Surprise 0.1% GDP growth in November

Surprise 0.1% GDP growth in November

New figures from the Office for National Statistics (ONS) have shown that the UK’s GDP grew by 0.1% in November, driven by an increase in the services sector.

The growth was attributed to temporary factors such as the beginning of the men’s football World Cup, which boosted activity in the food and hospitality sub-sectors.

Martin Beck, chief economic advisor to the EY ITEM Club, said: “Activity in December is likely to have been affected by widespread industrial action. This will have had both a direct impact on output from the lost working days and an indirect impact, with the disruption to the rail network preventing workers in other sectors from getting to work.

“The EY ITEM Club expects the impact to have been relatively modest, but it’s enough to mean that – absent historical revisions – it will be touch-and-go whether GDP fell again on a quarter-on-quarter basis in Q4 2022.

Mr Beck concluded: “The near-term outlook remains challenging. Notwithstanding consumer resilience in November, households are continuing to experience significant falls in real incomes. Meanwhile businesses face their own cost pressures and are seeing demand soften both at home and abroad.

“Against this backdrop the EY ITEM Club expects the UK economy to experience a shallow recession in H1 2023, with GDP beginning to recover in the second half of this year as inflation falls back and real incomes turn a corner.”

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