The economy grew by a modest 0.3% month-on-month in November, the Office for National Statistics revealed today.
This is just enough to bring the UK back to square one since October, when the country’s growth unexpectedly contracted by 0.3%.
Now all eyes are on the December figures to see if the UK is in a recession, said Richard Carter, head of fixed interest research at Quilter Cheviot.
“Growth is still relatively weak and interest rates are clearly biting. This uplift in November leaves an awful lot of pressure on the December figures as even a slight downward turn would result in the UK entering a technical recession after GDP in the third quarter was revised down to a fall of 0.1% at the end of last year,” Carter said.
“This morning’s figure shows just how precarious the situation is for the UK and piles yet more pressure to cut interest rates. The Bank of England has managed not to tip the UK into a recession to date, but it is looking increasingly likely that its luck may be coming to an end. The UK is currently on the cusp and continued weak growth or even contraction cannot be ruled out.”
On a slightly more positive note, given the inflation and interest rate pressures, Premier Miton’s chief investment officer Neil Birrell described November’s performance as “creditable”.
“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,” he said.
“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.”
The repercussions of a technical recession would be more psychological than real for Danni Hewson, head of financial analysis at AJ Bell, but no less important for it.
“When we are talking about such small moves on either side of the line most households won’t really care if the economy is growing or not, but psychologically, avoiding a technical recession matters. Today’s reading could suggest that falling inflation is finally having an impact on people’s sense of wellbeing, but in reality it seems many were simply tempted by Black Friday sales,” he said.
“The bigger question is whether the momentum continued through the final days of 2023 and we won’t find out the answer to that for another month, but the odds look pretty evenly stacked. In truth, the economy feels pretty stuck in the mud.”