The UK economy returned to growth in November, with gross domestic product (GDP) expanding by 0.3% during the month, according to the Office for National Statistics (ONS), but the country is is still teetering on the brink of a recession.
It follows the 0.3% contraction in October and is slightly stronger than the 0.2% predicted by economists.
However, looking at the three months to November, the UK economy actually shrank by 0.2%, stoking recession fears. Output in services grew by 0.4% during the month.
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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.”
A contraction or potentially even flat output in December could lead to a second consecutive quarter of falling output, the ONS said, which would place the economy in a technical recession, albeit a mild one.
Chancellor Jeremy Hunt said: “While growth in November is welcome news, it will be slower as we bring inflation back to its 2% target. But we have seen that advanced economies with lower taxes have grown more rapidly, so our tax cuts for businesses and workers put the UK in a strong position for growth into the future.”
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Neil Birrell, chief investment officer at asset manager Premier Miton, warned that there is “not much momentum” for economy moving into 2024. He said: “The UK economy returned to growth in November, although this may not prevent the fourth quarter of 2023 being another one of contraction.
“Whether the economy slides into a mild recession or not is unlikely to matter too much, but there is not much momentum moving into 2024. However, given the inflation and interest rate pressures, this is a creditable performance and with rate cuts in the pipeline and an election looming, there is some stimulus on the way.”
Watch: Economy grew by 0.3% in November but recession remains a threat
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