Hopes were raised that Britain can escape a full-blown recession today as the economy grew by more than expected in November.
GDP rose by 0.3 per cent in November, better than the 0.2 per cent analysts had pencilled in and largely offsetting a 0.3 per cent fall in October.
It makes the prospect of a second consecutive quarter of contraction, the official definition of a recession, less likely.
However, there are fears that the Red Sea crisis could derail progress, with the UK and US launching strikes on Iran-backed forces in Yemen overnight.
Chancellor Jeremy Hunt said the figures were ‘welcome’ and gave another hint at tax cuts in the coming months.
GDP rose by 0.3 per cent in November, better than the 0.2 per cent analysts expected and largely offsetting a 0.3 per cent fall in October
‘While growth in November is welcome news, it will be slower as we bring inflation back to its 2 per cent target,’ he said.
‘But we have seen that advanced economies with lower taxes have grown more rapidly, so our tax cuts for businesses and workers put the UK in a strong position for growth into the future.’
The GDP uplift was driven by the powerhouse services sector, which rose by 0.4 per cent during the month, and was the biggest contributor to economic growth.
It follows the economy shrinking in October, when manufacturing and construction sectors were hit by poor weather conditions.
It means that the UK is teetering on the brink of falling into a technical recession at the end of the year, which can be defined as two consecutive quarters of negative growth.
The economy declined between July and September, according to revised estimates from the ONS.
As a result monthly GDP would need to be fractionally below zero in December in order for the economy to have shrunk between October and December as well.
Chancellor Jeremy Hunt said the figures were ‘welcome’ and gave another hint at tax cuts in the coming months
However, the signals for the Christmas run-in have been relatively optimistic.
The ONS’s chief economist Grant Fitzner said: ‘The economy contracted a little over the three months to November, with widespread falls across manufacturing industries, which were partially offset by increases in public services, which saw less impact from strike action.
‘GDP bounced back in the month of November, however, led by services with retail, car leasing and computer games companies all having a buoyant month.
‘The longer-term picture remains one of an economy that has shown little growth over the last year.’
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