The UK economy grew 0.3% in November, after contracting by 0.1% in October. Manufacturing output surged as Jaguar Land Rover (JLR) production returned close to full capacity. This was compounded by strong growth in the services sector. However, consumer-facing services struggled as households likely put off big-ticket purchases until after the Autumn Budget. Overall, November’s strong growth and revisions to previous months’ data mean the UK economy likely managed to eke out 0.1% expansion in Q4 2025, which’ll probably keep the Monetary Policy Committee (MPC) on the sidelines until April.

What drove November’s UK GDP growth?

The UK economy surged 0.3% in November, spurred by a big jump in manufacturing output. But, underneath the headline figure, we think the balance of growth looks less healthy.

Starting with the positives, UK manufacturing output rose by 2.1% in November as JLR production continued to ramp up after late-summer’s cyber-attack. This prompted vehicle manufacturing to soar by 25.5%, which alone added 15bps to GDP growth in November. Car manufacturing output is now just 3.2% below its pre-cyber-attack level, which leaves limited room for a further rebound in December’s data.

Services output bounced back by 0.3% in November as professional services finally returned to growth after four consecutive months of contraction. IT output also grew strongly as firms likely tried to pre-empt Autumn Budget measures.

However, consumer-facing services fared poorly. Output dropped by 0.2% as consumers likely decided to hold off buying big-ticket items until Budget-related uncertainty cleared.

Finally, the construction sector collapsed by 1.3% after contracting by a similar amount in October. Poor survey data from the industry also suggests there’s little chance of a sharp rebound in the near-term.

UK GDP likely in the black – just – in Q4

Looking at Q4 2025 as a whole, November’s robust growth means the last quarter will probably come in at 0.1%. While this is better than the 0% we were expecting, there’s still the risk that December’s data will be disappointing. Exceptional factors, like JLR production, have little more to give, while the resident doctors’ strikes in England could drag on the UK’s health output in December.

In any case, November’s stronger-than-expected figures mean the UK economy is likely to have grown by 1.4% in 2025. That’s the strongest since 2022 when the economy was still recovering from the pandemic.

Furthermore, the chance of a back-to-back rate cut in February has declined as the economy held up in November − despite the pervasive uncertainty in the lead-up to the Budget. Instead, we expect the next interest-rate cut will come in April when the MPC will have more insight into whether inflation is closer to returning to 2%.

Looking ahead to the rest of 2026, the UK economy is likely to follow a familiar pattern of strong growth in the first half of the year before tailing off in the second. The biggest question facing the economy is whether consumers will start to spend again. We think there are reasons to be cautiously optimistic here, but suspect a big boost in spending will have to wait until 2027. The broader picture is that without structural reforms, which are unlikely to happen anytime soon, the UK looks to be range-bound between 1−1.5% for the rest of this decade.

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