UK
A month of two halves: November proved to be a month of two halves for the UK: first, the run-up to the Budget, and then the fallout from the Budget. Amid hopes of a forthcoming cut in interest rates, the FTSE 100 Index flirted with the 10,000-point level during the month, but eventually subsided, dampened by Budget-related jitters. Alongside the FTSE 250 Index, the blue-chip index eventually ended November broadly unchanged.
Budget measures: the government’s Budget froze income tax and National Insurance thresholds until 2030-31 – a move that will take more people into higher tax brackets over time. According to the Office for Budget Responsibility (OBR), Chancellor of the Exchequer Rachel Reeves’ tax-raising measures will send the tax take to “an all-time high of 38% of GDP in 2030-31”. The OBR cut its forecast for UK real GDP growth over the next five years to an average of 1.5%. The Cash ISA allowance was cut to £12,000 from April 2027 for all savers below the age of 65, and pension contributions over £2,000 made via salary sacrifice will incur National Insurance contributions from April 2029.
Before and after: ahead of the Budget, consumer confidence fell, according to GfK; meanwhile, retail sales volumes contracted by 1.1% in October, posting their first monthly fall since May as consumers delayed spending ahead of Black Friday. Afterwards – according to the Institute of Directors – UK directors’ flagging optimism about the UK’s economic prospects was further dampened by the Budget.
Lacklustre economic growth: having expanded by 0.3% during the second quarter, UK economic growth slowed to only 0.1% during the third quarter. The annualised rate of inflation eased from 3.8% to 3.6% in October, fuelling hopes of a rate cut. The Bank of England opted to leave UK interest rates unchanged at 4% in November, although the Monetary Policy Committee was narrowly split at five votes to four; policymakers need to see more evidence that inflation is returning to target. Elsewhere, the unemployment rate rose to 5% over the three months to September – the highest level since the three months ending February 2021 – boosting hopes of a rate cut in December.
Global
Tech angst: despite continuing concerns over an increasingly frothy US technology sector, the Dow Jones Industrial Average Index (DJIA) breached 48,000 points during November for the first time. Nevertheless, growing questions over elevated valuations within the sector – particularly amongst AI-related stocks – triggered some sharp dips during the month, and the DJIA eventually ended November only 0.3% higher than it began. Jitters over the possibility of an AI bubble were not allayed by news of record revenues at Nvidia and, in a BBC interview, Sundar Pichai, CEO of Google’s parent company Alphabet, acknowledged that there were “elements of irrationality” in the ongoing tech boom.
Shutdown ends: the 43-day US government shutdown – the longest in history – ended in November thanks to a short-term funding bill that will expire at the end of January 2026. The shutdown meant that some economic data releases were missed; in particular, there was no consumer price inflation data for October. Elsewhere, employment data for September – released in November – proved to be mixed: 119,000 jobs were created in September compared with 4,000 lost in August; however, the rate of unemployment crept up from 4.3% to 4.4%, fuelling expectations of an interest rate cut in December. US consumer sentiment, as measured by the University of Michigan’s survey, deteriorated in November, falling to its lowest level since June 2022, while the Conference Board’s index of consumer confidence fell to its lowest level since April.
Downgraded outlook for Europe: the European Commission lowered its 2026 economic growth forecast for the eurozone from 1.4% to 1.2%, citing geopolitical tensions and trade-related uncertainties. Although the European Commission raised its 2026 forecast for Germany’s growth from 1.1% to 1.2%, it downgraded its prediction for France from 1.3% to 0.9%, citing economic and policy uncertainty. In a speech, President of the European Central Bank Christine Lagarde warned that Europe’s current growth model, based on export-led growth, is “geared towards a world that is gradually disappearing” and called on policymakers to focus on developing the region’s domestic economy. The Dax Index fell by 0.5% over the month.
Sanaenomics: Japan’s Cabinet approved a 21.3 trillion yen fiscal stimulus package to help boost the country’s economic growth and address the impact of persistent inflationary pressures. Over November as a whole, the Nikkei 225 Index fell by 4.1%.
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