UK’s Economy Barely Grew in November After Reeves Budget

• Britain's economic output returned to growth in November, the first month after Finance Minister Rachel Reeves announced big tax increases for businesses, but the expansion was smaller than expected. Gross domestic product rose by 0.1% from October after dips in September and October. However, economists polled by Reuters had mostly forecasted a 0.2% rise.
• Reeves, whose Oct. 30 budget included big increases in social security contributions paid by employers, said she was "determined to go further and faster to kick-start economic growth." She will meet regulators on Thursday to discuss what they can do to help the Labour government meet its promise to speed up the economy.
• However, Ben Jones, lead economist at the Confederation of British Industry, said a mood of caution had settled over UK businesses since the budget. "Many firms are entering 2025 with a focus on reducing operational expenditure, which is likely to weigh on pay, hiring and investment in the months ahead," Jones said
• Rob Wood, chief UK economist at Pantheon Macroeconomics, said Thursday's data showed the gloomy mood continued for the UK economy due to the budget tax hikes and global uncertainty after Donald Trump's U.S. presidential election victory.
• Britain's economy, which was slow to recover from the COVID-19 pandemic, showed zero growth in the third quarter when uncertainty about the upcoming budget hit businesses. The BoE expects economic growth to have flat-lined in the last three months of 2024. However, an increase in government spending is expected to give a short-term boost to growth in 2025.
• Concerns about Britain's slow economy contributed to a recent surge in its government borrowing costs. But they dropped sharply on Wednesday after inflation data at home and in the U.S suggested interest rates could be cut more quickly.

(Source: Reuters)