“Despite the uncertainty ahead of the Budget, economic activity accelerated in November. With the worst of the uncertainty behind businesses, we expect growth momentum to continue over the coming months. Nonetheless, businesses remain concerned about the potential need for further taxes rises before Parliament ends and geopolitical tensions may also threaten growth this year.
“Despite the relatively muted consumer sentiment so far and consumer-facing services output declining in November, there are some tentative signs of a pick-up in household spending. Inflation is also projected to decline, thanks to easing food and energy prices, which could support a recovery in discretionary spending.
“The UK economy returned to growth in November, with GDP supported by a continued pickup in manufacturing activity. The economy likely expanded in December, and we expect it to have grown by 0.2% in the final quarter of 2025, resulting in overall growth of around 1.4% last year. The outlook for the first quarter of this year is positive, with growth expected to be mainly driven by business investment and government spending.”