London (AFP) – Britain’s economic growth rebounded less than expected in November, official data showed Thursday, dealing a fresh blow to a Labour government that is battling headwinds. Gross domestic product expanded 0.1 percent in the month after GDP contracted 0.1 percent in October, the Office for National Statistics (ONS) said in a statement. Analysts’ consensus forecast had been for growth of 0.2 percent in November.
The data offsets a slight reprieve for Prime Minister Keir Starmer and his finance minister Rachel Reeves on Wednesday when official data revealed an unexpected fall to UK inflation in December. Britain’s economy has stagnated since Labour won a general election in July, which saw the party end 14 years of rule by the Conservatives having pledged to drive growth. But Reeves has faced calls from the main opposition Conservatives to resign following a recent spike in state borrowing costs and a hefty drop in the pound.
“I am determined to go further and faster to kickstart economic growth, which is the number one priority in our plan for change,” Reeves said in a statement following the latest GDP data. “That means generating investment, driving reform and a relentless commitment to root out waste in public spending.” She added: “I will fight every day to deliver that growth and put more money into working people’s pockets.”
– ‘Gloomy business mood’ –
The finance minister’s maiden budget in October included tax rises for businesses — a decision blamed for Britain struggling to grow its economy in recent months. Reeves defended her brief record during a heated exchange in parliament on Tuesday, while Starmer on Wednesday insisted she would remain chancellor of the exchequer “for many, many years.” Following the growth data, yields on UK government bonds steadied after having cooled significantly Wednesday. The London stock market was up 0.6 percent in early trading and the pound slid against the dollar and euro, as traders reacted also to movements in the wider global economy.
“With inflation easing and sluggish economic growth, a 25 basis points rate cut by the Bank of England in February seems increasingly likely,” noted Matt Britzman, senior equity analyst at Hargreaves Lansdown. “UK government bond yields have felt an immediate impact, pulling back yesterday from multi-decade highs, offering some relief to risk-on investors and borrowers alike.” Some analysts warned, however, that the UK economy may have contracted overall in the fourth quarter of last year. Looking at 2025, “tighter financial conditions and a gloomy business mood on the back of higher taxes and a potential escalation in trade conflicts could set back business investment,” forecast Yael Selfin, chief economist at KPMG UK.
– Services boost –
The ONS said growth to services resulted in the UK economy expanding slightly in November. Production output dropped 0.4 percent but construction rebounded 0.4 percent in the month. “Services grew a little, with wholesaling, pubs and restaurants and IT companies all doing well, partially offset by falls in accountancy and business rental and leasing,” noted ONS director of economic statistics, Liz McKeown. She added that production declined further, with “falls across a range of manufacturing industries and oil and gas extraction companies.”
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