UK economy unexpectedly shrunk in November

UNITED STATES (OBSERVATORY NEWS)

The UK economy unexpectedly contracted in November, ahead of parliamentary elections in the country, according to data from the National Statistical Office (ONS).

UK GDP in November fell by 0.3% compared with the previous month. Analysts surveyed by Bloomberg averaged zero growth.

The November result means that the economy should show growth of 0.1-0.2% in December in order to avoid a reduction in the fourth quarter.

In annual terms, GDP in November grew by only 0.6%, at the lowest rate since June 2012. According to revised data, in October annualized GDP growth amounted to 1%, rather than 0.7%, as previously reported.

Weak November data reflect uncertainty surrounding Brexit and the election.

The Conservative Party, following the results of the December 12 election, received a clear majority in the British Parliament. In this regard, Prime Minister Boris Johnson said that his government received a new powerful mandate for the implementation of Brexit.

In September-November, the UK economy grew by 0.1% compared with the previous three-month period.

“In general, the economy has grown slightly over the past three months, with growth in construction being overshadowed by weakening services and still weak production,” ONS statistician Rob Kent-Smith noted.

In the UK services sector, in November a decline of 0.3% was recorded, the maximum since the beginning of 2018.

The volume of production in the manufacturing industry decreased by 1.7%. This partly reflects the closure of car factories, in order to avoid supply disruptions due to Brexit, previously scheduled for October 31.

Car production fell by more than 6%. This may also be due to the fact that some orders were postponed to October.

The volume of construction in November increased by 1.9% after a decline in the sector a month earlier.

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