The UK economy rebounded with growth of 0.3% in the month to November, new figures released by the Office for National Statistics (ONS) show.
The latest GDP data, which measures the value of goods and services produced, shows the economy grew by more than the 0.2% rise experts were predicting.
This follows a surprise fall in October when the economy shrank by 0.3% due to high interest rates and bad weather, which brought fears of a recession.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Alice Haine, personal finance analyst at Bestinvest, said: “November’s expansion was largely driven by growth in the services sector, while fewer industrial strikes and Black Friday sales also delivered a boost, with business and consumer confidence returning as the cost-of-living crisis slowly eases into the rear-view mirror.”
Latest Videos FromMoneyWeek
Production output also grew by 0.3% in the month to November, though growth in construction fell by 0.2%.
But, figures show in the three months to November, the economy shrank by 0.2% compared to the three months to August.
According to the ONS’s chief economist, Grant Fitzner, this was down to “widespread falls across manufacturing industries, which were partially offset by increases in public services, which saw less impact from strike action.”
Although the monthly growth is good news, experts warn that the outlook for the economy in December could take a downward turn, with the cost of living squeezing household budgets and high borrowing.
Plus, the government is still working to bring inflation down to its 2% target (currently at 3.9%). Chancellor Jeremy Hunt said: “While growth in November is welcome news, it will be slower as we bring inflation back to its 2% target.”
Is a recession still on the cards?
With October figures showing a shrinking economy, experts feared a recession was on the cards.
But the rise in GDP in November has boosted hopes of escaping it.
Haine says: “While the Bank of England said late last year it expects the economy to remain on the brink of recession in 2024, with interest rates remaining higher for longer to keep inflationary pressures at bay, that rhetoric may change if economic conditions continue to improve.”
But, with December’s outlook not looking so bright, some experts warn we shouldn’t dismiss the UK economy falling into a recession.
Richard Carter, head of fixed interest research at Quilter Cheviot, said: “The Bank has managed not to tip the UK into a recession to date, but it is looking increasingly likely that its luck may be coming to an end.”
Additional reporting by Press Association
