UK Economic Growth Weakest Since 2012 In November (Reuters)
Last Modified: 05:32 AM, Mon Jan 13, 2020

By David Milliken and Andy Bruce

13 January 2020

Word Count: 502

Britain's economy grew at its weakest annual pace in more than seven years in November, raising expectations that the Bank of England will cut interest rates later this month. Today's official figures showed the economy in November - before last month's decisive election win for Prime Minister Boris Johnson - was just 0.6% larger than a year before, the weakest expansion since June 2012. The November figure represented a slowdown from annual growth of 1.0% in October, after that month's growth pace was revised up from previously reported data. Output in November alone shrank by 0.3%, the biggest drop since April. Economists had expected unchanged output for the month.

    * UK GDP growth slows to 0.6% yr/yr in November, lowest
since 2012
    * Growth falls 0.3% in November alone as industrial output
slides
    * Sterling weakens, markets increase bets on BoE rate cut

 (Adds market reaction, detail)
    By David Milliken and Andy Bruce
    LONDON, Jan 13 (Reuters) - Britain's economy grew at its
weakest annual pace in more than seven years in November,
raising expectations that the Bank of England will cut interest
rates later this month.
    Monday's official figures showed the economy in November -
before last month's decisive election win for Prime Minister
Boris Johnson - was just 0.6% larger than a year before, the
weakest expansion since June 2012.
    The November figure represented a slowdown from annual
growth of 1.0% in October, after that month's growth pace was
revised up from previously reported data.
    Output in November alone shrank by 0.3%, the biggest drop
since April. Economists polled by Reuters had expected unchanged
output for the month. 
    The weak data, reflected the uncertainty of last autumn
about Brexit and the election, said John Hawksworth, chief
economist for accountants PwC. 
    "It is too early to say for sure if economic momentum will
pick up in the new year now the political situation is clearer,
but our latest survey of the financial services sector with the
CBI does suggest some boost to optimism since the election," he
said.
    Sterling fell and government bond yields headed lower as
financial markets priced in a 50% chance the Bank of England
will cut interest rates on Jan. 30, after its next meeting.
    The BoE predicted in November that the economy would eke out
limited growth in the fourth quarter, before recovering in 2020.
That forecast assumes progress towards a post-Brexit trade deal
and a reduction in U.S.-China trade tensions.
    In the past week, BoE Governor Mark Carney - who steps down
in March - and two other rate-setters, Silvana Tenreyro and
Gertjan Vlieghe, said a rate cut could be needed if those
assumptions prove over-optimistic.             
    Two more policymakers, Michael Saunders and Jonathan Haskel,
already support a rate cut.
    However, there have been some signs that business confidence
has revived since Johnson's Conservatives won an unexpectedly
large majority in the Dec. 12 election.
    That victory put Britain on course to leave the European
Union on Jan. 31 with a transition deal. However, Johnson has
only given himself 11 months to reach a long-term trade deal
with the EU, and some businesses fear they could face tariffs
and other obstacles to trade with the EU from 2021.             
   
    Looking at the three months to November, which smoothes out
some volatility, the economy grew by 0.1% versus poll forecasts
for a 0.1% fall, due to unexpected upward revisions to September
and October output, which the ONS said reflected late survey
returns. 
    "Overall, the economy grew slightly in the latest three 
months, with growth in construction pulled back by weakening
services and another lacklustre performance from manufacturing,"
ONS statistician Rob Kent-Smith said.

 (Editing by William Schomberg, Larry King)
 
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Creditline: Reuters
Slugline: BRITAIN-ECONOMY/ (UPDATE 1)