London Daily

Focus on the big picture.
Thursday, Jun 25, 2026

Two indicators slowdown already under way after Bank of England warns of 15-month recession

Two indicators slowdown already under way after Bank of England warns of 15-month recession

The bank rate is now at its highest level since 2008 as the Bank of England warns of tough times ahead - but signs of slowdown are already there.

Just a day after the Bank of England warned of a 15-month recession, there are signs in housing and recruitment that the slowdown is already well under way.

Figures out on Friday showed that house prices fell in July (in monthly terms) for the first time in more than a year, with warnings that the market is likely to weaken further following the bank's hiking of interest rates from 1.25% to 1.75%.

The bank rate is now at its highest level since 2008, as the bank tries to fight inflation which is running at 9.4% - well above its 2% target - and is forecast to pass 13% later this year.

It comes as households face record-breaking increases in energy bills, and mortgage lender Halifax said that this rapidly-spiralling cost of living would have its effect on the market, as buyers look to rein in spending.

In July the average house price stood at £293,221 - down £365 or 0.1% from the previous month's record high. In annual terms, however, prices still rose by 11.8%, compared to the 12.5% seen in June.

Russell Galley, Halifax managing director, said: "House prices are likely to come under more pressure as those market tailwinds fade further and the headwinds of rising interest rates and increased living costs take a firmer hold.

"Therefore a slowing of annual house price inflation still seems the most likely scenario."

It comes after a report from rival lender Nationwide which showed house prices rose in July, but at the slowest monthly pace seen in a year.


Bank of England data has also shown the lowest number of new mortgage approvals in two years during June.

The gloomy outlook is also resulting in fewer staff being hired by businesses, as they too become more cautious.

A study of 400 recruiters by the Recruitment and Employment Confederation and KPMG showed that businesses - facing increasing costs from energy prices and inflation - are "rightly hesitant" about their hiring plans.

Claire Warnes, of KPMG, said: "The trend of uncertainty in the UK jobs market of the last few months continues, as overall hiring activity saw another slowdown in July.

"Given the challenging economic outlook, employers are rightly hesitant about their hiring plans, but, to compound this, a lack of suitable candidates and an overall skills shortage in most sectors are keeping starting salaries high."


Kate Shoesmith, deputy chief executive of the REC, said: "The jobs market remains solid. Demand for staff continues to rise, as it has done since early 2021, rising in every sector.

"Starting salaries are still growing too, making this a good time for jobseekers to be looking for their next role.

"However, growth in permanent hiring has softened in recent months. We've seen that rising fuel and energy prices, inflation and labour shortages are impacting employer confidence.

"Labour and skills shortages are also restricting opportunities for both the private and public sector to meet consumer demand."


In the past week, the closely-watched PMI surveys have also shown signs of slowdown in the services, manufacturing and construction sectors.

It all presents a massive challenge for the next prime minister, as Conservative Party members prepare to choose between Rishi Sunak and Liz Truss for the role.

In Sky News's Battle for Number 10 Leadership Special on Thursday night, Ms Truss insisted a recession is not inevitable, adding: "We can change the outcome and we can make it more likely that the economy grows".

When her rival Mr Sunak was asked whether there is anything that can be done about a recession, he said: "Of course there is, of course."

He said "gripping inflation" would be the best way of preventing a recession, saying: "So what I'm not going to do is embark on a borrowing spree worth tens of billions of pounds, put that on the country's credit card, ask our kids and our grandkids to pick up the tab, because that's not right. That's not responsible."

