The UK economy recorded stronger-than-expected growth in November, expanding by 0.3% despite uncertainty surrounding Rachel Reeves’s recent budget, according to official figures.

Data published by the Office for National Statistics showed a rebound from October’s 0.1% contraction. Economists had forecast growth of just 0.1%, making the latest figures a positive surprise and welcome news for the chancellor as Labour looks to build momentum through an improving economic outlook.

Growth was driven primarily by the services sector, which expanded by 0.3% during the month. Production also performed strongly, rising by 1.1%. However, construction output fell by 1.3%, reinforcing concerns that the Government’s anticipated boost to housebuilding and infrastructure activity has yet to take hold.

Looking beyond the month, the ONS stated that gross domestic product grew by 0.1% in the three months to November, a period it described as providing a clearer picture of the underlying economic health. This figure was held back in part by the shutdown at Jaguar Land Rover. Economists at the National Institute of Economic and Social Research now expect the economy to grow by 1.4% over 2025, an improvement on the previous year.

Financial markets also reacted positively. UK borrowing costs fell to their lowest level in more than a year, reflecting growing expectations of further interest rate cuts by the Bank of England. Reeves has signalled that lower rates are central to easing cost-of-living pressures.

Interestingly, the ONS noted that professional, scientific and technical activities made the largest contribution to services growth, with particularly strong performance in accounting, bookkeeping, auditing and tax consultancy. This followed weeks of intense speculation ahead of Reeves’s tax-raising budget on 25 November, which business groups said had dampened investment confidence.

Further insight into the economy’s direction is expected next week, with new inflation and unemployment data due. Reeves is also expected to outline additional support for the hospitality sector following criticism of recent business rates changes.

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