The latest UK GDP figures have delivered a rare dose of optimism, with November’s 0.3% growth beating expectations and hinting that the economy may have ended last year on a stronger footing. While the longer-term trend remains weak, easing inflation and a rebound in services are raising hopes of a more sustained recovery in 2026.
Experts are reacting to the latest figures below:
Lindsay James, investment strategist at Quilter, said:
“The UK economy returned to growth in November, with GDP rising by 0.3%, but that growth over a longer period remains meagre at best. That monthly figure did beat expectations of 0.1% as the services sector continued to be the main engine of the UK economy. Production picked up 1.1% in the month but over three months remains in contraction, with the downturn in construction deepening. However, on aggregate November showed glimmers of hope, notable too given the Budget overhang continued during this period. Whether this materialises into anything more sustained remains highly questionable, however.
“Unfortunately, it doesn’t seem like a bumper Christmas period followed either as we saw weak retail sales from the British Retail Consortium this week, mirroring disappointing Christmas sales from UK retailers such as Tesco, M&S and Primark. For what should be a jolly time of the year, the economic cheer was missing.
“While domestic uncertainty has now lifted for now, following the Budget, the global picture remains incredibly volatile and this was be continuing to buffet businesses looking for any kind of stability. The good news, however, is that inflation is coming back to target quicker than expected and thus interest rate cuts may be more aggressive than first though, subsequently boosting the economy. With manufacturing output having potential to improve as the situation at Jaguar Land Rover stabilises in the aftermath of its cyber-attack and the potential for consumer activity to start to rebound as we leave winter behind, then there is some positivity for those looking for it. After today’s figures, the government will certainly be hoping for a repeat of last year when the first half of the year saw strong economic growth, before tailing off into this latest malaise.”
Chris Beauchamp, Chief Market Analyst at IG:
“It’s not often that we get such good news on the economy, but today’s GDP figures have done just that. Bets have been trimmed on further BoE easing, but the dovish bias remains. Is it too much to hope that the UK economy is about to enter a goldilocks period for data? The news is welcome for the government but also for the FTSE 250, which has lagged behind its counterpart the FTSE 100; more such UK figures could provide the rationale for further inflows into the index and its companies, helping it to play catch-up.”
Rob Morgan, Chief Investment Analyst at Charles Stanley, said:
“Britain’s economy looks set to complete the second half of 2025 in positive territory, with only December’s data left to confirm. GDP rebounded in November after October’s -0.1% dip, and when combined with the third quarter’s 0.1% rise, the second half of the year was weak but not as bad as feared. Growth remains in a low gear, but at least it’s forward.
“December could also deliver a modest boost thanks to a post-Budget bounce, festive spending, stronger car production, and a timely Bank of England rate cut adding momentum.
How does 2026 look?
“Overall, 2025 was lacklustre but far from catastrophic. Growth north of 1%, despite tariff and tax headwinds, showed underlying resilience. However, that strength was front-loaded, and the bigger picture is that the economy is barely ahead of where it stood in June.
“For 2026, expect more of the same: a mildly positive first half, then renewed weakness later. Deferred spending and investment may provide an early lift, but without gains in productivity or labour participation – and with the tax burden still weighing on sentiment – the economy is likely to stay stuck in low gear.
Jobs, inflation, and interest rates
“Weak growth will keep pressure on a febrile jobs market, where unemployment has moved up to 5.1% and is particularly acute among younger workers. The silver lining for households is easing inflation. Budget measures such as energy bill relief and rail fare freezes should soften cost-of-living pressures. Headline CPI is forecast to dip below 3% by April and fall further into summer.
“As a result, the Bank of England is still expected to deliver at least one more rate cut this year. Combined with earlier reductions, this should ease the burden on borrowers and help bolster consumer confidence and the housing market.
Overall, though, it’s hard to see anything other than a continuation of the weak, underwhelming picture as the year unfolds.”
Luke Bartholomew, Deputy Chief Economist, at Aberdeen said;
“After months of very sluggish activity, the November GDP report suggests there is still some life left in the UK economy. Of course, the monthly reports are very volatile, and the 3 month measure is still very weak at just 0.1% growth. But the final quarter of last year now looks like it ended in expansion. Looking forward, it is still not clear where the drivers of a sustainable pick-up in growth through 2026 come from. So we continue to expect Bank Rate to fall to 3% this year as long as inflation plays ball.”
Kevin Brown, savings expert at Scottish Friendly, has commented:
“After months of disappointment, November’s GDP figures offer a much needed and unexpected confidence boost. Given the headwinds facing businesses – from higher payroll taxes to growing geopolitical uncertainty – this recent data suggests that firms are starting to find their feet. Encouragingly, more up-to-date PMI data points to that momentum carrying into the end of the year, with manufacturing showing signs of a December rebound.
