Britain's economy grew slightly more strongly than expected in November but remains at risk of slipping into a mild recession, a potential blow for Prime Minister Rishi Sunak before an election expected in 2024.
Gross domestic product (GDP) expanded by 0.3% after a fall of 0.3% in October, slightly beating economists' forecasts for 0.2% growth in a Reuters poll.
But output shrank by 0.2% in the three months to the end of November, figures from the Office for National Statistics (ONS) showed on Friday, more than the expected 0.1% fall.
A contraction or possibly even flat output in December could lead to a second consecutive quarter of falling output, the ONS said. This would place the economy in a shallow recession.
"It remains touch-and-go whether the economy tipped into a technical recession in the second half of 2023," Investec economist Sandra Horsfield said. "In either case, a better description of the trend might be stagnation. The recession, if it did occur, looks to have been as mild as they come."
Sterling was little changed against the U.S. dollar after the data, but government bond yields fell as markets priced in a slightly higher chance that the Bank of England (BoE) will begin to cut interest rates in May.
Britain's economy struggled to gain momentum in 2023, as households were squeezed by rapid inflation and the highest BoE interest rates in 15 years.
EUROPEAN WEAKNESS
Economic output in November was only 0.2% higher than a year earlier and has grown by just 2.5% since 2019.
Much of Europe's economy is weak too, due partly to the after-effects of Russia's full-scale invasion of Ukraine in February 2022.
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