UK economy set to have returned to growth despite budget caution
Monthly UK GDP (gross domestic product) is expected to have risen by 0.2% in November.
The UK economy is set to have returned to growth in November as car production recovered following the Jaguar Land Rover cyber attack, according to economists.
Experts have pointed to stronger growth for the month despite caution in the run-up to the autumn budget at the end of the month.
Monthly UK GDP (gross domestic product) is expected to have risen by 0.2% in November when the Office for National Statistics unveils its latest figures on Thursday January 15, according to economists at Pantheon Macroeconomics and Investec.
It would represent a timely boost for the Labour government after declines of 0.1% in both September and October, and mark the first increase since June.
Economic activity across the previous two months was hit by weaker production, particularly in the car manufacturing sector after UK’s largest car maker JLR stopped production during September due to a major cyber attack.
The ONS also highlighted that some business spending was subdued ahead of the budget, which took place on November 26.
November’s data is, however, expected to show some uplift in consumer spending ahead of Christmas despite concerns over the budget.
Rob Wood and Elliott Jordan Doak, economists at Pantheon Macroeconomics, said they expect hospitality spending could help drive growth in the services sector.
They said: “All told, we think the economy continued to chug along in November, despite months of pre-budget uncertainty.
“Services activity likely rose at a solid clip in November, driven by healthy growth in consumer-facing services.”
Hospitality spending data from CGA and RSM indicated 3.1% growth in November, up slightly from 3% in the previous month, amid resilient spending in parts of the sector such as pubs and a slight lift from inflation.
Nevertheless, monthly retail data from the ONS showed that retail sales volumes dipped by 0.1% in November.
The fresh ONS data will shed more light on how confident businesses and consumers were with their spending and investment during the month, amid concerns over potential budget tax changes.
Thursday’s data is likely to see the biggest improvement in manufacturing.
Investec’s Philip Shaw predicted a manufacturing “bounce back” during the month as car production moved back towards more normal levels.
Last month, the Society of Motor Manufacturers and Traders (SMMT) reported that production jumped 22% month-on-month in November, with vehicle manufacturing up 12%.
Experts at Pantheon said this improvement is also likely to help support growth over the final quarter of 2025, but said this is still likely to be 0.1% growth for the period.
