UK economy grows unexpectedly in November

The UK economy grew slightly in November, driven in part by a boost from the World Cup, official figures showed. Gross domestic product , a measure of the value of services, construction and manufacturing output in a specific period, grew 0.1 per cent, the Office for National Statistics said. That represented a slowdown after a 0.5 per cent increase in the previous month. But it was better than estimates, which had predicted the economy would shrink by 0.3 per cent for the month. 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 said. “This 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. “Over the last three months, however, the economy still shrank, mainly due to the impact of the extra bank holiday for the funeral of Her Majesty Queen Elizabeth in September.” Consumer-facing industries were the biggest growth driver of the month, experiencing a 0.4 per cent increase amid a lift from higher food and drink sales during the World Cup. The service sector also grew by 0.2 per cent as more people visited pubs and other venues, although this still reflected a slowdown from a 0.7 per cent rise a month earlier. In November, the construction sector saw growth fall away as it stayed flat for the month following a 0.4 per cent rise in October. The country's trade deficit also narrowed over the month. Elsewhere, manufacturing was the main cause of a 0.2 per cent decline in the production sector for the period. The surprise overall GDP rise came after good news from British supermarkets ' Christmas trading figures. In late November and early December, many retailers had feared the festive season could be a disaster but such predictions turned out to be unfounded, especially for those in the grocery sector. After two festive seasons of pandemic restrictions, consumers were prepared to splash out a bit more, particularly on groceries. Combined with food inflation in the UK well above the overall inflation figure of 10.7 per cent, that boosted the amount of cash going into supermarket tills. Tesco, the UK's largest supermarket chain, on Thursday said like-for-like sales in the six weeks to January 7 were 7.9 per cent higher compared with the same period the previous year. However, economists predict the good news may not last. The ONS said that GDP still contracted by 0.3 per cent over the three months to November , despite the latest growth. “While the economy performed better than expected in November, the data can't mask the underlying problems in the UK economy,” said economist Alpesh Paleja at the CBI business lobby. “High inflation is severely impacting household budgets and businesses are facing intense cost pressures. As a result, consumer spending and investment plans are weakening. “The question for the government now is not whether we will fall into recession, but how long and deep the recession will be.” The UK will enter a technical recession if a further fall in GDP is recorded for the final quarter of the year. But some economists have said the latest data has made that less certain. 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.” Inflation started to cool in November, dropping to 10.7 per cent from a 41-year-high of 11.1 per cent a month earlier, and it is expected to drop further through 2023. Chancellor of the Exchequer Jeremy Hunt said: “We have a clear plan to halve inflation this year — an insidious hidden tax which has led to hikes in interest rates and mortgage costs, holding back growth here and around the world. “To support families through this tough patch, we will provide an average of £3,500 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 the latest 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,” she said.

UK economy grows unexpectedly in November

GDP increased 0.1% over the period after estimates predicted it would shrink by 0.3%