UK economy bounces back in November, boosted by JLR recovery

Britain’s economy grew more strongly than ⁠expected in November, boosted by the return to full production at Jaguar Land Rover after a cyberattack which hit the carmaker and its suppliers.

Gross domestic product expanded by 0.3 per cent on the month – the fastest growth since June – after a drop of 0.1 per cent in October, official data showed on Thursday.

Economists said the figures also suggested that nervousness about finance minister Rachel Reeves’ annual ‌budget statement on November 26 ‌had not affected output as much as feared.

Before the data, economists polled by Reuters had forecast that GDP would expand by 0.1 per cent on a month-on-month basis, in large part because of the boost from the ‌recovery of production at JLR.

Sterling briefly jumped in value against the U.S. dollar after the data and short-dated British government bond yields rose. Investors continued to almost fully price in two quarter point interest rate cuts by the BoE this year.

Just under half of November’s growth was accounted for by a 1.1 per cent rise in industrial output, which in turn was driven by a 25.5 per cent rise in car production – the biggest monthly increase in since July 2020 when COVID restrictions eased.

But ​output in Britain’s dominant services sector also grew by more than expected in November, rising by 0.3 per cent ​from October when it fell by 0.3 per cent.

Previous surveys of Britain’s economy had shown some signs of stumbling ahead of the budget as speculation ‌about possible tax increases weighed ‍on the economy.

The Office for National Statistics said firms across the economy reported they and their customers had been awaiting ‍the outcome of the budget in November as they had been in October, including in the construction ‌sector where production fell sharply for a second month in a row.

Stuart Morrison, research manager at the British Chambers of Commerce, said companies were not showing a lot of relief after they were spared a repeat of the big tax increases included in Reeves’ first budget in 2024.

“Firms are telling us they’re still cautious about investing and recruiting, meaning growth will stay limited for the foreseeable,” Morrison said.

The Bank of England expects Britain’s economy to have flat-lined in the October-to-December period of 2025 although it thinks underlying growth is running at about 0.2 per cent a quarter.

In the three months to November, the economy grew by just 0.1 per cent, the ONS said, though that was markedly faster than the 0.2 per cent decline forecast in the Reuters poll, partly due to ‍an upward revision to September data.

Sanjay Raja, chief UK economist at Deutsche Bank, said the economy could outpace forecasts in early 2026 due to the stronger-than-expected data and the end of budget-related uncertainty.

Reeves and Prime Minister Keir Starmer have promised to speed up Britain’s economy ‍but there has been ⁠no step change so far, 18 months after ⁠their Labour Party won a national election.

A survey published on Wednesday showed businesses turned the most pessimistic in three years at the end of 2025 and their mood worsened after Reeves’ budget.

In the housing market there were more optimistic signals, according to a report released by the Royal Institution of Chartered Surveyors earlier on Thursday which showed sales expectations reached their highest since the end of 2024 in December.

Yael  Selfin, chief economist at KPMG UK, said lower inflation could help boost discretionary spending by consumers this year.

“Despite the relatively muted consumer sentiment so far and consumer-facing services output declining in November, there are some tentative signs of a pick-up in household spending,” Selfin said.

The International Monetary Fund has forecast that Britain’s economy will grow by 1.3 per cent in 2026, the same as last year.

Although that would be the third-fastest among the Group of Seven nations after the United States and Canada, it would be less than half its typical pace in the roughly 15 years before the global financial crisis of 2007-09.>