06:34 AM EST, 01/16/2025 (MT Newswires) -- Thursday's United Kingdom gross domestic product data was slightly better than Deutsche Bank expected, but a little worse than general expectations, said Sanjay Raja, the bank's chief U.K. economist.

November activity picked up a mere 0.1% month over month, lifted by increases in the services sector (0.1% m/m) and construction sector (0.4% m/m). Industrial production remains in the doldrums (-0.4% m/m) with manufacturing activity declining for a third consecutive month.

The U.K. economy is heading for stagnation not just in the final quarter of last year, but through the entire second half of 2024, stated Raja. Indeed, after registering the fastest economic growth among G7 economies in the first half of 2024, the U.K. economy will likely register no growth in the second half.

Budget uncertainty and inclement weather won't have helped output. Deutsche Bank's nowcast models point to growth flatlining in Q4 2024, but picking up marginally in Q1 2025.

To be sure, the bank still sees activity rebounding to start the year. Economic fundamentals remain "healthy." Household balance sheets remain sound. Consumer confidence has grown. Housing demand has picked up too -- though could be tempered by rising rate expectations.

British businesses -- though weary of the increase in taxes coming from April 2025 -- still expect to invest, added Raja.

Deutsche Bank sees downside risks to its below-consensus projection for 2025 GDP growth of 1.3%. Unless sentiment picks up, the bank could see the recent "disappointment" in GDP carry over into the new year.