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By Harry Daniels
LiveSquawk News
@HarryDaniels71

15 January 2026 | 11:30 GMT

LONDON – Economic activity across the UK showed a modest upturn at the end of autumn, although the medium-term outlook remains fragile.

Data from the Office for National Statistics showed GDP grew 0.3% m/m in November, two tenths stronger than consensus and an improvement on October’s 0.1% increase.

Services were the main driver of growth, rising 0.3% on the month. Production output climbed 1.1%, helped in large part by a 2.1% rise in manufacturing. Within that, the manufacture of transport equipment surged 10.7%, driven primarily by a 25.5% jump in motor vehicles, trailers and semi-trailers. These gains were partly offset by a 1.3% fall in construction output.

In the three months to November, the economy expanded 0.1%, outperforming expectations for a 0.2% contraction and improving on the previous period’s upwardly revised flat reading.

Commenting on the data, Liz McKeown, ONS director of economic statistics, said services output led growth over the three-month period, rising 0.2% 3m/3m after a 0.1% increase previously, with output rising in eight of the 14 subsectors.

Production weighed on activity over the period, falling 0.1%, largely reflecting weaker manufacturing of motor vehicles, trailers and semi-trailers. This followed an upwardly revised 0.1% decline in the three months to October.

Construction also dragged, with output down 1.1% after a 0.3% fall previously. The ONS said this extended a pattern of slowing three-monthly growth since May and marked the weakest reading since March 2023.

James Smith at ING said a rebound in the UK automotive sector helped return the economy to growth in November. While flagging volatility in short-term data, he noted that recent underperformance was driven largely by a cyber-attack in the car industry that triggered a roughly 30% drop in vehicle production in September. “Now things are getting back to normal, production has surged, and that helps explain a decent chunk of November’s growth,” Smith said.

Even ahead of its December meeting, the Bank of England had characterised near-term growth prospects as “weak and constrained.”

A week before Christmas, the Monetary Policy Committee voted by a narrow 5–4 margin to cut Bank Rate by 25 basis points to 3.75%, with Governor Andrew Bailey siding with the dovish camp. The accompanying statement cited a loosening labour market and further cooling in inflation, while cautioning against expectations of rapid or frequent easing.

In post-decision media interviews, Bailey said he had been “very encouraged” by progress in returning inflation towards target. “I think now that we’re on a path where we’ll probably be around this level for a few months,” he said. “But we think that come the spring — April or May — we should see another quite sharp drop, and take this, I hope, to around target.”

Morgan Stanley’s Bruna Skarica said that with domestic weakness largely driven by UK policy settings, and externally facing sectors set to benefit from firmer global growth, some downside tail risks had been removed. “With lessened downside risks to growth, the BoE can probably — as markets are pricing — wait for further progress on disinflation before cutting rates again,” she said.