UK economy grows by 0.3% – industry reaction

Latest figures released by the Office for National Statistics (ONS) have shown that GDP rose by 0.3% in November after falling by 0.3% in October as the UK returned to growth.

ONS Chief Economist Grant Fitzner said “The economy contracted a little over the three months to November, with widespread falls across manufacturing industries, which were partially offset by increases in public services, which saw less impact from strike action.

“GDP bounced back in the month of November, however, led by services with retail, car leasing and computer games companies all having a buoyant month.

“The longer-term picture remains one of an economy that has shown little growth over the last year.”

Martin McTague, National Chair of the Federation of Small Businesses (FSB) said “Small businesses are still in the thick of it with this modest rise in GDP in November, which indicates an economy still bouncing along the bottom.

“Increased retail trade growth induced by Black Friday led to somewhat higher consumption in November as customers sought sales. But that doesn’t take away the core problem: the costs of running a business are now markedly up.

“High base rates have led to subdued consumer demand, greater costs of finance and soaring rent. Employment costs remain challenging due to labour shortages, impending rises in the National Living Wage and forthcoming changes to pensions legislation.

“With growth volatile and the lingering threat of a recession, this is not the time for celebration. Small businesses are looking for all sorts of ways to get through this challenging time.

“Uplifts in the Employment Allowance to cope with rising labour costs; lifting the VAT threshold to £100,000 to unleash economic potential; Tax free shopping to attract high-spending international visitors back to our retail and hospitality sectors – all of these would help spur economic growth.

“Government did the right thing taking a stand against late payers in the Autumn Statement. Now, we want to see actions apply to the private sector to stop the growing prevalence of late payments.

“Small businesses are a resilient bunch and will throw everything they have at attempts to keep going before having to call it a day. They are the main engine for economic growth – something the Government and all political parties across the UK should keep in mind as we head towards election year.”

Dr. Roger Barker, Director of Policy at the Institute of Directors, said “Although monthly GDP figures can be volatile, it was reassuring to see that GDP grew in November. However, over a longer time horizon, the economy is not going anywhere. November’s increase merely clawed back the ground lost in October. We will still need to wait for December’s GDP figure to find out if the UK avoided a technical recession in 2023.

“Services output drove the uptick in November, with the retail trade doing particularly well. This was consistent with the picture presented by the latest retail sales figures and recent announcements from major retailers. Black Friday may have helped, along with a lull in the intensity of industrial action during that month. On the downside, adverse weather conditions – particularly strong wind and rain – led to delay across many building projects. This exerted a drag on output in the construction sector.”