UK Economic Output Rises Slightly in November, Falling Short of Expectations

Britain’s economic output edged up by 0.1% in November compared to October, marking the first increase in three months. However, the rise was below the 0.2% expansion predicted by economists in a Reuters poll, according to data released Thursday by the Office for National Statistics.

The modest growth followed two consecutive months of contraction, with GDP shrinking by 0.1% in both September and October. The November data provides an early measure of economic activity after Finance Minister Rachel Reeves introduced a budget on October 30 that included increased tax burdens on employers.

Reeves responded to the figures by stating her determination to “go further and faster to kickstart economic growth.”

Sterling Declines Amid Economic Uncertainty
Following the release of the GDP data, the British pound fell slightly, losing about a fifth of a cent against the U.S. dollar, reflecting ongoing concerns about the country’s economic trajectory.

The UK economy has been slow to recover from the COVID-19 pandemic, with zero growth reported in the third quarter of 2024. Business uncertainty surrounding the budget further contributed to the stagnation. The Bank of England has forecast another quarter of flat growth for the final months of the year.

Inflation and Borrowing Costs
Weak growth has fueled concerns about Britain’s fiscal outlook, driving up government borrowing costs in recent weeks. However, borrowing costs eased on Wednesday following a surprise dip in both UK and U.S. inflation data.

Labour’s Ambitious Growth Target
The Labour government has set an ambitious goal of achieving the fastest per capita GDP growth among the Group of Seven advanced economies. Achieving this target will require addressing the structural challenges currently weighing on Britain’s economic performance.

As the country navigates a sluggish recovery, the government’s policy measures and the trajectory of inflation will play a critical role in shaping economic outcomes in 2025.