The Economy Has Grown, But Only Just

In more good news for Rachel Reeves (but that’s all relative at the moment), the latest figures released today (Thursday 16 January), show that the UK economy returned to growth for the first time in three months.  However, you should temper your excitement as the expansion was only 0.1% in November and was less than expected.

The growth in November was driven by trade for pubs, restaurants and the construction industry, after it shrank in October and September.  In the three months to November, the economy is estimated to have shown no growth, the Office for National Statistics (ONS) said. It has only grown twice in the five months since Labour took office.

Danni Hewson, AJ Bell head of financial analysis, said the bigger economic picture was one of an "economy still stuck in the muck", while Ben Jones, lead economist at the CBI business, said a "mood of caution seems to have settled over UK businesses".  In another comment laced with the feeling of “Meh” (economists would probably say stagnation) Liz Martins, senior economist at HSBC said, "We've had a pretty gloomy start to this year.  We're not in recession, but we're not doing much growing either."

The weaker-than-expected growth figures fuelled further expectations that the Bank of England will cut interest rates at its next meeting in February (Thursday 6th) from 4.75% to 4.5%, especially after UK inflation unexpectedly dipped as we reported yesterday.