Recession in doubt after unexpected growth in UK economy

The UK economy surprisingly grew by 0.1% in November, raising hopes that the country avoided entering a recession at the end of last year.

Output “edged up over the month”, said The Times, helped by growth in the dominant services sector, with pubs and bars enjoying a boost as people piled in to watch World Cup games.

December’s GDP figures will need to drop by about 0.5% for fourth-quarter growth to be negative and the UK economy to technically enter recession, which is defined as two consecutive quarters of negative growth.

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“To add to the growing optimism”, said the Evening Standard, Tesco and Marks & Spencer have both recorded “bumper Christmas trading figures”, suggesting Britain’s economy “may be showing greater resilience than predicted in the face of the cost of living crisis”.

The UK “may avoid a recession for now but it won’t feel like it for many”, wrote Larry Elliott, economics editor of The Guardian. GDP figures are “notoriously erratic”, he said, so the UK “could yet” fall into recession “in the face of rising interest rates and higher taxes over the coming months”.

Ruth Gregory, senior UK economist at Capital Economics, said in a note to clients that “even if the economy does a bit better than expected in quarter four, it is at best stagnating” and “we still think a recession is on its way in the first half of 2023”.

Chancellor Jeremy Hunt responded to the latest figures with caution, pledging to “stick to the plan to halve inflation this year so we get the economy growing again”. Labour’s Rachel Reeves said: “Today’s results are just another page in the book of failure that is the Tory record on growth”.