The UK economy grew faster than expected in November, offering some reassurance that activity did not grind to a halt ahead of the government’s Budget. However, economists cautioned that the headline strength masked underlying fragility, with growth uneven across sectors and confidence still weak among households and businesses.
Official data from the Office for National Statistics showed gross domestic product expanded by 0.3% month on month, ahead of Bloomberg consensus expectations. Services and production contributed to growth, while construction contracted again, underscoring the uneven nature of the recovery.
Russ Mould, investment director at AJ Bell, said the data was encouraging but should not be overstated. “Better than expected UK GDP growth in November is welcome news for the new year,” he said. While some of the improvement reflected the resumption of output at Jaguar Land Rover following a cyber-attack, Mould added that “the increase in services activity shows there is more to the GDP progression than just restarting car production”.
The timing of the growth was also notable. November coincided with a period when businesses and consumers were widely thought to be delaying decisions ahead of the Budget. Mould said it was “positive to see GDP growth for a month where business and consumer decisions might have been put on ice pending the Budget”, though he stressed that overall activity remained subdued.
That caution was echoed by Kallum Pickering, chief economist at Peel Hunt, who said: "It could have been worse.”
Looking beyond the monthly figure, he highlighted that on a three-month-on-three-month basis, GDP grew by 0.1% in November, well ahead of expectations for a decline. Services growth was modest on this measure, while construction output continued to slump, reflecting the impact of high interest rates, weak confidence and policy uncertainty.
Still, the broader picture remains uninspiring, with economic activity “at best lukewarm”. Pickering also pointed to confidence as a key constraint, saying growth remained “constrained mostly by a lack of confidence in the policy decisions of the Labour government”.
Andrew Wishart, senior UK economist at Berenberg, struck a similar tone, arguing that the data challenged the idea that policy uncertainty alone paralysed the economy in November. “What Budget worries? Economic output was surprisingly resilient to policy uncertainty in the run-up to 26 November, according to the official data released this morning,” he said.
Wishart noted that the stronger-than-forecast monthly increase created an upside risk to forecasts that GDP stagnated in the fourth quarter. “The big picture remains that the UK economy has lost momentum since the summer,” he said, adding that Berenberg expected this soft patch to persist into 2026 amid job losses and fiscal consolidation.
The sector breakdown reinforced that view. Within services, real estate and wholesale and retail were among the stronger areas on a three-month basis, though Wishart cautioned that much of the rise in real estate activity reflected higher “imputed rent” rather than a genuine pickup in housing market transactions. Construction, meanwhile, slipped back again.
For monetary policy, the November figures reduces the immediate pressure on the Bank of England to act. Peel Hunt said the relative strength of the data was likely to be enough to keep the central bank on hold at its next meeting in February, with rate cuts still expected later in the year.
Mould also stressed that one stronger month does not alter the broader challenges facing the economy. He said growth remained “pedestrian overall”, with businesses still reluctant to invest and a fragile jobs market. Referring to the chancellor’s strategy, he added: “We’re still in the waiting game for that strategy.”