UK economy grew 0.1% in November

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The UK economy grew 0.1 per cent in November, undershooting analysts’ expectations but still marking the first expansion since August.

The monthly figure was below the 0.2 per cent growth forecast by economists polled by Reuters and follows a 0.1 per cent contraction in both October and September, according to data published on Thursday by the Office for National Statistics. 

Thursday’s data will not dispel concerns over the performance of the UK economy after fears of stagflation, in which sluggish growth is accompanied by persistent price pressures, contributed to a sharp rise in borrowing costs at the start of the year.

It follows official data released on Wednesday showing an unexpected decline in inflation to 2.5 per cent in December from 2.6 per cent the previous month.

The economy failed to grow in the three months to September, marking a sharp slowdown from the 0.4 per cent expansion in the previous quarter. Growth was 0.7 per cent between January and March last year.

In December, the Bank of England said it expected no growth in the final three months of the year, down from a 0.3 per cent expansion it had forecast in November. 

The BoE left interest rates unchanged at 4.75 per cent last month after cutting borrowing costs twice in 2024. Markets largely expect that the bank will cut the policy rate by a quarter-point in February. 

Experts polled by the FT expect the UK economy to outperform France and Germany, but warned that Reeves’ plans to increase employers’ national insurance contribution could hurt the labour market. The chancellor announced the rise in her October Budget but it will only take effect in April.

This is a developing story