UK monthly GDP data for November
National Gallery and St. Martin’s Church in the Fields at dusk. Trafalgar Square, London, UK
Stockcam | E+ | Getty Images
The UK economy grew at a weak pace of 0.1% in November, the Office for National Statistics said on Thursday.
That compares with a 0.2% monthly increase expected by economists polled by Reuters.
Monthly real gross domestic product (GDP) fell 0.1% in October after a 0.1% drop in September and a 0.2% increase in August.
The slight increase in economic output in November was mainly due to growth in the services sector, the ONS said. Although small, the data is the first sign of life in the wider UK economy in three months.
British Chancellor Rachel Reeves said in a statement after Thursday’s data that she was “determined to go even faster to kick-start economic growth.”
“This means an unrelenting commitment to generate investment, reform and root out waste in public spending, and today I will press regulators on what more they can do to deliver growth,” the Treasury said in emailed comments.
However, the ONS said real GDP showed no growth in the three months to November compared with the three months to August.
“In this three-month period, services showed no growth, manufacturing decreased by 0.7%, and construction increased by 0.2%.” This was reported by ONS.
The British pound The dollar fell 0.2% to $1.2214 after the GDP print, which comes as the Bank of England considers whether to cut interest rates at its next meeting on February 6.
The Bank of England’s next move
A cooler-than-expected annual inflation print for December on Wednesday fueled broad expectations of a 25 basis point rate cut when the central bank meets.
Such a cut would bring the key interest rate to 4.5% from 4.75%, although BOE policymakers will take into account inflationary pressures such as continued wage growth and uncertainty about Britain’s economic outlook. The inflation target of the Central Bank is 2%.
The Labor government and the Treasury have been under pressure in recent weeks amid rising public borrowing costs and questions about their financial plans, and the growing tax burden on businesses. Both were given some respite on Wednesday, however, when the latest inflation data showed consumer price growth cooled to a more than expected 2.5% in December and core price growth slowed further.
The print came in below the expectations of economists polled by Reuters, who expected inflation to be unchanged from November’s 2.6% reading.
Core inflation, which excludes greater volatility in food and energy prices, fell to 3.2% in the twelve months to December, from 3.5% in November.
Inflation in the UK hit a more than three-year low of 1.7% in September, but since then monthly prices have accelerated amid higher fuel costs and the cost of services. In December, the annual inflation rate for services decreased from 5% in November to 4.4%.
The UK economy has found itself in a tight spot lately, with economists voicing their concerns slow development prospects of the country and concerns about headwinds from both external factors, such as potential trade tariffs after President-elect Donald Trump takes office on Jan. 20. Domestic financial and economic problems have plagued the Labor government and the Treasury since the October budget.
“Nearly stagnant GDP in November dampened the optimism created by yesterday’s unexpected drop in inflation. Meanwhile, the widening trade deficit highlights the continuing challenges for UK businesses as they grapple with an increasingly complex global landscape,” said Samuel Edwards, chief executive. The global financial services firm, which deals with Ebury, said in emailed comments Thursday.
“The incoming US administration brings both opportunities and challenges. While uncertainty about policy direction remains, there is optimism that closer trade ties will unlock significant potential in one of the UK’s largest markets,” he said.
The government’s efforts to strengthen ties with the EU and China, Edwards noted, “reflect a clear strategy to diversify export opportunities and enhance long-term economic sustainability.”
Correction: The headline of this article has been updated to reflect that the UK economy grew by 0.1% in November. The previous version had the number wrong.
English