UK economy grew by 0.1% in November – industry reaction

The UK economy experienced a modest growth of 0.1% in November, falling short of the anticipated 0.2% increase, as reported by the Office for National Statistics (ONS).

Liz McKeown, Director of Economic Statistics at the ONS, said “The economy continues to be broadly flat, having grown slightly in November following two small falls in the previous months.” The services sector contributed to this growth, while industrial production saw a decline of 0.4%.”

Martin McTague, National Chair of the Federation of Small Businesses (FSB), said “November’s nearly-flat growth in GDP offers little comfort to small firms, and it reflects the difficult trading conditions they have been consistently reporting.

“However, yesterday’s news that inflation rose by less than expected will give small firms a measure of hope that interest rates could fall in the near future, something that is badly needed.

“The Government must now make good on its statements that growth is its number one priority. Its recent call for regulators to put forward suggestions for growth-friendly changes they could make is one small businesses will welcome. Support for small firms must also be at the core of the three strategies which will be unveiled this spring: the Industrial Strategy, the Small Business Strategy and the Trade Strategy.

“Looking ahead, the proposed changes in the Employment Rights Bill are much less promising. With nine in ten small firms expressing concern about the Bill, and with two-thirds saying they are preparing to hire fewer staff, the Bill risks dampening growth, and harming the economy by reducing employment levels and deterring expansion.

“The forthcoming Spending Review must be used by the Government as an opportunity to look at how to support small businesses. Small business owners, limited company directors, and the self-employed should be shielded from future tax rises, as it is small and medium-sized businesses who are the ones with the greatest potential to grow, if given the right conditions.”

Anna Leach, Chief Economist at the Institute of Directors, said “The UK returned to meagre growth in November, driven by accommodation and food, ICT and wholesale trade. While welcome, this is a slower pace than expected: in the second half of 2024, four out of five months have seen growth come in below expectations. November coincided with a new post-Covid low for the IoD’s Economic Confidence Index as business leaders were left reeling from a worse-than-expected Budget for business. The economy now seems likely to have ground to a halt over the second half of 2024.

“It is more urgent than ever for government policy to be focussed on driving up growth. The government’s negative rhetoric snuffed out confidence and growth in the second half of 2024: we now need relentlessly positive pro-growth messaging. This then needs to be accompanied by meaningful, measurable progress in the delivery of this year’s policy ambitions. Pro-growth regulation, the Chancellor’s expected speech at the end of the month, Industrial Strategy and tax simplification announcements are important opportunities this spring for the government to demonstrate its commitment to driving up investment and growth. Planning reform also presents a huge opportunity to unblock growth.”

Stuart Morrison, Research Manager at the British Chambers of Commerce, said “With no growth in the three months to November 2024, and a very limited uptick for the month itself, it’s clear that the UK economy continues to be stuck in a worrying rut.

“Our latest forecast expects GDP to pick up slightly in 2025 and 2026, but this is driven largely by increased government spending. Right now, firms are struggling to deal with a raft of extra costs following the Budget. Investment levels are likely to remain low for the foreseeable future, as businesses try to balance their books.

“We urgently need to see government action to ease cost-pressures and spark investment. Ministers should focus on business rates reform, infrastructure projects and promoting trade to unlock economic growth.”

Ben Jones, CBI Lead Economist said “After a string of disappointing data, it’s good to see that growth returned to positive territory in November, though the economy is still only on track for a very modest expansion at best over the final quarter of last year. In the wake of the Autumn Budget a mood of caution seems to have settled over UK businesses. Many firms are entering 2025 with a focus on reducing operational expenditure, which is likely to weigh on pay, hiring and investment in the months ahead.

“The Government can help shift the UK’s economic narrative with more determined focus on measures that could underpin growth. Reforming the business rates system, implementing flexibility in the Apprenticeship Levy and supporting people to stay in work through expanding employer occupational health provision would give businesses immediate flex for investment. In the long-term there is a pressing need to develop an effective industrial strategy that supports our whole economy.”

Suren Thiru, Economics Director at ICAEW said “This disappointingly modest return to growth for the UK economy is unlikely to ease stagflation concerns, with a recovery in service sector output helping drive only a slight strengthening in overall activity.

“November’s uptick is unlikely to have sparked a more notable improvement in economic activity across the fourth quarter with the dramatic damage to confidence from the budget and global uncertainty expected to have suppressed activity in December.

“Beyond the political noise, a key lesson from this financial market turbulence is the need to address our longstanding challenges of poor productivity and persistent supply side constraints, to help better insulate us against these external shocks.

“Though these disappointing figures make a February interest rate cut more probable, concerns over financial market fragility and heightened global inflation risks mean a policy loosening next month is not quite done and dusted.”