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In a surprising turn, the UK economy expanded by 0.3% in November, outperforming forecasts. This growth marks a recovery from the previous month’s decline, driven by a robust services sector and a notable rebound in manufacturing.

The Office for National Statistics released November’s GDP figures on Thursday, revealing a 0.3% increase. This was higher than the 0.1% growth predicted by economists surveyed by Reuters and a significant improvement from October’s 0.1% contraction.

November’s GDP performance, the most impressive since June, was supported by a 0.3% rise in services and a substantial 2.1% surge in manufacturing.

This positive data provides a welcome boost to the government, which has prioritized economic growth as a key component of its policy agenda.

Ben Caswell, a senior economist at the National Institute of Economic and Social Research, remarked, “Today’s data presents encouraging news for the UK economy, showing modest growth in November despite uncertainties leading up to the Budget.”

He added that chancellor Rachel Reeves’ move to more than double her fiscal headroom in November’s Budget “appears to have eased speculation over future tax policy and the uncertainty that came with it”.

The UK economy had lost momentum since the strong growth of the first quarter of 2025, weighed down by geopolitical uncertainty, elevated borrowing costs, disrupted auto production and anticipation of tax-raising measures in the Budget.

But Thursday’s data showed signs of an uptick. In the three months to November, a less volatile measure, the economy grew 0.1 per cent, beating expectations of a 0.2 per cent contraction.

The boost to manufacturing in November’s data came as car production normalised following a cyber incident at Jaguar Land Rover.

Consumer-facing industries, such as restaurants and shops, registered a strong 0.5 per cent growth in the three months to November.

The figure for September was also revised up to 0.1 per cent growth from an initial estimate of a 0.1 per cent fall.

Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said the data made a Bank of England rate cut in February less likely, as it gave rate-setters concerned about inflation “sufficient comfort over economic conditions to delay voting to ease policy again”.

Traders kept their expectations for BoE interest rate cuts largely unchanged on Thursday, with a quarter-point cut by June fully priced in the swaps market. The pound was little moved against the dollar at $1.343.

Ruth Gregory, economist at the consultancy Capital Economics, said the stronger than expected monthly figure “suggests the economy is heading into 2026 with a bit more momentum than we thought”.

But she warned that November’s strength “is more likely to be a rebound rather than a sign that the economy is fundamentally stronger than we thought”.

In December, the BoE expected no growth in the final quarter of 2025 after a marginal 0.1 per cent increase in the three months to September.

The central bank estimated that policies announced in the Budget, including U-turns on welfare cuts and the two-child benefit cap, could increase GDP by about 0.1 to 0.2 per cent over the next few years, but that tax rises will weigh on growth beyond that.

Yael Selfin, chief economist at KPMG UK, said: “With the worst of the uncertainty behind businesses, we expect growth momentum to continue over the coming months.”

Inflation is also projected to decline, she added, thanks to easing food and energy prices, which could support a recovery in discretionary spending.

A spokesperson for the Treasury said the government was working to reverse “years of under-investment” as well as “taking action to get bills and inflation down . . . to deliver an economy that works for working people”.

Separate trade data published by the ONS on Thursday showed that the UK goods and services trade deficit widened in the three months to November and that goods exports to the US “have remained relatively low since the introduction of tariffs in April”.

Additional reporting by Ian Smith