Britain’s economy grew by more than expected in November, boosting hopes that the country can avoid recession in 2024.
Gross domestic product (GDP) rose by 0.3 per cent in November, after declining by 0.3 per cent in October, according to the Office for National Statistics (ONS).
Economists had been expecting GDP to rise by 0.2 per cent, as the prospect of the country entering a recession at the end of the year hangs in the balance.
Chancellor Jeremy Hunt hailed the “welcome news” and insisted that the country was in “a strong position for growth into the future”.
But opposition parties and union leaders attacked the “dismal” growth figures, and said talk by Rishi Sunak’s claim the economy had turned a corner had “not survived contact with economic reality”.
The uplift to growth was driven by the wide-reaching 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.
Chancellor Jeremy Hunt described the growth in November as ‘welcome’— (PA Wire)
The economy declined between July and September, according to revised estimates from the ONS. Therefore, monthly GDP would need to be fractionally below zero in December, 0.02 per cent or more, in order for the economy to have shrunk between October and December as well.
The ONS’s chief executive Grant Fitzner said falls across manufacturing industries were “partially offset by increases in public services, which saw less impact from strike action”.
He added: “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.”
Mr Hunt said: “While growth in November is welcome news, it will be slower as we bring inflation back to its 2 per cent target.
“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.”
Labour shadow chancellor Rachel Reeves said the weak growth showed Mr Sunak’s “legacy of failure”. She added: “He failed to beat Liz Truss, he failed to cut waiting lists, he failed to stop the boats, and now he has failed to grow the economy.”
Labour’s Rachel Reeves said the government had failed to grow the economy as promised— (PA)
And the Liberal Democrats’ Treasury spokesperson, Sarah Olney MP said Mr Sunak’s “talk of turning a corner has not survived contact with economic reality”. She added: “"This no growth. The prime minister has no plan and no idea how to get the economy moving again.”
The TUC’s general secretary Paul Nowak said the year had begun with “another set of dismal growth figures”, saying Tory economic failures were “starving our crumbling public services of much-needed funding”.
The Sunak government now fears the British economy could shrink in the face of ongoing attacks on shipping in the Red Sea.
On Thursday night, the US and the UK launched scores of airstrikes against targets linked to the Iran-backed Houthi rebel group in Yemen, which has targeted dozens of international cargo ships in the Red Sea, a major artery of world commerce, since the start of Israel’s war with Hamas in Gaza.
The Treasury has modelled scenarios, such as crude oil prices increasing by more than $10 a barrel and a 25 per cent rise in natural gas, amid concerns another energy shock is possible if the disruption to cargo traffic spreads to tanker traffic, according to the BBC.
The price of Brent crude, which is the international benchmark for oil prices, shot up by two per cent to $78.94 per barrel on Friday, while the cost of US West Texas crude rose by 2.1 per cent to $73.55.
