The UK economy surprisingly expanded in November, aided by the World Cup, according to official data.
Despite households being squeezed by rising prices, the economy expanded by 0.1%, aided by demand for services in the technology industry.
The Office for National Statistics (ONS) reported that pubs and restaurants also contributed to economic expansion as people went out to watch football.
However, it remains uncertain if rising expenses will cause a recession in the United Kingdom.
Despite the fact that the UK’s gross domestic product figure for November came in significantly higher than forecasted. The overall picture still paints a picture of an economy that is stagnant as consumers make budget cuts due to rising food and energy prices.
The November increase represents a deceleration from the 0.5% growth in October, which was mostly due to a rebound from businesses reopening after closing for Queen Elizabeth II’s funeral in September.
According to economists, the most recent data makes it less obvious that the United Kingdom entered a recession at the end of last year.
Two consecutive three-month periods, or quarters, of declining economic output, characterize a recession.
A recession is an indicator that a country’s economy is performing poorly. During a recession, companies often earn less money, and the unemployment rate rises. Additionally, it is difficult for graduates and high school dropouts to obtain their first employment.
From July to September, the UK’s economic production decreased by 0.3%.
Since October, economic growth has slowed significantly, in part due to labor disputes.
In November, rail employees and Royal Mail employees went on strike over salary and working conditions. The head of economic statistics at the ONS, Darren Morgan, stated, “We saw the impact of industrial action in today’s data.”
This sector exerted the greatest impact on the economy in November. As rail transport, postal work, and warehousing all suffered significant declines.
In December, strike action persisted and expanded to include NHS workers and Border Force personnel at six UK airports. It may have an impact on next month’s data. Which will disclose if the technical definition of a recession has been reached.
Mr. Morgan stated that the GDP would have to contract by 0.6% in December for the United Kingdom to enter a recession.
Although there may have been a slight recovery in the economy in November, the Federation of Small Businesses (FSB) warned that economic problems have not yet been resolved.
Martin McTague, national chair of the FSB, stated, “With expenses staying high for both small businesses and households, policymakers cannot rest on their laurels. Inflation must be reduced, there is still a great deal of uncertainty around energy prices. And consumer confidence remains stubbornly low.”
At Gtech in Worcester, employees have observed the economy slowing down.
The company develops and distributes cordless vacuum cleaners and additional accessories. After a busy period, when people were eager to invest in maintaining the appearance of their houses and gardens, demand began to decrease.
Nick Grey, the company’s creator, speculates that a recession is likely on the horizon because individuals are experiencing difficulty. They are somewhat concerned about their fundamental costs of heating and fuel, as well as inflationary concerns.
Despite this, the company provided its employees a £1,000 cost-of-living payment in December and gave its lower-paid employees a more substantial pay raise than its senior employees, as they are more impacted by growing costs.
Mr. Grey predicts that the next twelve months will be difficult. “We’re simply focusing on doing the fundamentals properly. So that we’re in a strong position to grow and recover when all of this blows over.”
While it was a surprise that the economy expanded in November. The trend over the past three months is still negative by 0.3%. Overall, the UK economy still appears to be sluggish. But whether or not it is officially in a recession relies on the next set of data revealed in a month.
UK economy outperforms in November
The World Cup boosted taverns, pizza delivery, and the advertising business, boosting the economy above typical levels. However, several preceding monthly figures from the previous year were revised downward. Resulting in a decline in the less volatile three-month measure. Strikes contributed to declines in transportation and postal services of 4.7% and 3.0%, respectively.
As the Bank of England conducts its most comprehensive evaluation of the status of the economy next month. A variety of fresh and one-time factors, as well as statistical revisions, will likely result in a further rate hike.
Chancellor Jeremy Hunt stated on Friday that he had a “clear plan” to halve inflation. Which is at a 40-year high and gauges the rate at which prices rise.
However, according to Rachel Reeves, shadow chancellor, the latest findings are “very troubling for families already struggling with the escalating cost of living.
According to Pantheon Macroeconomics, it is “in the balance” whether or not the United Kingdom is currently in recession. Potentially creating greater suffering for people.
Mr. Morgan of the ONS stated that one in six businesses had reported being impacted by industrial action. Therefore it will be necessary to assess the impact of industrial action on the December figure in the coming weeks.
In November, while the manufacturing sector contracted and the construction sector remained stagnant. The services sector, which comprises industries ranging from hospitality to accounting, expanded.
