November Growth Helps the UK Economy Beat Expectations

Official statements have shown that the UK economy was unexpectedly free in November, aided by the World Cup. Despite household prices increasing, the economy grew by 0.1% in November as the demand for tech-related products increased. Still, the office of National Statistics also released data showing that pubs and restaurants received more visitors as people came out to watch the World Cup. However, analysts and experts are still unsure whether the ever-growing costs will cause a recession in the UK.

Gross domestic product, commonly referred to add GDP, is a measure of all the activities of individuals, businesses, and government in a nation. In the UK, the GDP readings in November beat all expectations, as they indicated economic growth. However, the change is not likely to dent the overall market stagnation. This is because the prices of food and fuel have increased tremendously, not forgetting that many people have lost their jobs. 

The 0.1% increase in the economy of November is still slightly low compared to the October 0.5% increase last year. The rise was mostly because most businesses had resumed operations after some closed or slowed operations due to the queen’s death and burial in September. 

Latest data released by the office of National Statistics continues to raise questions among economists about whether the UK’s economy had entered the recession phase at the end of last year. A recession can be considered a 2-4-month period where the economic output shrinks consecutively. A recession is usually a sign that a nation’s economy is performing poorly. During this period, companies within the country make way less money and thus are forced to offload most of their workers. This also means that unemployment also increases. Furthermore, graduates and school leavers also struggle to land their first job. Between July and September, the Office of National Statistics showed that the UK’s economy had shrunk by 0.3%.

In October, there was a sharp decline in the economy partly due to the strike. In November, staff from Royal mall and Railway workers took to the streets demanding better pay and working conditions. The director of economic statistics at the Office of National Statistics- confessed to a media outlet that the strike heavily affected the numbers in November. That there was a significant drop in warehousing, rail transport, and postal services.

According to the source, these sectors heavily dragged down economic numbers in November. Industrial action continued into December as well. The magnitude of the strike also increased due to the inclusion of NHS workers and Border force staff from six airports in the UK. Morgan warns that the industrial action witnessed last month could have a knock-on effect on this month. If so, this will indicate that the technical definition of recession has been met. 

According to Morgan, director at the ONS, UK’s economy had to shrink by around 0.6% last month to indicate a recession. UK’s Federation of Small Businesses (FSB) warned that despite economic growth in November, huge concerns about the United Kingdom are still to be addressed. The chair FSB-Martin Mc Tague told the press that prices of basic items remain high for households and businesses. Therefore, he called upon policymakers not to rejoice about November’s numbers but to find a long-lasting solution to the problem. He added that the government had to try low inflation as fuel and food prices continued to skyrocket.

Tougher months ahead

Despite beating expectations in November, the general trend still indicates that the UK economy is struggling. However, the formal requirements for a recession haven’t been met yet. The world cup played a huge role in November’s growth. By increasing “pizza delivery” and advertising, the economy was able to surpass expectations.

Industrial action has played a part in dragging down the economy. Morgan from the office of National Statistics shared with a particular media outlet that in about every six calls from business owners, one of them has been heavily affected by industrial action. If the UK economy continues to shrink and enters a recession, that would usher in a spell of even tougher months. More unemployment, higher inflation rates, and high living costs will be the order of the day.

Sharing with Eat News, the CEO DNA Consultancy, David, said that it’s not going to be easy for small scale businesses and hinted moving and investing more on crypto. He further goes to mention that despite the tough economic times, stronger crypto like BTC and ETH is on an upward trajectory. David goes to mention that businesses would have to add these to their balance sheets. The downside however, banks don’t like crypto as it’s a risky investment due to its volatility. All in all, the UK economy has exceeded expectations by showing growth in November. This is a welcome development as the country continues to recover from the pandemic. The growth was mainly driven by increased consumer spending, business activity, and growth in sectors such as retail, manufacturing, and construction. This is a good sign that the economy is on the upswing, and we can hope that this trend will continue. However, it’s worth noting that the ongoing uncertainty caused by the COVID-19 pandemic and the potential impact of Brexit on the economy still pose a significant risk to the UK’s economic recovery. Typically, the November growth is a positive development, but it’s too early to say if it’s the start of a long-term recovery.