Economy grows by 0.1% in November – business industry reaction

The UK economy unexpectedly grew in November, with Office for National Statistics (ONS) data showing growth of 0.1%.

While the figure shows a slowdown in growth after a 0.5% increase in October, analysts had predicted that the economy would shrink by 0.3% in November. The expansion was driven by the services industry, which saw a boost from football fans heading to pubs and bars to watch the World Cup.

Economists have suggested that November’s GDP reading makes it less clear whether the UK will have entered a recession at the end of last year.

Commenting on ONS data  Kitty Ussher, Chief Economist at the Institute of Directors, said “This is stronger activity than was expected for November and so will further contribute to the improvement in market sentiment we have seen in the last few weeks. Given we know the economy also grew in October – albeit driven by a rebound from the period of state mourning – it is no longer certain that the economy will meet the technical definition of a recession when the final data for 2022 is in. ”

“Today’s better-than-expected data will be encouraging for businesses, but may also cause a cautious Bank of England to continue raising rates unnecessarily when they meet in early February. The risk now is that rates will rise too far if inflation is already on a downward path due to changes in global energy prices.” 

Federation of Small Businesses (FSB) National Chair Martin McTague said “The 0.1% growth in November is encouraging, but the concerns that small businesses have over the economy’s direction of travel have not been laid to rest, even though the men’s football World Cup gave a fillip to the hospitality sector as people gathered to watch games.”

“With costs remaining high for small firms and households alike, policymakers cannot rest on their laurels. Inflation needs to be brought down, there remains huge uncertainty over energy prices, and consumer confidence remains stubbornly low.”

“We’re hearing from small businesses who aren’t just worried for themselves and their own firms – they are worried for the future of their fellow local businesses, and the vibrancy of their community.”

“The recently-announced Energy Bill Discount Scheme will do little to stem these concerns. It is utterly inadequate given the scale of the challenge at hand, with countless small businesses teetering on the edge, and will likely see some firms forced to increase prices in April.”

“The very last thing we need is accelerating closures of small businesses, leading to a lower level of economic activity, fewer jobs, and, ultimately, less tax revenue for public services.”

“The Government needs to grasp the scale of the threat that remains. Helping relieve financial pressure on small firms through expanding business rate relief, cracking down on late payments, and expanding the energy support would all be welcomed with open arms by small firms who are doing their best in very difficult circumstances.”

UKHospitality Chief Executive Kate Nicholls said “Today’s GDP figures once again underline the importance of hospitality in driving economic growth and recovery. The World Cup provided a significant boost in November, with pubs and bars reporting sales up 30-40% on matchdays. This once again shows the power of big sporting events, even in the winter, and the important role our venues play in bringing communities together.”

“However, the figures also highlight the impact strike action had on the sector and the cost of lost sales is likely to be set out more starkly in next month’s figures. While hospitality has yet to recover to pre-Covid levels, in real terms, today’s figures demonstrate the role the sector can play in boosting the economy. While times are challenging right now, with the right support and investment the sector can both survive and thrive; delivering long-term economic growth, creating jobs and continuing its tradition of investing in our communities.”