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Britain’s economy grew at a modest 0.1% in November, data from the Office for National Statistics (ONS) showed on Thursday, fueling expectations that the Bank of England will begin cutting interest rates next month.
The latest print was in line with the 0.2% rise from last month that economists polled by Reuters had expected.
Monthly real gross domestic product (GDP) fell 0.1% in October, following a 0.1% decline in September and a 0.2% rise in August.
The ONS said the slight rise in economic output in November was mainly due to growth in the services sector. Although scant, the data is the first sign of life in the UK economy in three months.
British Chancellor Rachel Reeves said in a statement after the data was released on Thursday that she was “determined to go further and faster to kick-start economic growth”.
“That means attracting investment, driving reforms and a relentless drive to stamp out waste in public spending, and today I will be pressing regulators on what more they can do to deliver growth,” she said in comments from the Ministry. of finances sent by e-mail.
However, the ONS said real GDP did not rise in the three months to November compared with the three months to August.
“The services sector showed no growth over the three months, while manufacturing fell 0.7% and construction rose 0.2%.” The ONS said in a data release.
The British pound fell 0.2% against the greenback to trade at $1.2214 after the GDP print, which came as the Bank of England considers cutting interest rates at its next meeting on February 6.
Economists say the latest data only supports a rate cut next month, although BOE policymakers will take into account inflationary pressures such as persistent wage growth and uncertainty about the UK’s economic outlook. The central bank’s inflation target is 2%.
“Along with softer-than-expected CPI inflation in December, today’s release showed that the economy still had little momentum towards the end of last year, leaving us comfortable with our view that the Bank of England will cut interest rates from 4.75% to 4 .50% in February,” UK-based Capital Economics economist Ashley Webb said in an emailed statement.
Work under pressure
The Labor government and the Treasury have been under pressure in recent weeks over rising government borrowing costs and questions about their fiscal plans and increased business tax burdens.
However, both received a reprieve on Wednesday when the latest inflation data showed that consumer price growth eased more than expected to 2.5% in December, with core price growth slowing further.
The print came in below the expectations of economists polled by Reuters, who expected the inflation rate to remain unchanged from 2.6% in November.
Core inflation, which excludes more volatile food and energy prices, was 3.2% in the twelve months to December, compared with 3.5% in November.
Inflation in the UK hit a more than three-year low of 1.7% in September, but since then monthly prices have accelerated amid higher fuel prices and the cost of services. The annual rate of inflation in the services sector was 4.4% in December against 5% in November.
The UK economy has been in dire straits recently, and economists are expressing concern sluggish growth prospects of the country and concerns about headwinds from both external factors such as potential trade tariffs after President-elect Donald Trump takes office on Jan. 20, along with the domestic fiscal and economic problems that have dogged the Labor government and the Treasury since the October Budget.
“The near-stagnation of GDP in November dampened the optimism sparked by yesterday’s surprise drop in inflation. Meanwhile, the widening trade deficit underlines the ongoing challenges facing UK businesses as they grapple with an increasingly complex global landscape,” said Samuel Edwards, head of About said in emailed comments Thursday.
“The incoming US administration brings both opportunities and challenges. Although uncertainty about the political direction remains, there is optimism that closer trade links can unlock significant potential in one of the UK’s largest markets,” he noted.
The government’s efforts to strengthen ties with the EU and China, Edwards noted, “reflect a clear strategy to diversify export opportunities and enhance long-term economic sustainability.”
Correction: The headline of this article has been updated to reflect that the UK economy grew by 0.1% in November. In the previous version, this number was distorted.
