According to the Office for National Statistics (ONS), the economy grew by 0.1% in November, marking its first expansion in three months. This growth, though marginal, was supported by increased trade in pubs, restaurants, and the construction sector. However, declines in manufacturing and business rentals tempered the overall performance, falling short of economists’ expectations.
Despite the slight rebound, the economy showed no growth in the three months to November. Businesses continue to warn that upcoming tax increases, including hikes in National Insurance and the minimum wage in April, could stifle further recovery. Many employers fear reduced cashflow will limit their ability to offer raises and create jobs.
The growth comes amidst financial market turbulence that has seen Government borrowing costs soar to multi-year highs and the pound’s value drop. Nonetheless, a growing economy typically signals increased spending, more job opportunities, and higher tax revenues, providing some optimism.
In response to the challenging economic climate, Chancellor Rachel Reeves is set to meet with key regulators, including Ofgem and the Competitions and Markets Authority, to explore strategies for driving sustainable growth.
The construction and services sectors were pivotal in November’s performance, but the weaker-than-expected growth has heightened speculation that the Bank of England may lower interest rates at its February meeting, potentially reducing the rate from 4.75% to 4.5%.
While the return to growth offers some relief, significant hurdles remain for sustained economic progress.
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