UK recession in doubt as economy unexpectedly grows in November

The UK economy unexpectedly grew by 0.1% in November and reduced the risk of the country entering a recession, new figures show.

Data from the Office for National Statistics (ONS) show the services sector remained in growth, despite the rising cost of living, with experts saying the slight rise was supported by the technology sector. The growth was also driven by people packing into pubs and bars to watch football matches during the winter World Cup in Qatar.

It nevertheless represented a slowdown in growth after GDP increased by 0.5% in October. Analysts had predicted the economy would shrink by 0.3% for November.

ONS director of economic statistics Darren Morgan said: “The economy grew a little in November, with increases in telecommunications and computer programming helping to push the economy forward.

“Pubs and bars also did well as people went out to watch World Cup games. This was partially offset by further falls in some manufacturing industries, including the often-erratic pharmaceutical industry, as well as falls in transport and postal, partially due to the impact of strikes.

“Over the last three months, however, the economy still shrank – mainly due to the impact of the extra bank holiday for the funeral of Her Majesty Queen Elizabeth in September.”

The ONS said consumer-facing industries were the biggest growth driver of the month with a 0.4% increase following a lift from higher food and drink sales during the World Cup. The service sector also grew by 0.2% as more people visited pubs and other venues, but this still reflected a slowdown from a 0.7% rise a month earlier.

In November, the construction sector saw growth fall away as it stayed flat for the month following a 0.4% rise in October. Elsewhere, manufacturing was the main cause of a 0.2% decline in the production sector for the period.

The ONS added that GDP still contracted by 0.3% over the three months to November despite the latest growth and said the economy also declined by 0.3% in the third quarter of 2022. As such, the economy would therefore enter a technical recession if a further fall is recorded for the final quarter of the year.

UK recession in doubt

Economists say the latest ONS data makes it unclear whether the UK will have entered a recession at the end of last year.

Kitty Usher, chief economist at the Institute of Directors, said: “This is stronger activity than was expected for November and so will further contribute to the improvement in market sentiment we have seen in the last few weeks.

“Given we know the economy also grew in October – albeit driven by a rebound from the period of state mourning – it is no longer certain that the economy will meet the technical definition of a recession when the final data for 2022 is in.”

It comes as inflation started to fall in November, dropping to 10.7% from a 41-year-high of 11.1% a month earlier. It is expected to drop even further through 2023.

Chancellor of the Exchequer Jeremy Hunt said: “We have a clear plan to halve inflation this year – an insidious hidden tax which has led to hikes in interest rates and mortgage costs, holding back growth here and around the world.

“To support families through this tough patch, we will provide an average of £3,500 support for every household over this year and next – but the most important help we can give is to stick to the plan to halve inflation this year so we get the economy growing again.”

Labour branded the latest figures as “another page in the book of failure” for the Tories’ record on growth, adding that the “news of further economic pain will be deeply concerning to families already struggling with the soaring cost of living.”

Labour’s Shadow Chancellor Rachel Reeves said: “Today’s results are just another page in the book of failure that is the Tory record on growth.

The news of further economic pain will be deeply concerning to families already struggling with the soaring cost of living. People will be asking themselves whether they feel better off under the Tories, and the answer will be no.

“But this is not a new trend. 13 years of Tory failure and wasted opportunities have left growth on the floor and our economy weakened. What we need now is a Labour government to stabilise our economy and to get it growing.”