The UK economy grew by a modest 0.1% in November, missing forecasts of 0.2%, according to data released by the Office for National Statistics (ONS) on Friday. While the figure marks a slight recovery from two consecutive months of 0.1% contraction, it underscores the ongoing challenges facing Britain’s economic recovery as Labour’s new government contends with high inflation, weak consumer confidence, and global trade uncertainties.

The disappointing GDP result caused a small dip in the value of the pound, which fell 0.10% against the dollar to $1.22 and 0.25% against the euro to €1.18. Despite the lackluster economic growth, the UK’s equity markets remained buoyant, with the FTSE 100 climbing by 1.1%, or 90.77 points, to 8,391.90, and the FTSE 250 up 1%, gaining 194.08 points to 20,527.70. Government bond yields remained flat, reflecting a mix of investor caution and optimism following a surprising drop in inflation earlier this week.

Chancellor Rachel Reeves acknowledged the modest progress but emphasized that more significant improvements would take time. The latest three-month data from the ONS revealed zero growth over the period leading up to November, further highlighting the difficult path ahead for the government.

Business sentiment remains cautious following Labour’s October budget, which introduced a £25 billion increase in national insurance contributions and £70 billion in additional government spending. Many businesses have warned that these measures could lead to job cuts and higher prices as they adjust to the new tax burdens.

Reeves defended her approach, insisting that her government has ended the “instability” caused by the previous Conservative administration. “This new government has come in with a determination, a No 1 mission, to grow the economy. That takes time,” she said, adding that she will meet with regulators to push for a stronger pro-growth focus ahead of the spring statement and the Office for Budget Responsibility’s updated forecasts in March.

Concerns about a potential trade war, fueled by the incoming US President Donald Trump’s pledge to impose tariffs on imports, also loom large. Business Secretary Jonathan Reynolds expressed unease about the possibility of a “tariff war between friends.”

Reeves also faces growing pressure to manage public finances carefully, with market borrowing costs rising. Speculation is mounting that the Chancellor may need to raise taxes or curb spending. However, Reeves remains committed to “rooting out waste in public spending” while prioritizing growth.

Optimism has emerged following an unexpected drop in inflation to 2.5% in December, with some analysts predicting that the Bank of England may soon begin lowering interest rates, currently at 4.75%. This could offer relief to borrowers, particularly those struggling with high mortgage costs.

Despite the slight growth in services, November’s figures highlighted weaknesses in other sectors. Construction saw a 0.4% rise, driven by commercial developments, but manufacturing and oil and gas extraction continued to struggle. Analysts caution that these figures do little to dispel concerns about a stagnant economy heading into 2025.

The OBR projects 2% GDP growth for 2025, although some experts consider this overly optimistic, given the potential risks of a trade war or additional global economic downturns. Reeves’ challenge is clear: delivering a robust economic recovery remains a formidable task. As HSBC analysts put it, “For a government that has said growth is its top priority, this is not great news.”

Asos has revealed plans to shut down its major US warehouse near Atlanta, Georgia, in a move aimed at cutting costs and boosting profitability. The decision comes with a one-off impairment charge of £200 million, as the online fashion retailer shifts its American operations to its automated UK distribution centre in Barnsley and a smaller, more flexible facility in the US.

The closure of the Union City site is expected to contribute between £10 million and £20 million to Asos’s pre-tax earnings from 2026 onward. However, it will result in a £190 million impairment for the current financial year. Despite this, Asos’s shares rose by 6.5% on the day of the announcement, though they have fallen by more than 85% over the past five years.

Although Asos’s US arm has remained profitable, the company admitted that American demand and stock levels no longer justified maintaining a large-scale warehouse. The move comes as competition has intensified from fast-fashion competitors such as Shein, Temu, and Boohoo, the latter of which also closed its US site. According to Asos, the shift to serving US customers from the UK and a smaller American facility will allow the company to offer a wider product variety while reducing fulfilment costs. However, customers may experience slower delivery times.

Asos confirmed that only seven direct employees would be affected by the closure, with logistics partners working to redeploy hundreds of staff to nearby locations. The decision follows a series of restructuring measures put in place by chief executive José Antonio Ramos Calamonte, aimed at improving profitability and reshaping the retailer’s business model. His strategy includes reducing stock levels, cutting back on discounts, and adopting a more flexible “test-and-react” approach to inventory management.

The Union City warehouse, which opened in 2018 under former CEO Nick Beighton, was initially considered a key part of Asos’s expansion into the North American market. However, analysts at Panmure Liberum have suggested that the closure represents a shift in the company’s long-term ambitions in the US. On the other hand, analysts at Deutsche Bank continue to view significant international growth potential for Asos, particularly in the US and Europe, where the company maintains a local infrastructure.

Dyson has announced the cancellation of its £100 million technical and research centre in Bristol, opting instead to consolidate its southwest operations at its flagship campus in Malmesbury, Wiltshire. This move will result in the relocation of 180 staff, originally slated for the new Bristol hub at 1 Georges Square, to the company’s main site, which also houses the Dyson Institute and its engineering degree programme.

The British technology company, renowned for its vacuum cleaners, hairdryers, and other household innovations, had revealed plans for the Bristol hub in 2023. However, Bill Wright, Dyson’s UK HR director, explained that consolidating teams in one location would foster greater collaboration in research and innovation. “As the pace of innovation accelerates, we increasingly see the benefits of having teams all located together in one physical location,” Wright said.

Dyson had already invested significantly in refurbishing the Bristol site but confirmed that 1 Georges Square will now be put up for lease. To assist staff with the relocation, Dyson will introduce a coach service and provide free electric car charging points to ease the impact of the move.

This decision follows a global review by the company, which last year prompted the announcement of potential cuts to up to a third of its UK workforce. The move also comes amid founder Sir James Dyson’s outspoken criticism of the UK’s economic policies, particularly Labour’s proposed tax hikes and national insurance increases. In a letter to The Telegraph, Dyson called out the Labour party, saying, “Why would anyone start a company in the UK? The hit delivered by Labour to business, and the destruction of British family-owned businesses especially, is an egregious act of self-harm.”

While Dyson insists that the closure of the Bristol site is a business-driven decision and not a political statement, the move highlights the company’s ongoing strategy of consolidating its operations. Dyson, which is now headquartered in Singapore, appears committed to focusing its innovation efforts at the historic Malmesbury campus, where the company was originally founded.

The decision to centralize operations at Malmesbury reflects Dyson’s broader strategy to streamline its research and development efforts, as the company continues to navigate challenges in the global market.