“That said, it’s important not to get carried away. While oil is well below where it was a year ago, the price has spiked in recent days following the unrest in Iran, one of the world’s largest oil producers. If the price continues to rise, it would lead to higher energy prices, which would hit manufacturers and derail their recent recover. This is something the Bank of England will be keeping a close eye on.
“As things stand, we still expect an interest rate cut by March, with another in the second half of the year, though global events could yet change the picture. In the meantime, savers shouldn’t sit still. If rate cuts are coming, the best deals won’t be around for long. And for those with a longer-term horizon, investing could still provide the potential to provide an effective way to try to stay ahead of inflation, which is still running significantly above the Bank of England’s 2% target.”
Richard Pike, chief sales and marketing officer at Phoebus Software, commented:
“Today’s figures provide some much-needed good news for the economy as it returned to growth in November, after showing no growth for the previous three months. A 0.1% increase in GDP won’t set the world alight but at least the UK economy is moving in the right direction.
“The bad news for the housing market is that construction output fell by 1.1% in November, with the lowest three-monthly reading since March 2023. With housebuilding activity taking a sharp downturn at the end of last year, we have to hope that client confidence returns in 2026 so construction companies can start building again.
“Looking ahead, the Office of Budget Responsibility downgraded its growth forecast for the UK in its most recent outlook but still predicts modest growth of 1.5% over the next three years. With rates coming down and affordability improving, we are optimistic the housing market could be a key driver for growth over the coming months.”
Jeremy Batstone-Carr, European Strategist at Raymond James Investment Services:
“While the UK economy returned to growth over November (+0.3% and a little stronger than thought likely), the marginal nature of the increase confirms that pockets of weakness remain including in manufacturing. Admittedly, uncertainty surrounding the end-month Budget certainly served to suppress confidence and business spending intentions. However, financial markets are likely to accord today’s data only passing interest given the more contemporary focus on the Bank of England’s detailed assessment of the Chancellor’s measures, scheduled to coincide with the conclusion of the next rate-setting policy meeting on 5th February.
“September’s disruption at Jaguar Land Rover hasn’t quite been consigned to the past, as despite the production resumption in October, manufacturing activity contracted again even as the service sector grew more strongly.
“The Budget ensured elevated nervousness regarding potential announcements. Paired with wet weather and a plunge in construction sector activity, this ensured November’s GDP was decidedly anaemic.
“While Budget-related jitters were mostly transient, making a rebound to end last year likely, the Bank of England used the opportunity afforded by its final rate-setting meeting of 2025 to confirm that it expects nothing better than a flat outcome for UK growth over the final quarter. While this may prove pessimistic, the combination of the lagged effect of high interest rates, high taxes and subdued global economic activity will continue to have a dampening effect on growth in the months ahead. This limited growth, combined with a further easing in price pressures, should ensure that it’s only a matter of time before interest rates are cut again.”
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE 100 has taken a pause this morning after reaching a record close of 10,184.35 points on Wednesday. The mining sector has had a large part to play in the strong start to the year, with metal prices on the march, and the potential for a Rio Tinto tie-up with Glencore fuelling consolidation fever. Improving economic news is also adding to the positive mood.
UK GDP grew 0.3% in November compared to forecasts of just 0.1% with services doing much of the heavy lifting. Add yesterday’s comments from the Bank of England’s Alan Taylor that inflation is on track to reach target levels of 2% by the middle of the year, and the case for a soft landing would look to be holding the high ground. But it’s not all good news with today’s economic output figures revealing broadly flat production numbers and a 1.1% fall in construction activity.
US futures are showing little direction today after a weak Wednesday on Wall Street. Mixed numbers for the US banks dragged on financials and the question of tech trade with China dragged on semiconductor names. However, today’s record earnings from Taiwanese chip builder TSMC showed that demand from elsewhere looks strong enough to keep the AI boom alive.
Delayed shutdown figures for November’s Producer Prices Index came in a little more benign than expected, but an annual rise of 3.3% still showed that wholesale prices are growing faster than those that consumers are paying. Until inflation is firmly under control, market volatility is likely to remain elevated, particularly as question marks circulate over the Federal Reserve Bank’s independence.
Brent crude oil prices are down over 3% to about $64.4 per barrel after five consecutive rises. Traders are paying close attention to the unfolding drama on the streets of Tehran. Donald Trump appears to have pulled back from the brink of military intervention. With expectations of an oil surplus this year remaining high, speculation-driven gains can be quickly reversed. But with events moving so quickly, oil traders should prepare for more volatility.”
