The UK economy returned to growth in November, expanding by 0.3% and outperforming expectations, according to official figures. The increase follows a 0.1% contraction in October and comes despite prolonged uncertainty ahead of Chancellor Rachel Reeves’s autumn budget.
Data published by the Office for National Statistics (ONS) showed economists had anticipated a more modest 0.1% rise. The stronger result will be welcomed by the Government, which is looking for signs that economic momentum is improving after a subdued period earlier in the year.
Manufacturing and services drive recovery
November’s improvement was partly driven by a rebound in manufacturing following earlier disruptions in 2025. A cyber-attack on carmaker Jaguar Land Rover had weighed heavily on output in previous months, depressing vehicle production and wider industrial activity. As production recovered, motor vehicle manufacturing surged by 25.5% in November, providing a significant boost to overall growth.
The services sector, which makes up the bulk of the UK economy, also expanded by 0.3% during the month. Production output rose by 1.1%. Construction, however, fell by 1.3%, reinforcing concerns that the Government’s ambitions for a construction-led recovery and housing expansion are yet to gain traction.
Looking at a broader picture, the ONS said gross domestic product grew by 0.1% in the three months to November. This rolling measure is considered a more reliable indicator of underlying economic health and was still held back by the earlier Jaguar Land Rover shutdown.
Budget uncertainty and cautious optimism
Economists suggested the figures point to a tentative stabilisation after months of hesitation linked to fiscal uncertainty. Yael Selfin, chief economist at KPMG UK, said the economy appeared to have “found its footing” in November.
She noted that, despite the budget uncertainty, economic activity has picked up and businesses now have greater clarity. With speculation largely behind them, growth momentum could continue in the coming months. There were also early signs of a recovery in household spending, although this remains fragile.
The National Institute of Economic and Social Research (NIESR) said the data supported a forecast of 1.4% growth for 2025 as a whole, stronger than in 2024. Ben Caswell, a senior economist at NIESR, said the chancellor’s decision to more than double fiscal headroom at the budget appeared to have eased concerns about future tax policy, helping to stabilise business confidence.
Interest rates and political reaction
Financial markets reacted positively, with UK borrowing costs falling to their lowest level in more than a year amid expectations of further interest rate cuts from the Bank of England. Reeves is keen to see ratesdropl as part of a broader effort to reduce living costs, although the latest data may complicate that path.
Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, cautioned that the return to growth is unlikely to spark a sustained revival. He warned that softer consumer spending, a heavier tax burden and rising unemployment could result in weaker growth in 2026, despite easing inflation. The figures, he added, may make a February rate cut less likely by giving policymakers confidence to delay further easing.
The opposition was quick to criticise the Government’s record. Shadow chancellor Mel Stride said the data showed growth was “flat-lining” and accused Labour of economic mismanagement, arguing that higher taxes would stifle growth and fuel inflation.
The ONS highlighted an unusual detail within the services sector. The most significant contribution to growth came from professional, scientific and technical activities, with robust performance in accounting, bookkeeping, auditing and tax consultancy. The surge may reflect the intense speculation and advisory work in the run-up to the budget.
Further insight into the economy’s direction is expected next week, when inflation and unemployment figures are released. Reeves is also expected to announce additional support for the hospitality sector following criticism of recent changes to the business rates regime.
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