The Royal Exchange and the Bank of England.
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Data released by the Office for National Statistics (ONS) on Thursday showed the UK economy grew at a lackluster pace of 0.1% in November, raising hopes that the Bank of England will cut interest rates next month. It has increased.
The latest data print compares with economists’ forecasts of 0.2% month-on-month growth in a Reuters poll.
Monthly real gross domestic product (GDP) decreased by 0.1% in October, following a 0.1% decrease in September and a 0.2% increase in August.
The ONS said the slight increase in economic output in November was mainly due to growth in the services sector. Although the data is scant, it is the first sign of vitality across the UK economy over the past three months.
British Prime Minister Rachel Reeves expressed “determination to act even faster to accelerate economic growth” in a statement after Thursday’s release of the figures.
“That means a relentless effort to generate investment, drive reform and root out waste in public spending. Today I will press regulators to do more to deliver growth. ,” he said in an emailed comment from the Treasury Department.
Despite this, the ONS said real GDP is estimated to have shown no growth in the three months to November compared to the three months to August.
“Services showed no growth over the past three months, while production fell by 0.7% and construction increased by 0.2%,” the ONS said in a data release.
of british pound The currency fell 0.2% against the dollar to trade at $1.2214 following the GDP announcement, as the Bank of England considers a rate cut at its next meeting on February 6.
Economists say the latest data only strengthens the case for a rate cut next month, but BoE policymakers are likely factoring in inflationary pressures such as solid wage growth and uncertainty about the UK economic outlook. . The central bank’s inflation target is 2%.
“Combined with softer-than-expected CPI inflation in December, today’s announcement makes clear that the economy had little momentum towards the end of last year, with the Bank of England raising interest rates from 4.75% to 4.75%. “We are happy with our view that the rate will drop to 4.50% in February,” Ashley Webb, UK economist at Capital Economics, said in an email.
working under pressure
The Labor government and the Treasury have been under pressure in recent weeks due to rising government borrowing costs, questions about fiscal plans and increased tax burdens on businesses.
Both were given some respite on Wednesday, however, with the latest inflation figures showing that consumer price growth slowed more than expected to 2.5% in December, with core price growth slowing further. It was done.
The result was lower than forecast by economists polled by Reuters, who had expected inflation to remain unchanged from November’s 2.6%.
Core inflation, which excludes more volatile food and energy prices, was 3.2% in the 12 months to December, down from 3.5% in November.
Britain’s inflation rate hit a three-year low of 1.7% in September, but monthly price increases have since accelerated on the back of rising fuel and service prices. The annual services inflation rate was 4.4% in December, down from 5% in November.
Britain’s economy has been in trouble recently, with economists worried about both the country’s prospects for slowing growth and the possibility of trade tariffs after President-elect Donald Trump takes office on January 20. has expressed concern about the headwinds caused by these factors. It also has domestic financial and economic challenges that have plagued the Labor government and the Treasury since the October budget.
“GDP was almost stagnant in November, dampening the optimism sparked by yesterday’s unexpected fall in inflation. Meanwhile, a widening trade deficit means the UK is grappling with an increasingly complex global situation.” “This highlights the persistent challenges facing businesses,” said Commissioner Samuel Edwards. A trading representative at Every, a global financial services company, said in an emailed comment Thursday.
“The next US administration brings both opportunities and challenges. While uncertainty remains over policy direction, closer trading ties could unlock huge potential in one of the UK’s largest markets. “There is some optimism that there is,” he said.
Mr Edwards said the government’s efforts to strengthen ties with the EU and China “reflect a clear strategy to diversify export opportunities and strengthen long-term economic resilience”.
Correction: The headline of this article has been updated to reflect that the UK economy grew by 0.1% in November. In previous versions, this number was listed incorrectly.
