The mixed signals in the UK economy are still the problem as inflationary pressures are continuing besides fiscal policy adjustments that take place in the center of attention. Recently released data showed a highest-ever average wage increase to £40,846, causing worries in the Bank of England over the very strong inflation.
Retailers gave a warning about the price rises, especially in the food sector, because of the increases in national insurance contributions and the minimum wage amendments.
We see that despite difficulties, some areas of the economy keep hope. The net-zero sector is a clear winner, it develops three times faster than the entire economy and brings the Gross Value Added to £83 billion. This surge emphasizes the UK’s desire to be eco-friendly and innovative in the field of green technology.
The decision of PM Keir Starmer to increase the defense budget to 2.5% of GDP by 2027 has initiated the discussion of budgetary priorities.
Economists are of the opinion that the actual cost of this policy on an annual basis may be way higher than £6 billion, mostly due to the reductions in the aid budget. In the meantime, a new round of negotiations with India has been rejuvenated to reach an FTA with the expectations of boosting economic growth.
Consumer confidence is still somewhat shaky because the job postings reached the lowest point in the past four years in January. However, business barometer by Lloyd’s showed optimism rise, which reached the highest level since August 2024.
This may suggest that the companies could tentatively be hoping for a better year even though there would be some unpleasant financial situations from the economic side.