Abhi Chatterjee, Chief Investment Strategist, Dynamic Planner, said:
“The UK economy offered a rare glimpse of resilience in November 2025, posting a 0.3% growth rate that beat expectations. When viewed through the broader lens of the preceding quarter, the 0.1% expansion suggests a subtle, yet significant, beating of expectations. For a policy-making establishment that has long operated under a cloud of doubt, these figures represent the first robust reading since June—a necessary, if cautious, reprieve. This momentum was driven primarily by a resurgent services sector, which expanded by 0.2% in November. However, the internal architecture of the economy remains uneven. Production and construction continue their contractionary trend, signalling a persistent industrial slowdown.
“While these “green shoots” offer a measure of psychological comfort to the Monetary Policy Committee, they are unlikely to shift the Bank of England’s immediate strategic trajectory. One positive data point does not a trend make; true victory requires sustained evidence that the UK has moved beyond mere survival. The backdrop, however, is becoming more supportive. A combination of stringent fiscal adjustments—notably welfare reforms and the removal of the two-child benefit cap—alongside cooling food and energy inflation suggests the structural headwinds are finally easing. We may not be ready for a celebration, but the UK economy appears to be finding its footing on the long road to recovery.”
Susannah Streeter, Chief Investment Strategist, Wealth Club, said:
‘’November was always going to be an uphill struggle for the UK economy, but although activity was still super-sluggish the UK has not been completely defeated on its quest for growth. Output has surprised on the upside, with growth of 0.3% month on month. There will be sighs of relief in Downing Street that the economy has shown more resilience.
The performance was helped by car manufacturing whirring back into life, with production returning to normal levels at Jaguar Land Rover following the devastating cyber-attack mid-way through the month. With Budget fears reaching panic attack levels for some sectors, it’s not surprising that many battened down the hatches and held off from making big investments. Marketing budgets seem to have been hit, with a 1.3% fall in advertising and market research. Real estate activities also declined 0.4%, as worries bubbled about changes to stamp duty. Consumers worried about where tax rises may fall, also retreated from spending which meant it was a tough time for the hospitality sector during the month. It was still a bleak performance from the construction sector, where activity shrank 1.3% and was also revised lower in October, denting the government’s ambitions for a housebuilding revolution.
However other companies ploughed on, undeterred by Budget worries in projects aimed at longer term growth, such as scientific research and development, which grew 4.5%. There was also a trend of expansion in computer programming and hiring consultants. It’s likely to be linked to advancements in artificial intelligence, with companies anxious not to be left behind. This helped boost the information and communication sector by 1.5%.
Investor confidence
Although the FTSE 100 has raced to fresh record highs, lifted by enthusiasm for multinationals with global reach and defensive characteristics, for now investor confidence in the UK’s prospects don’t seem to be following the same optimistic path. A survey of Wealth Club’s high net worth investors shows that 68% say they are pessimistic about the outlook for the UK over the next 12 months. Just 10% said they were optimistic about the prospects, while another 21% were on the fence about what could evolve over the next year for the United Kingdom.
Glimmers of optimism ahead
While stagnation and slow growth look set to define the end of 2025, there are glimmers of optimism ahead, and we may already have passed the nadir of pessimism. While unemployment looks set to rise, which is causing wariness for consumer-focused sectors, inflation is cooling and interest rates have been cut. This may encourage households who’ve built up nest eggs of savings to be a bit more flash with their cash and spend more, supporting economic growth. With Budget uncertainty now in the rear-view mirror, and some of the onerous Treasury measures on agriculture and hospitality farms being rolled back, it could also boost business sentiment going forward. Already firms are showing willingness to invest in longer term R&D and IT projects. But fixing the UK’s productivity problem remains a big challenge and with no quick fixes available, significant growth is likely to remain elusive.”
Derrick Dunne, CEO of YOU Asset Management, has commented:
“While the volatile monthly figure showed 0.3% growth in November, GDP growth was harder gained over the three months to November 2025, ekeing out a paltry 0.1%. While growth is welcome, there is a concern here in which sectors showed signs of positivity and which took a hard downward turn. In particular, the construction sector contracted at -1.1% in what should be an problematic signal for the rest of the economy, despite the economy beating expectations on the monthly GDP figure.
“Construction is a leading indicator – it shows us where the rest of the economy downstream from its activity (think, people taking mortgages on those houses built, kitting out their homes etc) will go. Contraction of this nature in construction specifically is therefore a potentially negative signal. To be sure, it is likely that some of this downturn in activity was circumstantial as construction businesses held their breath ahead of the Budget. Lower interest rates will also boost activity. But to see one leading economic sector in particular sneeze like this could see the whole economy catch a cold.
“On the flipside to this, it is indicative that inflationary pressures should continue to ease in the month ahead and therefore rates. Anyone unsure what this could mean for their long-term financial plans should consider consulting with a financial adviser.”
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