UK Economy Surprises with 0.3% Growth. Car Production and Services Rebound

The UK economy grew by a stronger-than-expected 0.3% in November, according to the Office for National Statistics (ONS), driven by a rebound in car production and a boost in services. The figure exceeded economists’ forecasts of 0.1% growth and followed a 0.1% contraction in October. The ONS also revised September’s growth up to 0.1% from a previous estimate of -0.1%.

Industrial output played a significant role, largely thanks to the return of production at Jaguar Land Rover (JLR) facilities after a cyber-attack in September halted operations. Motor vehicle output surged 25.5% in November, reflecting the staged resumption of production from October. Meanwhile, services benefitted from heightened activity related to the November Budget, including accounting and tax consultancy work.

Car production

Economists say the figures suggest modest growth for the final three months of 2025 and early 2026. Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said the “unexpectedly upbeat” November data indicates that most sectors “seemingly shrugged off pre-Budget uncertainty.” He added that easing uncertainty post-Budget may have supported growth in December despite disruptions from the ‘super flu’ affecting sectors like education.

Construction, however, fell by 1.3% in November, marking its largest three-monthly decline in nearly three years, with deputy chief economist at Capital Economics Ruth Gregory attributing the drop to unseasonably wet weather. Analysts expect a rebound in December.

KPMG UK chief economist Yael Selfin noted that businesses had delayed decisions before the autumn Budget, and the latest data reflects increased activity. She highlighted tentative signs of rising household spending and said growth momentum is expected to continue, supported by business investment and government expenditure.

Cautious criticism

Despite positive signals, critics remain cautious. Shadow chancellor Mel Stride argued that economic growth is “still flatlining” and criticised tax increases and the lack of control over benefits bills as weighing on business and overall economic performance.

A Treasury spokesperson emphasised ongoing efforts to strengthen the economy by investing in infrastructure and reforming planning systems while acknowledging the need to tackle the cost of living and inflation. Deutsche Bank’s chief UK economist Sanjay Raja suggested that the robust data may reduce pressure for an early February interest rate cut by the Bank of England.

Overall, while the UK economy shows signs of resilience, analysts caution that November’s growth may represent a temporary rebound rather than a significant underlying acceleration. The mixed signals, including strong industrial recovery and services growth offset by construction weakness, underscore the ongoing volatility in the UK’s economic performance.

With industrial activity returning to normal and services benefiting from policy-related demand, analysts expect moderate growth to continue into early 2026, though uncertainty around consumer sentiment and sector-specific disruptions could affect momentum.

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