The U.K. economy exhibited unexpected resilience in November 2024, expanding by 0.3% according to figures released by the Office for National Statistics (ONS). This growth surpassed the forecasted increase of 0.1% by economists surveyed by Reuters. The positive performance stemmed from notable gains in both the services sector, which grew by 0.3%, and a robust 1.1% advancement in production. However, construction faced challenges, contracting by 1.3% during the same period.
The latest growth figures come after an unexpected contraction of 0.1% in October, a downturn attributed in part to the effects of a significant cyber-attack on Jaguar Land Rover. This incident disrupted car production and contributed to uncertainty among consumers and businesses ahead of the Autumn Budget.
Market reactions to the data revealed that the pound sterling held steady against the U.S. dollar, trading at approximately $1.3433. Jane Foley, head of FX Strategy at Rabobank, called the growth data a “big relief,” emphasizing the encouraging recovery in the manufacturing sector. Foley suggested that this rebound may have positively influenced the retail sector and consumer spending, hinting at broader economic optimism.
Looking forward, economists project a gradual but steady improvement in the U.K. economy. Sanjay Raja, chief U.K. economist at Deutsche Bank, noted expectations for a robust rebound in GDP during the first quarter of 2026. He highlighted that survey data indicate positive trends as the impacts of the recent budget settle, with signs of stabilization in the labor market.
Deutsche Bank also forecasts that household spending may see an uptick early in the year, alongside sustained investment growth. However, Raja did caution about potential risks to these optimistic projections, particularly relating to vulnerabilities within the labor market. Overall, while the current economic outlook appears promising, analysts remain vigilant to underlying challenges that could impact growth.
