New data has revealed a stronger-than-expected uptick in UK economic output for November 2024, providing a temporary boost for Chancellor Rachel Reeves. The Office for National Statistics reported that Gross Domestic Product (GDP) grew by 0.3 per cent in the month, surpassing analyst predictions.
One-Off Rebound Masks Underlying Weakness
The growth was significantly driven by a robust recovery in the manufacturing sector, spearheaded by Jaguar Land Rover roaring back to life after a disruptive cyberattack that had crippled supply chains. Despite this positive monthly figure, the broader picture remains concerning. Over the three months leading to the end of November, the economy limped along at a sluggish 0.1 per cent growth rate.
Leading economists were quick to caution that November's performance should not be mistaken for a fundamental strengthening. Thomas Pugh, chief economist at RSM UK, noted: "November’s unexpectedly strong rebound was boosted by some one-off factors, which won’t be repeated in December." This sentiment was echoed by Ruth Gregory, deputy chief economist at Capital Economics, who stated the strength was "more likely to be a rebound rather than a sign that the economy is fundamentally stronger than we thought."
Budget Headaches and Downgraded Forecasts
The November figures arrived after a tumultuous period for the Treasury, marked by pre-Budget leaks and a high-profile U-turn on income tax policy. When the Autumn Budget was finally delivered, it brought its own set of challenges for growth. The independent Office for Budget Responsibility (OBR) downgraded the UK’s growth forecasts for every year from 2026 to 2030.
This pessimistic revision came after the fiscal watchdog concluded that the measures outlined by Chancellor Reeves would do little to drive sustainable economic expansion. This creates a significant long-term headache for the Labour government, even as it welcomes the short-term victory of beating expectations in the November data.
Political Turbulence Overshadows Economic Data
The economic news unfolded against a backdrop of political drama, which may serve as either a distraction or an additional challenge for the government. The period was rocked by the defection of former shadow justice secretary Robert Jenrick to the Reform party, following his sacking from what he labelled the "rotten" Conservative party.
While the November GDP data offers a sigh of relief, the combination of weak underlying growth, downgraded future forecasts, and political instability suggests the Chancellor's economic challenges are far from over. The focus now shifts to whether December's figures will sustain the rebound or confirm the fragility warned of by experts.
