For the data behind the commentary, download the full November 2025 UK Economy & Housing Report.
Car crash
The Chancellor will go into the Autumn Budget off the back of a headline fall in monthly GDP, the cause of which is quite a one-off. If it wasn’t for the cyber attack that shut down JLR’s production facilities, negatively impacting motor vehicle manufacturing output by 28.6%, the economy would have grown by 0.1% for the month.
Nevertheless, the most recent results highlight two important points: Firstly, that the UK manufacturing base remains so fragile and secondly, that economic growth is meagre – once population growth has been accounted for, the UK economy on a per capita basis is no better off than it were three months ago, and is only 0.8% better than a year ago, highlighting the productivity problem.
Growth is likely to remain sluggish as we move into the final quarter and new year. While monetary policy will likely continue to ease, fiscal policy will act as a major drag. On which….
Nothing is certain….
At the Budget, the Chancellor will need to raise taxes by approximately £38 billion which will likely weigh further on growth, while also have the impacts of weighing on inflation, and contributing to further interest rate cuts in the near future.
While there is so much conjecture as to make much of it moot, the likelihood is that increased taxation will fall mainly on higher earners, wealthy individuals, landlords and owners of expensive real estate. The likelihood is that politically, the Chancellor can do not much right.
However, from an economic perspective, if the measures provided are disinflationary, and can include taxation that could drive growth, this would likely be seen as positive by the markets.
It is worth bearing in mind, however, this is no easy feat and volatility is likely. This is most recently evidenced in the week that was, where bonds moved 11 basis points in one morning on rumours of inclusion or exclusion of income tax rises.
