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The UK economy beat expectations to grow 0.3 per cent in November, in a rebound from the previous month’s contraction that was propelled by growth in the services sector and a rise in manufacturing.

Thursday’s monthly GDP figure from the Office for National Statistics surpassed the 0.1 per cent increase forecast by economists polled by Reuters and the 0.1 per cent decline in October.

The figure, the strongest monthly reading since June, was boosted by a 0.3 per cent expansion in services and a 2.1 per cent increase in manufacturing.

The data will come as a boost for the government, which has made growth the centrepiece of its economic agenda.

Ben Caswell, senior economist at the National Institute of Economic and Social Research, said: “Today’s data is welcome news for the UK economy, with GDP growing modestly in November despite the uncertainty in the run-up to the Budget.”

He added that chancellor Rachel Reeves’ move to more than double her fiscal headroom in November’s Budget “appears to have eased speculation over future tax policy and the uncertainty that came with it”.

The UK economy had lost momentum since the strong growth of the first quarter of 2025, weighed down by geopolitical uncertainty, elevated borrowing costs, disrupted auto production and anticipation of tax-raising measures in the Budget.

But Thursday’s data showed signs of an uptick. In the three months to November, a less volatile measure, the economy grew 0.1 per cent, beating expectations of a 0.2 per cent contraction.

The boost to manufacturing in November’s data came as car production normalised following a cyber incident at Jaguar Land Rover.

Consumer-facing industries, such as restaurants and shops, registered a strong 0.5 per cent growth in the three months to November.

The figure for September was also revised up to 0.1 per cent growth from an initial estimate of a 0.1 per cent fall.

Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said the data made a Bank of England rate cut in February less likely, as it gave rate-setters concerned about inflation “sufficient comfort over economic conditions to delay voting to ease policy again”.

Swaps traders continued to bet on a quarter-point interest rate cut to 3.5 per cent by the Bank of England by June, but slightly trimmed the implied probability of a second cut coming before the end of the year to roughly 70 per cent.

The pound was down 0.4 per cent by late afternoon against a broadly stronger dollar at $1.339.

Ruth Gregory, economist at the consultancy Capital Economics, said the stronger than expected monthly figure “suggests the economy is heading into 2026 with a bit more momentum than we thought”.

But she warned that November’s strength “is more likely to be a rebound rather than a sign that the economy is fundamentally stronger than we thought”.

In December, the BoE expected no growth in the final quarter of 2025 after a marginal 0.1 per cent increase in the three months to September.

The central bank estimated that policies announced in the Budget, including U-turns on welfare cuts and the two-child benefit cap, could increase GDP by about 0.1 to 0.2 per cent over the next few years, but that tax rises will weigh on growth beyond that.

Yael Selfin, chief economist at KPMG UK, said: “With the worst of the uncertainty behind businesses, we expect growth momentum to continue over the coming months.”

Inflation was also projected to decline, she added, thanks to easing food and energy prices, which could support a recovery in discretionary spending.

A Treasury spokesperson said the government was working to reverse “years of under-investment” as well as “taking action to get bills and inflation down . . . to deliver an economy that works for working people”.

Separate trade data published by the ONS on Thursday showed that the UK goods and services trade deficit widened in the three months to November and that goods exports to the US “have remained relatively low since the introduction of tariffs in April”.

Additional reporting by Ian Smith