UK Gross Domestic Product MoM: November 2025 Release and Macro Outlook
Key takeaways: The UK’s GDP contracted by 0.10% MoM in November 2025, missing the 0.10% growth estimate and reversing the prior month’s 0.10% expansion. This marks the first monthly contraction since September 2025, signaling emerging headwinds amid tightening monetary policy and external uncertainties. Inflation pressures and fiscal constraints weigh on growth, while geopolitical risks and financial market volatility add downside risks. Forward scenarios range from mild recovery to recession risks, with policy responses critical to trajectory.
Table of Contents
The UK’s Gross Domestic Product (GDP) contracted by -0.10% month-over-month (MoM) in November 2025, according to the latest release from the Sigmanomics database. This figure fell short of the consensus estimate of 0.10% and reversed October’s modest 0.10% growth. The contraction marks a notable shift after a period of stagnation and mild expansion, highlighting emerging economic fragilities.
Drivers this month
- Manufacturing output declined amid supply chain disruptions and energy cost pressures.
- Consumer spending softened due to rising inflation and tighter credit conditions.
- Services sector growth slowed, reflecting subdued business investment and cautious hiring.
Policy pulse
The Bank of England’s ongoing monetary tightening, with the base rate at 5.25%, continues to weigh on growth. Inflation remains above the 2% target, but slowing GDP growth raises concerns about potential overtightening. Fiscal policy remains constrained by budgetary limits, limiting stimulus options.
Market lens
Immediate reaction: GBP/USD weakened by 0.30% in the first hour post-release, while UK 2-year gilt yields dropped 5 basis points, reflecting increased growth concerns. Breakeven inflation rates edged lower, signaling tempered inflation expectations.
The November GDP print follows a flat reading in September and a slight 0.10% rise in October, placing the current three-month average at approximately 0.00%. Over the past 12 months, the UK economy has averaged a modest 0.20% monthly growth rate, underscoring a slowdown from the 0.40% average seen in 2024.
Comparative context
- November’s -0.10% contrasts with the 0.20% average MoM growth in the same month over the last five years.
- Annual GDP growth slowed to 1.10% YoY in October 2025, down from 1.50% in mid-2025.
- Industrial production contracted by 0.30% MoM in November, reinforcing the GDP weakness.
Monetary policy & financial conditions
Monetary tightening has pushed borrowing costs higher, with mortgage rates rising above 6%. Credit growth has slowed, and consumer confidence indices have dipped below 90, the lowest since early 2024. The Bank of England’s stance remains cautious, balancing inflation control against growth risks.
Fiscal policy & government budget
The UK government’s fiscal stance remains tight, with limited room for expansionary measures due to elevated public debt at 95% of GDP. Recent budget announcements focused on targeted support for energy costs but avoided broad stimulus, reflecting fiscal prudence amid inflation concerns.
This chart reveals the UK economy is trending downward after a brief recovery phase. The contraction in November reverses two months of growth, suggesting that monetary tightening and external shocks are beginning to weigh more heavily on activity.
Market lens
Immediate reaction: GBP/USD fell 0.30%, UK 2-year gilt yields declined 5bps, and breakeven inflation rates softened. Equity markets showed mild risk-off sentiment, with the FTSE 100 down 0.40% in early trading.
Looking ahead, the UK economy faces a complex mix of risks and opportunities. The contraction in November raises questions about the durability of the recovery and the potential for a technical recession in early 2026.
Bullish scenario (25% probability)
- Inflation eases faster than expected, allowing the Bank of England to pause rate hikes.
- Consumer spending rebounds due to improved real incomes and easing energy costs.
- Global trade stabilizes, supporting manufacturing and exports.
Base scenario (50% probability)
- GDP growth remains flat to mildly positive (0.00% to 0.10% MoM) through Q1 2026.
- Monetary policy remains tight but data-dependent, with cautious communication.
- Fiscal policy remains neutral, focusing on targeted support without broad stimulus.
Bearish scenario (25% probability)
- Persistent inflation forces further rate hikes, deepening the growth slowdown.
- Geopolitical tensions disrupt trade and energy markets, exacerbating supply shocks.
- Consumer and business confidence deteriorate, triggering a mild recession.
Structural & long-run trends
Long-term challenges include productivity stagnation, demographic shifts, and Brexit-related trade frictions. These factors constrain potential growth and complicate policy responses. Investment in technology and skills remains critical to reversing these trends.
The UK’s November 2025 GDP contraction signals a fragile economic phase amid tightening monetary policy and external uncertainties. While inflation pressures persist, growth risks are rising, requiring careful policy calibration. Financial markets have reacted with caution, reflecting uncertainty about the near-term outlook. Policymakers face a delicate balance between controlling inflation and supporting growth. The coming months will be critical in determining whether the UK can avoid recession or face a deeper slowdown.
Key Markets Likely to React to Gross Domestic Product MoM
The UK GDP MoM release is a critical indicator for several markets, influencing currency, bond yields, equities, and commodities. Traders and investors closely monitor this data for signals on economic health and policy direction.
- GBPUSD – The primary currency pair reflecting UK economic strength and monetary policy expectations.
- FTSE100 – UK equity index sensitive to domestic growth and global risk sentiment.
- HSBA – HSBC Holdings, a major UK bank, impacted by credit conditions and economic cycles.
- BTCUSD – Bitcoin, often viewed as a risk barometer, reacts to macroeconomic uncertainty.
- EURGBP – Reflects relative economic and policy divergence between UK and Eurozone.
Indicator vs. GBPUSD Since 2020
Since 2020, UK GDP MoM fluctuations have shown a moderate positive correlation with GBPUSD movements. Periods of GDP contraction often coincide with GBP weakness, while expansions support GBP strength. For example, the COVID-19 shock in early 2020 saw a sharp GDP drop and GBPUSD fall from 1.32 to 1.15. Recovery phases saw gradual GBP appreciation, reflecting improved growth prospects.
FAQs
- What does the UK Gross Domestic Product MoM figure indicate?
- The UK GDP MoM figure measures the monthly change in economic output, signaling short-term growth or contraction trends.
- How does the November 2025 GDP MoM reading affect monetary policy?
- The contraction suggests growth risks, potentially influencing the Bank of England to pause or slow rate hikes to avoid recession.
- Why is GDP MoM important for currency markets?
- GDP MoM data affects currency valuations by indicating economic health, influencing investor confidence and central bank policy expectations.
Takeaway: The UK’s November 2025 GDP contraction signals rising economic headwinds amid tight monetary policy and external risks. Policymakers and markets must navigate a narrow path between inflation control and growth support.
The November GDP MoM contraction of -0.10% contrasts with October’s 0.10% and the 12-month average of 0.20%. This reversal highlights a shift from mild expansion to contraction, signaling emerging economic headwinds.
Sectoral breakdown shows manufacturing output down 0.30%, services growth slowing to 0.05%, and construction activity flat. Consumer spending growth decelerated to 0.10%, the slowest pace since early 2024.