The Royal Stock Exchange and the Bank of England.
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The British economy grew at a weak pace of 0.1% in November, Office for National Statistics (ONS) data showed on Thursday, fueling expectations that the Bank of England will continue to cut interest rates next month.
The latest data print compares with the 0.2% month-on-month gain expected by economists polled by Reuters.
Monthly real gross domestic product (GDP) fell 0.1% in October, after falling 0.1% in September and rising 0.2% in August.
The ONS said the slight increase in economic output in November was mainly due to growth in the services sector. Although modest, the figures represent the first sign of life in the wider UK economy in three months.
British Chancellor Rachel Reeves said in a statement after Thursday's data that she was “determined to go further and faster to boost economic growth.”
“That means generating investment, driving reform and a continued commitment to rooting out wasteful public spending, and today I will be pressing regulators on what more they can do to deliver growth,” she said in emailed comments from Treasury.
Nevertheless, the ONS said real GDP was estimated to have shown no growth in the three months to November compared with the three months to August.
“Over these three months, services showed no growth, while manufacturing decreased by 0.7% and construction increased by 0.2%,” he added. – the ONS reported in the data publication.
The British pound fell 0.2% against the dollar to trade at $1.2214 following the GDP release, which comes as the Bank of England considers whether to cut interest rates at its next meeting on February 6.
Economists say the latest data only encourages a cut in interest rates next month, although BOE policymakers will take into account inflationary pressures such as stable wage growth and uncertainty over the UK's economic prospects. The central bank's inflation target is 2%.
“With a softer-than-expected December CPI inflation print, today's release revealed that the economy was still showing modest momentum at the end of last year, which makes us happy with our view that the Bank of England will cut interest rates from 4.75% to February 4.50%,” Ashley Webb, British economist at Capital Economics, said in an emailed note.
Working under pressure
The Labor government and the Treasury have come under pressure in recent weeks over rising government borrowing costs and questions about fiscal plans and higher corporate tax burdens.
But both received some relief on Wednesday when the latest inflation data showed consumer price growth slowed more than expected in December to 2.5%, with core price growth slowing further.
The print came in worse than expectations of economists polled by Reuters, who expected the inflation rate to remain unchanged from November's reading of 2.6%.
Core inflation, which excludes more volatile food and energy prices, was 3.2% in the twelve months to December, down from 3.5% in November.
In September, the UK's inflation rate hit a more than three-year low of 1.7%, but monthly prices have since risen due to higher fuel costs and service prices. In December, the annual inflation rate in the services sector was 4.4%, up from 5% in November.
The British economy has recently found itself in a difficult situation, which has raised concerns among economists poor prospects for the country's economic growth and concerns about difficulties caused by both external factors, such as potential trade tariffs once President-elect Donald Trump takes office on January 20, along with the domestic fiscal and economic challenges that have dogged the Labor government and the Treasury since the October budget.
“The near stagnation of GDP in November dampened the optimism caused by yesterday's unexpected drop in inflation. Meanwhile, the growing trade deficit highlights the continuing challenges facing UK businesses in the face of an increasingly complex global landscape” – Samuel Edwards, head of department In an emailed comment on Thursday, it said it was working with global financial services firm Ebury.
“The new US administration brings both opportunities and challenges. “While uncertainty about policy direction remains, there is optimism that closer trade links could unlock significant potential in one of the UK's largest markets,” he noted.
Edwards noted that the government's efforts to strengthen links with the EU and China “reflect a clear strategy to diversify export opportunities and enhance long-term economic resilience.”
Correction: The headline of this article has been updated to reflect the UK economy grew by 0.1% in November. The previous version incorrectly stated this number.