UK Economy Beats Expectations with November Rebound Driven by Manufacturing Recovery

2026-01-15 economy

London, Thursday, 15 January 2026.
A dramatic 25.5% spike in car manufacturing, following Jaguar Land Rover’s recovery from a cyber-attack, propelled the UK economy to unexpectedly expand by 0.3% in November 2025, defying initial market forecasts.

Broad-Based Growth Amidst Construction Struggles

Data released by the Office for National Statistics (ONS) on Thursday reveals that the economy’s 0.3% expansion in November 2025 comfortably exceeded the modest 0.1% forecast anticipated by economists [1][4]. This uptick marks a significant turnaround from October, where the economy contracted by 0.1%—a figure that remains unrevised—while growth for September 2025 was revised upward to 0.1% [5]. The November rebound was driven by a 1.1% rise in production output and a 0.3% increase in the services sector [1]. However, the recovery was not uniform across all industries; the construction sector faltered, contracting by 1.3% in November and registering its largest three-monthly decline in nearly three years [1][8].

The ‘JLR Effect’ and Service Sector Resilience

The volatility in recent monthly figures is inextricably linked to the automotive industry. November’s industrial output was bolstered by a massive 25.5% surge in car production, the largest monthly rise since July 2020 [4]. This sharp increase represents a correction following a cyber-attack on Jaguar Land Rover (JLR) in September 2025, which had forced a production halt and subsequently dragged down GDP figures in October [3]. Liz McKeown, ONS Director of Economic Statistics, confirmed that while the manufacturing sector had been impacted by the cyber incident earlier in the autumn, the industry has now “largely recovered” [8]. Beyond manufacturing, the services sector showed resilience, driven significantly by professional, scientific, and technical activities, including accounting and tax consultancy, which saw increased activity ahead of the Chancellor’s Budget on November 26, 2025 [2][3].

Monetary Policy and Future Outlook

These robust growth figures may alter the Bank of England’s immediate calculations regarding interest rates. While markets have been anticipating further easing to stimulate the recovery, the stronger-than-expected performance dampens the urgency for immediate action. Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales (ICAEW), noted that the data provides rate-setters with sufficient comfort to delay further easing, making a rate cut in February 2026 less likely [2][5]. Current money market pricing indicates only a 7% probability of a cut in February, though a reduction is fully priced in by June 2026 [5]. Looking further ahead, the International Monetary Fund has forecast annual growth of 1.3% for 2026, matching the rate seen in 2025 [4]. Similarly, Deutsche Bank projects that GDP will rebound strongly in the first quarter of 2026, with quarterly growth expected to track at 0.35% [1].

Sources

UK GDP Bank of England