Stronger than expected rebound after October contraction
The UK economy expanded by 0.3% in November, outperforming market expectations and marking a rebound after an unexpected contraction in the previous month, according to official data from the Office for National Statistics. Economists had anticipated growth of just 0.1%, making the outcome a positive surprise for policymakers and investors.
The improvement follows a 0.1% decline in October, which had been linked to production disruptions caused by a cyberattack at a major car manufacturer and heightened uncertainty among consumers and businesses ahead of the Autumn Budget.
Services and manufacturing drive the recovery
November’s growth was supported by gains in both services and production. The services sector, the backbone of the UK economy, grew by 0.3%, while industrial production recorded a stronger increase of 1.1%. In contrast, construction activity declined by 1.3%, acting as a partial drag on overall performance.
Currency markets showed little reaction to the data, with the pound trading broadly flat against the US dollar, suggesting investors had already priced in some degree of recovery or were focused on the broader economic outlook.
Analysts see improving momentum into 2026
Market analysts described the data as reassuring, highlighting the strength of the manufacturing rebound and its potential spillover effects on retail activity and household consumption. Signs of stabilisation in the labour market and easing uncertainty following the Budget are also contributing to a more constructive outlook.
Looking ahead, economists expect economic momentum to build in early 2026. Anticipated interest rate cuts by the Bank of England are likely to support household spending and investment, although vulnerabilities in the labour market remain a key downside risk. Overall, while annual growth in 2026 may be slightly softer than in 2025, quarterly growth is expected to remain resilient.
