be sustained into the new year.

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