UK Economy Grew Slightly in November, Defying Expectations of Slump

The City of London financial district can be seen as people walk along the south side of the River Thames, in London, on March 19, 2021. (Henry Nicholls/Reuters)

The UK economy grew slightly in November, beating expectations of a slump and reducing the risk of the country entering a recession.

According to the latest data from the Office for National Statistics (ONS), Britain’s gross domestic product (GDP) grew by 0.1 percent in the month, as the services sector remained in growth despite the soaring cost of living.

Analysts had predicted the economy would shrink by 0.3 percent for November, but ONS experts said it beat expectations because of the positive performance of the technology sector and a strong showing by pubs and bars amid a boost from the winter World Cup in Qatar.

ONS director of economic statistics Darren Morgan said: “The economy grew a little in November, with increases in telecommunications and computer programming helping to push the economy forward. Pubs and bars also did well as people went out to watch World Cup games.”

He added that the boost was “partially offset by further falls in some manufacturing industries, including the often-erratic pharmaceutical industry, as well as falls in transport and postal, partially due to the impact of strikes.”

The ONS said that the GDP still contracted by 0.3 percent over the three months to November despite the latest growth.

Morgan said it was “mainly due to the impact of the extra bank holiday for the funeral of Her Majesty Queen Elizabeth in September.”

Recession ‘No Longer Certain’

Consumer-facing industries were the biggest growth driver of the month, witnessing a 0.4 percent increase amid a lift from higher food and drink sales during the World Cup.

The service sector also grew by 0.2 percent as more punters visited pubs and other venues, though this still reflected a slowdown from a 0.7 percent rise a month earlier.

In November, the construction sector saw growth fall away as it stayed flat for the month following a 0.4 percent rise in October.

Elsewhere, manufacturing was the main cause of a 0.2 percent decline in the production sector for the period.

Economists have suggested that the latest data makes it less clear whether the UK entered a recession at the end of last year.

Kitty Ussher, chief economist at the Institute of Directors, said: “This is stronger activity than was expected for November and so will further contribute to the improvement in market sentiment we have seen in the last few weeks.

“Given we know the economy also grew in October—albeit driven by a rebound from the period of state mourning—it is no longer certain that the economy will meet the technical definition of a recession when the final data for 2022 is in.”

Pro-Growth Measures

Despite the unexpected growth, industry groups have highlighted the impact of inflation and Brexit on British businesses and have urged the government to bring in more pro-growth measures.

Alpesh Paleja, lead economist of the Confederation of British Industry (CBI), said: “While the economy performed better than expected in November, the data can’t mask the underlining problems in the UK economy. High inflation is severely impacting household budgets and businesses are facing intense cost pressures. As a result, consumer spending and investment plans are weakening.”

He urged Prime Minister Rishi Sunak and Chancellor of the Exchequer Jeremy Hunt to “stay alive to enacting pro-growth measures,” such as “a permanent full investment allowances regime.”

David Bharier, head of research at the British Chambers of Commerce (BCC), said that “UK economic growth is heading in the wrong direction.”

He said: “While month-on-month GDP grew by 0.1 percent, this is a volatile measure. The three-month average, standing at -0.3 percent, sends a clearer signal of the current trajectory of the economy. Unprecedented energy costs, new trade barriers with the EU, and lasting damage caused by COVID lockdowns have created the hardest trading conditions for small businesses in recent history.”

The BCC said its latest Quarterly Economic Forecast expects five consecutive quarters of recession lasting until the end of 2023, and its most recent business survey points to “significant falls in longer-term business confidence.”

“To get back to growth in the long-term, firms will need to see the removal of trade barriers, particularly with the EU, investment in public infrastructure, and measures to improve their access to appropriately skilled staff,” Bharier added.

Commenting on the latest GDP figures, the chancellor said the government has “a clear plan to halve inflation this year.”

Hunt added: “To support families through this tough patch, we will provide an average of £3,500 ($4,273) support for every household over this year and next—but the most important help we can give is to stick to the plan to halve inflation this year so we get the economy growing again.”

Rachel Reeves, Labour’s shadow chancellor, said: “Today’s results are just another page in the book of failure that is the Tory record on growth. The news of further economic pain will be deeply concerning to families already struggling with the soaring cost of living.”

PA Media contributed to this report.