The UK’s monthly gross domestic product rose by 0.1% during the month of November 2024, according to the latest figures from the Office for National Statistics (ONS). This makes a 20 basis point uptick, compared to a 0.1% fall in October last year.
While the UK’s monthly services output grew by 0.1%, compared to a 0.1% fall during the previous month, the figure remained static over three months to November 2024.
Elsewhere, construction output improved by 70 basis points, from a 0.3% fall in October to a 0.4% increase in November. It also grew by 0.2% over three months to November.
In contrast, production output fell by 0.4%, following on from a 0.6% fall in October. Over three months to November, a drop in UK manufacturing levels led to a 0.7% reduction in growth.
See also: ‘Not out of the woods yet’: UK inflation falls by 10 basis points in December
Lindsay James, investment strategist at Quilter Investors, said that while the risk of recession in the UK “remains modest for now”, we are “not out of the woods yet” with three-month GDP growth flatlining.
“This weak growth can in part be attributed to the fallout of the government’s budget, which saw consumers hit pause on spending. As we move further into this year we could see an even bigger impact,” she warned. “Businesses will soon feel the effects of increased national insurance contributions, the costs of which are likely to be passed on to employees. Wage growth is expected to take a hit, and spending could be dampened further as a result.”
James added: “It appears the Chancellor has a large task ahead, given she is banking on growth to drive the economy.”
‘The economy needs stimulus from somewhere’
Neil Birrell, chief investment officer at Premier Miton Investors and lead manager of the Premier Miton Diversified fund range, agreed that while the UK economy grew in November, it “only just” managed to do so.
“Manufacturing and industrial output was poor, reflecting the collapse in business confidence we have seen since the Budget,” he explained. “Perhaps a combination of improving inflation and a weaker economy will spur the Bank of England on to look at cutting interest rates at their next meeting. However, inflation hasn’t gone away, but the economy needs stimulus from somewhere.”
James added that markets have generally been sceptical about the Bank of England cutting rates during the first part of this year, with less than two 25 basis-point cuts priced into markets for the full year.
See also: UK unemployment rates remains unchanged at 4.3%
“The Bank of England stood alone in its decision to hold rates in December while the ECB and Federal Reserve forged ahead with cuts. However, should the economy fail to pick up at least some momentum and the UK falls into a recession, it may be forced to change tack.”
While Scott Gardner, investment strategist at Nutmeg, concurred the UK economy grew “only by a whisker” in the latest figures, the outlook for the UK economy remains “bright”.
He said: “Falling business confidence in response to the Budget and weaker manufacturing orders dampened economic growth. This clear mood shift, represented by recent instability across financial markets, could provide a headwind to the UK’s growth ambitions and is an important area to watch in the months ahead.
“Despite this change in sentiment, the outlook for the UK is bright with the economy predicted to grow quicker in 2025 than European peers including France and Germany.
“A potential uplift in housing market activity in the lead-up to the April stamp duty changes could provide a tailwind for the economy. While we remain in ‘wait and see’ mode ahead of potential US trade tariff announcements, if they come to pass, they are expected to have a larger impact on the UK’s European neighbours.”