Britain’s economy proved more resilient than expected with a strong rebound of 0.3% m/m. This economic growth has surprised many economists. They had forecasted a virtual standstill at only 0.1%, but it looks like the world economy might be moving a bit faster than they expected. Even with all the continued confusion, especially around the Autumn Budget, it seems like business confidence isn’t too shaken and consumer spending is still going strong.
That monthly growth number, though, is subject to one important caveat. This trend should be viewed with extreme caution as it is quite spiky and difficult to forecast. This leads to important questions about whether this tree growth can be maintained. The complete quarter numbers won’t come out until mid-February, but they’ll show much more of the direction the economy is heading in.
Building on November’s impressive growth, given the contraction in October this will essentially tie one hand behind Britain’s economic back. We’re therefore likely to see only very modest real growth once again for the fourth quarter. Our policy analyst David Alpert estimates this expansion will lead to an increase of about 0.1-0.2%. The cooling job market over the last year has made these developments more complicated. Though consumers continue to spend vigorously, the labor market is beginning to exhibit more signs of stress.
The outlook for 2026 remains concerning. Britain’s doomsday hen economists are warning about the worst possible downturn since their last mild slowdown. They think that what’s been accomplished so far can’t be kept up indefinitely. This expected deceleration brings with it risks as firms and households adjust to a possible new, more difficult economic landscape.