The UK economy grew by a stronger-than-expected 0.3% in November despite uncertainty around Rachel Reeves’s budget, official figures show.
Figures from the Office for National Statistics (ONS) on Thursday showed the improvement, up from a 0.1% fall in October.
Forecasters had expected a more modest 0.1% expansion. The better-than-expected data will be good news for the chancellor, who hopes an economic turnaround will help Labour’s fortunes.
Economic output earlier in 2025 was hit by the cyber-attack on the carmaker Jaguar Land Rover, which depressed vehicle production. The company’s recovery appears to have contributed to November’s growth, with a 25.5% improvement in motor vehicle manufacture during the month.
The services sector grew by 0.3% in November, while production grew by 1.1%, the ONS said. However, construction fell by 1.3%, underlining fears that the government’s hoped-for building boom is failing to materialise.
Yael Selfin, the chief economist at KPMG UK, said the data suggested the economy had “found its footing” in November.
“Despite the uncertainty ahead of the budget, economic activity accelerated in November. With the worst of the uncertainty behind businesses, we expect growth momentum to continue over the coming months,” she said, adding that there were “tentative signs of a pick-up in household spending”.
Economists at the National Institute of Economic and Social Research (NIESR) said the data pointed to growth of 1.4% for 2025 as a whole – stronger than the previous year.
Ben Caswell, a senior economist at NIESR, said: “Against this backdrop, the chancellor more than doubled her fiscal headroom at the budget in an effort to bolster economic confidence. While it is too early to see the full effect of this, the move appears to have eased speculation over future tax policy and the uncertainty that came with it.”
The UK’s borrowing costs dropped to their lowest level in more than a year on Wednesday amid hopes of more interest rate cuts from the Bank of England.
The ONS said that over the three months to November – a period it said gave a better snapshot of the economy’s health – gross domestic product grew by 0.1%, dampened by the JLR shutdown.
The shadow chancellor, Mel Stride, said: “This morning’s news that growth is flat-lining is more evidence of Labour’s economic mismanagement. Because Labour made the wrong choices, their budget is unravelling day by day.
“Despite Labour’s U-turns on the family farms tax and business rates, their budget will still leave working people worse off and our economy weaker, with higher taxes stifling growth and fuelling inflation.”
Further evidence on the state of the economy will come in the next week, with inflation and unemployment data due to be released. Reeves is keen to see more rate cuts as part of the government’s drive to cut the cost of living.
Suren Thiru, the economics director at the Institute of Chartered Accountants in England and Wales, said: “This return to growth probably won’t trigger a sustained economic revival with softer consumer spending amid an intensifying tax burden and higher unemployment likely to mean noticeably weaker growth for 2026, despite a boost from lower inflation.
“These figures make a February interest rate cut less likely by giving those rate-setters still concerned over inflation with sufficient comfort over economic conditions to delay voting to ease policy again.”
The chancellor delivered her second tax-raising budget on 25 November, after a febrile period of speculation. The flurry of on-off tax rumours was blamed by business groups for deterring investment and consumer spending.
In a hint that the unusual level of speculation in the run-up to Reeves budget may have been good business for some, the ONS said the largest contribution to service sector growth came from “professional, scientific and technical activities” – noting in particular strong growth in accounting, bookkeeping, auditing and tax consultancy.
Reeves is expected to announce additional support for the hospitality industry in the coming days after a backlash over changes to the business rates regime.
