search
date/time
 | Yorkshire Times Weekend Edition |
P.ublished 15th January 2026
business
GDP Snapshot: Stagnation Ruled But November Growth Still Beats Forecasts
A rebound in car production following Jaguar Land Rover attack appears to have helped. Monthly construction output is estimated to have fallen by 1.3% in November. Budget fears made some firms cautious, but there was increased activity across IT and R&D.
Wealth Club survey of high-net worth investors show pessimism about the 12 months head. With the Budget in rear-view mirror and interest rates on a downward path more optimism is due.
November was always going to be an uphill struggle for the UK economy, but although activity was still super-sluggish the UK has not been completely defeated on its quest for growth. Output has surprised on the upside, with growth of 0.3% month on month. There will be sighs of relief in Downing Street that the economy has shown more resilience.
The performance was helped by car manufacturing whirring back into life, with production returning to normal levels at Jaguar Land Rover following the devastating cyber-attack mid-way through the month. With Budget fears reaching panic attack levels for some sectors, it’s not surprising that many battened down the hatches and held off from making big investments. Marketing budgets seem to have been hit, with a 1.3% fall in advertising and market research. Real estate activities also declined 0.4%, as worries bubbled about changes to stamp duty. Consumers worried about where tax rises may fall, also retreated from spending which meant it was a tough time for the hospitality sector during the month. It was still a bleak performance from the construction sector, where activity shrank 1.3% and was also revised lower in October, denting the government's ambitions for a housebuilding revolution.
However other companies ploughed on, undeterred by Budget worries in projects aimed at longer term growth, such as scientific research and development, which grew 4.5%. There was also a trend of expansion in computer programming and hiring consultants. It's likely to be linked to advancements in artificial intelligence, with companies anxious not to be left behind. This helped boost the information and communication sector by 1.5%.
Investor confidence
Although the FTSE 100 has raced to fresh record highs, lifted by enthusiasm for multinationals with global reach and defensive characteristics, for now investor confidence in the UK’s prospects don’t seem to be following the same optimistic path. A survey of Wealth Club’s high net worth investors shows that 68% say they are pessimistic about the outlook for the UK over the next 12 months. Just 10% said they were optimistic about the prospects, while another 21% were on the fence about what could evolve over the next year for the United Kingdom.
Glimmers of optimism ahead
While stagnation and slow growth look set to define the end of 2025, there are glimmers of optimism ahead, and we may already have passed the nadir of pessimism. While unemployment looks set to rise, which is causing wariness for consumer-focused sectors, inflation is cooling and interest rates have been cut. This may encourage households who’ve built up nest eggs of savings to be a bit more flash with their cash and spend more, supporting economic growth. With Budget uncertainty now in the rear-view mirror, and some of the onerous Treasury measures on agriculture and hospitality farms being rolled back, it could also boost business sentiment going forward. Already firms are showing willingness to invest in longer term R&D and IT projects. But fixing the UK’s productivity problem remains a big challenge and with no quick fixes available, significant growth is likely to remain elusive.
“GDP growth recorded a welcome uptick in November, lifting quarterly growth to 0.1%. A strong recovery in the manufacturing of motor vehicles following the JLR shut-down helped lift growth in manufacturing output. However, the underlying picture remains fragile, with signs that pre-Budget uncertainty dampened demand and slowed growth towards the end of last year. Supports for growth remain precarious in both services and manufacturing with only half of the subsectors posting growth. After a strong September, consumer-services output fell in both October and November, while construction output dropped dramatically in November.
“As the new year begins, there is some hope that policy uncertainty may diminish over the year. In particular, we head towards the Spring Statement with a larger buffer against the fiscal rules which will not be assessed this time round. But recent policy reversals – even when welcome – ferment their own uncertainty. In 2026, we need to get policy decisions right the first time and push harder in those areas which will deliver the strongest growth payoffs. Today’s approval by Heathrow’s board for the airport’s expansion plans must be matched by swifter progress on planning reform. Upgrading the UK’s ageing infrastructure and unlocking the government’s public investment commitments will be a critical to supporting growth and lifting productivity.”
“This latest data is better than expected and suggests the economy was more resilient towards the end of last year than earlier figures implied – with revisions pointing to less of a slowdown than previously feared.
“While growth is likely to remain moderate, the economy should still expand at a steady pace through 2026 as inflation eases and real incomes rise modestly. However, business investment is likely to remain fairly subdued amid soft demand conditions, high labour and energy costs and supply-side bottlenecks.
“Lowering the cost of doing business must now be the government’s priority to unlock investment and growth. Recent pragmatism shown on areas such as day one rights is welcome, but further progress is dependent on greater policy clarity more generally – best achieved by working in partnership with business.”