The UK economic landscape & thoughts ahead of the Autumn Budget

Key Takeaways:

1. UK Growth Outlook The UK economy remains sluggish, with GDP growth of just 0.7% in Q1 and 0.3% in Q2. Inflation is sticky, driven by wage growth and service sector pressures, and remains the highest in the G7 at around 3.8–4.0%.
2. Global Trends Global GDP is expected to grow just above 3% in 2025–2026. The US is moderating, the Eurozone is slowly recovering, and China is facing property-sector stress. Emerging markets like India continue to lead with growth above 6%.
3. Financing Pressures High interest rates and cautious central bank policies are impacting business loans and government borrowing costs. UK government debt is projected to rise significantly due to ageing demographics, climate change, and geopolitical tensions.
4. Sector-Specific Challenges Construction and real estate face high financing costs, labour and material inflation, planning delays, and uncertain public investment. Commercial property is under pressure, and housing affordability remains a concern.
5. Labour Market Unemployment is edging up, with more than 9 million people economically inactive—30% of whom are long-term sick. Job vacancies have been falling steadily, adding to workforce challenges.