UK economy unexpectedly grows in November with help from World Cup

UK economy  Soccer Football - FIFA World Cup Qatar 2022 - Fans in London watch England v France - BOXPARK Wembley, London, Britain - December 10, 2022 England fans react after being eliminated from the World Cup REUTERS/Toby Melville
The UK economy got a boost from the World Cup as fans packed pubs and bars to watch events unfold on the pitch. Photo: Toby Melville/Reuters

The UK economy unexpectedly grew in November, with the World Cup in Qatar providing a boost to pubs and bars, as supporters gathered to watch games.

Gross Domestic Product (GDP) rose 0.1% on the previous month, according to the Office for National Statistics (ONS), as the services sector remained in growth despite the soaring cost of living.

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Economists had predicted a negative growth figure of around 0.2%.

The ONS said pubs and restaurants contributed to growth as people went out to watch World Cup games.

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However, in the three months to November, the economy shrank by 0.3%.

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ONS director of economic statistics Darren Morgan said: “The economy grew a little in November, with increases in telecommunications and computer programming helping to push the economy forward.

“Pubs and bars also did well as people went out to watch World Cup games.

“This was partially offset by further falls in some manufacturing industries, including the often-erratic pharmaceutical industry, as well as falls in transport and postal, partially due to the impact of strikes.

“Over the last three months, however, the economy still shrank – mainly due to the impact of the extra bank holiday for the funeral of Her Majesty Queen Elizabeth in September.”

A recession is defined as two quarters or more in a row of falling output. With GDP falling by 0.3% between July and September, economists widely expected a similar fall in the final quarter of 2022 - despite a 0.5% rise in October.

Most analysts had thought believe the economy is already in recession thanks to soaring inflation, rising interest rates and a slowing global outlook.

The Bank of England has predicted the UK would officially enter recession when figures for GDP in December are released next month and then remain in recession throughout 2023.

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The Resolution Foundation said the UK is likely to have avoided a 2022 recession thanks to the surprise.

James Smith, research director at the Resolution Foundation, said: “Surprise economic growth in November – driven by the UK’s dominant services sector – means Britain has likely avoided a rapid return to recession in 2022.

The think tank pointed out, however, that family incomes are still shrinking, with typical household disposable incomes on track to fall by 7% – equivalent to £2,100 per household – over this financial year and the next one.

“But while GDP may not have been shrinking, household incomes certainly were – and are – as families experience a deep living standards downturn," Smith added.

ONS director of economic statistics Darren Morgan told Radio 4’s Today programme that if GDP falls by 0.6% or more in December, that would mean the economy contracted in the fourth quarter of 2022.

That would be the second quarterly contraction in a row – a technical recession.

Kitty Ussher, chief economist at the Institute of Directors, said it is "no longer certain' that Britain will suffer a technical recession following the data showing the economy grew in November.

She said: This is stronger activity than was expected for November and so will further contribute to the improvement in market sentiment we have seen in the last few weeks.

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"Given we know the economy also grew in October – albeit driven by a rebound from the period of state mourning – it is no longer certain that the economy will meet the technical definition of a recession when the final data for 2022 is in."

Chancellor Jeremy Hunt said: “We have a clear plan to halve inflation this year – an insidious hidden tax which has led to hikes in interest rates and mortgage costs, holding back growth here and around the world.

“To support families through this tough patch, we will provide an average of £3,500 support for every household over this year and next – but the most important help we can give is to stick to the plan to halve inflation this year so we get the economy growing again.”

Watch: What is a recession and how do we spot one?