Newsletter

Related Articles

0:00
0:00
Close
UK Financial Services Reform Debate Intensifies Over Ministerial Regulatory Powers
UK Energy Price Cap Rise Expected to Keep Inflation Above Target Through 2026
UK Biohacking and AI Wellness Trends Drive Surge in Personal Health Monitoring
UK Social Care Sector Sees Workforce Shift as Overseas Recruitment Masks Domestic Labour Decline
Nuffield Trust Warns UK Health Budgets Remain Vulnerable Despite Record Spending Levels
UK Coal Pension Surplus Debate Returns to Parliament as Reform UK MP Seeks Clarity on Distribution
UK MPs Consider E-Petition Calling for NHS Newborn Screening for Spinal Muscular Atrophy
UK Parliament Debates E-Petition Calling for Inquiry Into Pro-Israel Influence in Politics
UK Economy Grew 0.6 Percent in Q1 2026 but Business Sentiment Weakens Over Geopolitical Risks
UK Financial Services Bill Enters Lords Committee Stage With Expanded Ministerial Powers
UK Armed Forces Bill Advances With Plans for Defence Housing Service and Drone Defence Measures
UK Treasury Proposes Higher Electricity Generator Levy and Updated Mileage Allowance Rules
UK Parliament Debates Health Bill Amid Persistent GP Access and Patient Satisfaction Concerns
UK Financial Sanctions Regulator Signals Faster, Intelligence-Led Enforcement Strategy
British Chambers of Commerce Warns Business Confidence Crisis Is Dampening UK Investment
UK Parliament Debates Carbon Budget Order as Pressure Mounts on Net Zero Delivery
UK Energy Price Volatility Reinforces Pressure for Faster Electrification of Economy
UK Defence and Aerospace Strategy Gains Momentum as Keir Starmer Pushes Industrial Cooperation in Berlin
Department for Environment, Food and Rural Affairs Unveils £53 Million Investment in Farming Innovation
Foreign Secretary Announces Medical Evacuations and University Support for Palestinians in Gaza
Government-Commissioned Report Highlights Economic Exposure to Climate-Driven Fossil Fuel Price Shocks
Climate Change Committee Warns UK Is Off Track on Emissions Cuts and Calls for Faster Decarbonisation
Prime Minister Keir Starmer Calls for Deeper UK-EU Defence and Industrial Cooperation in Berlin Address
Met Office Issues Red Extreme Heat Warning as Temperatures Set to Surpass 37°C in England and Wales
Bank of England Holds Interest Rates at 3.75% as Inflation Outlook Remains Uncertain
UK Announces New Military Infrastructure at Catterick to Support Engineer Regiment Relocation
University of Reading Ranked Among Top 100 Globally for Sustainability Impact
UK Launches Counter-Fraud Taskforce to Investigate Covid Loan Scams
UK Government Introduces Customs and Tax Reforms to Support High Street Retailers
Jonathan Haskel Nominated as Chair of the UK Office for Budget Responsibility
UK Government Expands Powers to Recover Benefit Debt and Tackle Welfare Fraud
Labour Party Leadership Contest Intensifies as Andy Burnham and Ed Miliband Clash Over Economic Direction
Rail Operators Urge Essential Travel Only as Extreme Heat Threatens UK Network Stability
United Kingdom Issues Red Extreme Heat Warning as Temperatures Forecast to Reach 38°C
Keir Starmer Announces Resignation as UK Prime Minister Amid Deepening Political Instability
UK Biotechnology Sector Receives Increased Public Funding to Support Regional Growth
Police Chiefs Update National Protest Management Guidelines Amid Rising Demonstration Activity
UK Aviation Regulator Expands Support for Regional Airports to Strengthen Domestic Routes
CMA Launches Investigation Into Retail Pricing Across UK Grocery Sector
UK Energy Operator Warns of Winter Supply Pressures Despite Stable Overall Grid Outlook
UK Research Council Expands Funding for Regional Biotechnology and Life Sciences Clusters
UK Compensation Scheme for Post Office Horizon Scandal Reaches 80 Percent Completion
Police Chiefs Issue Updated National Guidance on Managing Large Public Demonstrations
UK Expands Regional Airport Funding Scheme to Boost Domestic Connectivity
UK Competition Watchdog Launches Inquiry Into Grocery Pricing Practices
National Grid Warns of Tight Energy Management Needs During Upcoming Winter Peak Demand
UK Education Department Introduces National Standards for AI Use in Secondary Schools
UK High Court Clears North Sea Carbon Capture Project After Final Legal Challenge Fails
Northern Ireland Leaders Hold Emergency Talks on Trade Disruption Under Windsor Framework
Welsh Government Moves to Expand Social Housing in Response to Severe Affordability Pressures
×