Professor Emeritus, Joe Nellis, is an economic adviser at MHA, the accountancy and advisory firm says:

 

Growth in November offers relief but no clear turning point for UK economy

While November’s increase in GDP of 0.3% is welcome, the recovery remains fragile, narrowly based, and vulnerable to shifts in household and business sentiment, as well as the impact of the Chancellor’s Autumn Budget.

 

Growth in November was supported by pockets of resilience in services and selective strength in consumer-facing industries during the early festive period, as Christmas sales continue to be spread across a longer period. However, output across construction remains constrained, reflecting a cautious investment climate and persistent cost pressures.

 

Implications for the economic outlook

The UK economy appears to be stable and performing as well as or better than the majority of its G7 peers. With inflation moving closer to the Bank of England’s 2% target, we can expect another interest rate cut in the Spring, providing a much-needed stimulus to business confidence and a boost to corporate investment.

 

Yet, while the UK may be moving away from stagnation, the underlying picture is far from settled. Inflation has eased, but real disposable incomes remain stretched, and productivity gains are limited. Expected interest rate cuts are only possible because the economy is not growing at too fast a pace and overheating.

 

Government revenues

Following two months of contraction, a firmer GDP reading offers some short-term support to the government’s finances. Improved activity typically helps reinforce tax receipts from both labour markets and consumer spending. UK 10-year bond yields are now at their lowest level since December 2024, lowering the cost of servicing the debt. However, the government’s fiscal position remains tight.

 

Business sector impact

For businesses, November’s data provide some encouragement but not certainty. Firms continue to operate in an environment defined by high input costs, subdued demand, and elevated financing rates. Many are delaying investment decisions until there is clearer visibility of momentum in the real-economy and further reductions to interest rates.

 

Looking ahead to 2026

Today’s figures outperformed expectation and is a sign of life in the economy as we head into 2026. The pace of expansion will depend on further disinflation, looser monetary conditions, and a revival in business confidence.