Royal Stock Exchange and Bank of England.
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Data from the Office for National Statistics (ONS) showed on Thursday that the British economy grew at a lackluster pace of 0.1% in November, with the reading reinforcing expectations that the Bank of England will proceed with interest rate cuts next month.
The latest data compares with the 0.2% monthly growth expected by economists polled by Reuters.
Monthly real GDP fell by 0.1% in October, after a 0.1% decline in September and 0.2% growth in August.
The Office for National Statistics said the slight growth in economic output in November was largely due to growth in the services sector. Although this data is scanty, it is the first sign of life in the wider UK economy for three months.
British Chancellor Rachel Reeves said in a statement after the data was released on Thursday that she was “determined to move forward faster to revive economic growth.”
“This means generating investment, driving reform and making a tough commitment to eliminating waste in public spending, and today I will press regulators on what they can do to deliver growth,” she said in emailed comments from the Treasury Department.
However, the ONS said real GDP was estimated to have shown no growth in the three months to November, compared to the three months to August.
“Services showed no growth during this three-month period, while production fell by 0.7% and construction grew by 0.2%.” The Office for National Statistics said in a data release.
the British pound It fell 0.2% against the dollar to trade at $1.2214 after the GDP reading, which comes as the Bank of England considers whether to cut interest rates at its next meeting on February 6.
Economists say the latest data only fuels the case for a rate cut next month, although Bank of England policymakers will take into account inflationary pressures, such as resilient wage growth and uncertainty about Britain’s economic outlook. The inflation target set by the central bank is 2%.
“Combined with a lower-than-expected CPI inflation reading for December, today’s statement revealed that the economy continued to enjoy little momentum until the end of last year, leaving us satisfied with our view that the Bank of England will cut interest rates from 4.75% to 4.75. “Inflation rose 4.50% in February,” Ashley Webb, UK economist at Capital Economics, said in an email note.
Work under pressure
The Labor government and the Treasury have come under pressure in recent weeks amid rising government borrowing costs, questions about their financial plans and a rising tax burden on companies.
However, both were given something of a reprieve on Wednesday, when the latest inflation data showed that consumer price growth slowed more than expected to 2.5% in December, with core price growth slowing further.
The reading was lower than the expectations of economists polled by Reuters, who expected the inflation rate to remain unchanged from November’s reading of 2.6%.
Core inflation, which excludes more volatile food and energy prices, was 3.2% in the 12 months to December, down from 3.5% in November.
UK inflation reached its lowest level in more than three years at 1.7% in September, but monthly prices have accelerated since then on the back of rising fuel costs and utility prices. In December, the annual inflation rate in services was 4.4%, down from 5% in November.
The UK economy has found itself in a difficult situation recently, with economists expressing concerns about it Slow growth prospects in the country Concerns about headwinds from external factors, such as potential trade tariffs once President-elect Donald Trump takes office on January 20, along with Internal fiscal and economic challenges have dogged the Labor government and the Treasury since the October Budget.
“A near-stagnation in GDP in November has dampened the optimism sparked by yesterday’s unexpected fall in inflation. At the same time, the widening trade deficit highlights the continuing challenges facing UK businesses as they deal with an increasingly complex global landscape.” , Samuel Edwards, Head of UK Economics. The deal at global financial services firm Epri said in emailed comments on Thursday.
He noted, “The incoming US administration brings both opportunities and challenges. While uncertainty persists over the direction of policy, there is optimism that closer trading ties could unlock great potential in one of the UK’s largest markets.”
Edwards noted that the government’s efforts to strengthen ties with the European Union and China “reflect a clear strategy to diversify export opportunities and enhance long-term economic resilience.”
Correction: The title of this article has been updated to reflect that the UK economy grew by 0.1% in November. The previous version had made a mistake in this number.
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