UK's economy grew at weakest rate for seven years in November

13 January 2020, 09:37 | Updated: 13 January 2020, 11:11

The economy grew at its weakest annual rate since 2012 in November amid political chaos over Brexit, official figures show.

The Office for National Statistics (ONS) said the pace slowed to 0.6% from 1% in October - the latter figure representing an upwards revision from an earlier estimate.

For November as a whole - the month when Boris Johnson secured a general election after failing to break the parliamentary deadlock over Brexit - output fell by 0.3%, the ONS said.

Economists had been expecting a flat performance.

The ONS added that, over the three months to November, growth was 0.1% up when a contraction had been forecast.

Its head of GDP Rob Kent-Smith said: "Overall, the economy grew slightly in the latest three months, with growth in construction pulled back by weakening services and another lacklustre performance from manufacturing.

"The UK economy grew slightly more strongly in September and October than was previously estimated, with later data painting a healthier picture.

"Long term, the economy continues to slow, with growth in the economy compared to the same time last year at its lowest since the spring of 2012.

"The underlying trade deficit narrowed as exports grew faster than imports."

The data did little to shore up the value of the pound - weakened since its post-election bounce by growing expectations that the Bank of England is on course to cut interest rates at the end of the month.

Over the weekend, a third rate-setter suggested that a rate cut to help support output was possible, adding gloom to the currency's performance.

It fell below $1.30 on Monday morning and retreated further against the greenback to trade at $1.2970 once the ONS figures emerged.

While Bank governor Mark Carney warned last week that the economy was below potential, there have been some signs of a so-called post-election "Boris bounce" in business activity and in consumer confidence.

While the latter has not reached high street retailers, spending on leisure experiences, nights out and things such as cinema trips appears to have surged.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the Bank would be watching business surveys closely over the next two weeks to determine whether a rate cut was the appropriate response.

He said of the ONS figures: "The latest GDP data are nowhere near as horrendous as they appear initially.

"The sharp fall in November has followed upwardly revised growth in the previous two months.

"In addition, nearly all of November's fall in GDP was attributable to temporarily weakness in the manufacturing and distribution sectors.

"The 1.7% month-to-month decline in manufacturing output reflected both the impact of the October Brexit deadline on the timing of demand and temporary closures of car plants.

"Meanwhile, the 0.9% drop in distribution output reflected the impact of the shift in the timing of Black Friday this year.

"Output in both the manufacturing and distribution sectors will rebound in December.

"This should ensure that quarter-on-quarter GDP growth in Q4 comes in at zero, only a bit below the MPC's 0.1% forecast."