UK economy barely returned to growth in November; monthly GDP rose 0.1%
2025.01.16 02:13
Investing.com – The UK economy returned to growth in November, after the contraction seen in the prior month, but economic activity in the fourth quarter remains subdued, piling the pressure on the Bank of England to ease monetary policy further in 2025.
Data released earlier Friday by the Office for National Statistics showed that the grew by 0.1% in November, below the 0.2% expected, after contracting by 0.1% in October. This resulted in an rate of 1.0%, a drop from the revised lower 1.1% the prior month..
This sombre start to the fourth quarter marks a significant slowdown in growth momentum and output activity compared to the robust performance in the first half of the year.
Additionally, consumer and business confidence across major industries has declined significantly, compounding the existing headwinds, while the forthcoming increase in employers’ National Insurance Contributions, announced in the Autumn Budget, is expected to weigh on the labor market and dampen growth.
Throw in the potential for new tariff policies from the upcoming Trump administration and the possibility of a cut to government spending as the new Labour government contends with rising bond yields and significant downside risks to growth exist.
The International Monetary Fund forecasts that the UK will grow by 1.1% in 2024, which is slower than previous periods but would put the UK in the middle of the pack of the world’s leading nations.
The has reduced its benchmark Bank Rate twice since August – less than other central banks – and it has stressed it is likely to move gradually on further interest rate cuts, given persistent inflation pressures in Britain’s economy.
It next meets in early February, and the pressure is mounting on the central bank to cut interest rates again, having last moved in November, reducing its base rate then to 4.75% from 5%.
