The National Gallery and St Martin-in-the-Fields at dusk. Trafalgar Square, London, UK
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Data released by the Office for National Statistics on Thursday showed that UK economic growth was weak at 0.1% in November.
By comparison, economists polled by Reuters expected a 0.2% month-on-month increase.
Real gross domestic product (GDP) fell 0.1% in October, following a 0.1% decline in September and a 0.2% increase in August.
The Office for National Statistics said a small increase in economic output in November was mainly due to growth in the services sector. Although the data was meager, it was the first sign of recovery in the UK’s overall economy in three months.
Chancellor of the Exchequer Rachel Reeves said in a statement after Thursday’s data release that she was “determined to drive economic growth further and faster.”
She said in emailed comments from the Treasury: “This means creating investment, driving reform and working relentlessly to eliminate waste from public spending, and today I will be pressing regulators to do more measures to achieve growth.”
However, the ONS said real GDP was not expected to grow in the three months to November compared with the three months to August.
“The services sector did not grow during the three-month period, while production fell by 0.7% and construction increased by 0.2%,” The Office for National Statistics said in a release of the data.
this GBP GBP/USD fell 0.2% to $1.2214 following the GDP data as the Bank of England considers whether to cut interest rates at its next meeting on February 6.
The Bank of England’s next steps
Annual inflation data for December released on Wednesday was lower than expected, fueling widespread expectations for a 25 basis point interest rate cut at the central bank’s meeting.
While BoE policymakers will take into account inflationary pressures such as elastic wage growth and uncertainty about the UK economic outlook, such a change would see the key interest rate drop to 4.5% from 4.75%. The central bank’s inflation target is 2%.
The Labor government and the Treasury have been under pressure in recent weeks as government borrowing costs have risen, fiscal plans have been questioned and corporate tax burdens have increased. However, on Wednesday, the latest inflation data showed that consumer price growth had been slower than expected in December, falling to 2.5%, and core price growth slowed further, both of which received some relief.
The data was below expectations of economists polled by Reuters, who expected inflation to remain unchanged from November’s 2.6%.
Core inflation, which excludes volatile food and energy prices, was 3.2% in the 12 months to December, down from 3.5% in November.
Inflation in the UK hit a more than three-year low of 1.7% in September, but monthly prices have risen since then due to rising fuel costs and service prices. Annual service sector inflation was 4.4% in December, down from 5% in November.
The British economy has been in trouble recently, and economists are concerned about the following issues The country’s growth prospects are bleak and concerns about headwinds from external factors, such as trade tariffs that may be imposed after President-elect Donald Trump takes office on January 20, and Internal fiscal and economic challenges have dogged the Labor government and the Treasury since the October Budget.
Correction: The title of this article has been updated to reflect that the UK economy grew 0.1% in November. A previous version misstated this number.
