The UK economy grew by a faster-than-expected 0.3% in November, beating analysts’ forecasts of a 0.1% increase. This unexpected uptick was driven by a rebound in industrial output, particularly in the automotive sector, as well as a boost in the services industry, particularly in accounting and tax consultancy.
The growth figures for November were revised upwards from the previous estimate of a 0.1% contraction in October. The Office for National Statistics (ONS) also revised September’s growth figure up to 0.1%, from a previous estimate of a 0.1% fall.
Suren Thiru, economic director at the Institute of Chartered Accountants in England and Wales, said the “unexpectedly upbeat” November figures suggested that most sectors had “seemingly shrugged off pre-Budget uncertainty”. He added that the November uptick means it’s “inevitable that the UK economy grew modestly across the final quarter of 2022, with easing uncertainty post-Budget likely to have supported growth in December, despite the ‘super flu’ disrupting activity in sectors like education.”
The rebound in the UK’s economic performance was partly driven by the continued recovery in Jaguar Land Rover (JLR) production, which had been disrupted by a cyber-attack in September. The 25.5% increase in motor vehicle output in November helped offset a 1.3% fall in construction output.
Despite the better-than-expected November figures, economists have cautioned that growth is likely to remain moderate. Ruth Gregory, deputy chief economist at Capital Economics, said the increase in services output “did little more than reverse the big declines in the past few months,” suggesting that November’s strength is “more likely to be a rebound rather than a sign that the economy is fundamentally stronger than we thought.”
The government has sought to highlight the economic progress made, with a Treasury spokesperson stating that the government is “making the economy ‘work for working people’ by ‘reversing years of underinvestment’ in infrastructure as well as putting through planning reform.” However, the opposition Shadow Chancellor, Mel Stride, argued that the figures showed economic growth is “still flatlining” and that the government’s failure to “grip the benefits bills – and instead putting up taxes – is weighing heavily on business and the economy.”
As the UK grapples with the ongoing cost-of-living crisis and uncertainty surrounding the post-Budget landscape, the economic outlook remains cautiously optimistic, with the potential for continued growth, albeit at a moderate pace.
