The UK economy delivered a modest but welcome surprise at the end of 2025, expanding slightly faster than analysts had predicted. According to the Office for National Statistics, gross domestic product (GDP) grew by 0.3% in November, providing a flicker of positive news for Chancellor Rachel Reeves.
A Closer Look at the November Growth Figures
This 0.3% rise in economic output during November managed to offset the decline recorded in October. The growth came despite concerns that uncertainty ahead of Chancellor Reeves' impending Budget statement might have caused households and businesses to rein in their spending. A significant factor in the uptick was the restart of production at Jaguar Land Rover factories, which had been temporarily shuttered by a cyber attack. The data also indicated that consumer spending held up reasonably well during the period.
The Broader Economic Picture Remains Subdued
While the November figures were positive, economists were quick to temper optimism. They warn that the UK economy remains stuck in the slow lane, with little prospect of a vigorous acceleration in the near term. Forecasts suggest growth for the coming year will be limited to around 1.5%, which falls well short of the long-term historical average of approximately 2.5%.
This persistent weakness has direct implications for public finances, as it holds back Treasury tax revenues. The situation places ongoing pressure on the Chancellor to evaluate options for raising funds or implementing spending reductions to balance the books.
Interest Rate Decision Hangs in the Balance
The latest GDP data has left economists divided on its potential impact on monetary policy. The key question is whether this evidence of modest growth will influence the Bank of England's Monetary Policy Committee when it meets next month. The Bank's base interest rate currently stands at 3.75%, and market watchers are split on whether a further cut is now more or less likely following this economic update.
The UK economy, valued at £2.8 trillion in 2024, continues to demonstrate resilience amidst global challenges, but the path to robust, sustained growth appears to be a long one.
