Overview

• UK retail sales fell 0.3% in December, disappointing forecasts and marking a weak holiday trading period, with broader quarterly sales down 0.8%.
• The UK economy showed minimal growth in November, with GDP stagnating over three months, raising concerns of a potential recession.
• Markets now anticipate at least three Bank of England interest rate cuts in 2025, with the first expected in February, potentially lowering the base rate from 4.75% to 4%.
• High borrowing costs, tax increases, and slowing job market growth are straining households and businesses, contributing to reduced consumer spending and hiring.
• While inflation cooled to 2.5% in December, easing some pressure, volatility in bond markets and elevated mortgage rates remain significant challenges for the UK economy.