London Daily

Focus on the big picture.
Saturday, Feb 21, 2026

Interest rates: 'Green light' for pre-Christmas hike as growth holds up despite disruptions

Interest rates: 'Green light' for pre-Christmas hike as growth holds up despite disruptions

A closely-watched survey showed another month of record price pressures and sharply rising customer demand - but suggested the manufacturing sector was still beset by shortages and factory shutdowns.

Strong business growth and record price pressures this month should give the "green light" for a pre-Christmas interest rate hike, according to a closely-watched survey.

November's purchasing managers' index (PMI) showed growth slipping very slightly from the month before but still pointing to an end-of-year pick up for the economy after a third quarter slowdown, despite continued supply chain disruption.

There was also a ninth month in a row of job gains - though the pace slackened off to its slowest pace since the spring, according to the poll.

The Bank of England held off on raising interest rates earlier this month, despite inflation pressures, partly because it wanted to wait for a clearer picture to emerge of how employment would be affected by the end of the furlough scheme in September.

Rate setters will hold their next meeting nine days before Christmas.

Chris Williamson, chief business economist at IHS Markit, which compiled the survey, said: "A combination of sustained buoyant business growth, further job market gains and record inflationary pressures gives a green light for interest rates to rise in December."

The PMI poll showed cost burdens again increasing at their highest pace since the survey began more than two decades ago - due to higher wages as well as fuel, energy, and raw materials prices.

Customer demand also continued to rise sharply, despite these higher costs being passed through to them by companies, the figures showed.

The cross-sector "composite" PMI reading for the month of 57.7 - where the 50-level separates growth from contraction - was slightly down from 57.8 in October.

Bank of England rate-setters hold their next meeting on 16 December


However, that masked a continuing gap between the strong pace of growth in the dominant services sector - which represents four-fifths of UK economic output - and manufacturing firms that continue to be dogged by supply chain problems.

Services - a sector that takes in pub, hotels and restaurants as well as law firms and accountants - saw a further boost as a result of the rolling back of pandemic restrictions.

However, there were some signs of profit margins being squeezed as customers showed "greater resistance" to costs being passed on in the form of higher prices.

Manufacturing growth picked up, but remained hamstrung by shortages of staff as well as materials - with a lack of critical components in some cases leading to production stoppages.

Meanwhile, export sales fell slightly, with long lead times and Brexit trade friction holding back trade with the EU, according to the survey.

Mr Williamson said: "Encouragingly, an acceleration in growth of new business hints that December should bring a strong end to the year, meaning the fourth quarter should see a welcome pick up in GDP growth after the slowdown seen in the third quarter.

"The relatively poor performance of manufacturing is likely to remain a concern for some time, however, as is the potential to see tighter growth-inhibiting COVID-19 restrictions applied amid high COVID-19 case numbers both at home and now also in continental Europe.

"The latest survey results will none the less likely shorten the odds of an interest rate hike at the Bank of England's December meeting."

Bethany Beckett, UK economist at Capital Economics, said: "The economy held up fairly well despite continued supply disruptions and shortages.

"Meanwhile, signs that price pressures continued to grow suggests that a hike to Bank rate in December still looks like the most likely outcome."

Newsletter

Related Articles

0:00
0:00
Close
UK Confirms Preferential U.S. Trading Terms Will Continue After Supreme Court Tariff Ruling
U.S. and U.K. to Hold Talks on Diego Garcia as Iran Objects to Potential Military Use
UK Officials Weigh Possible Changes to Prince Andrew’s Position in Line of Succession Amid Ongoing Scrutiny
British Police Probe Epstein’s UK Airport Links and Expand High-Profile Inquiries
United Kingdom Denies U.S. Access to Military Base for Potential Iran Strike
British Co-founder of ASOS falls to his death from Pattaya apartment
Early 2026 Data Suggests Tentative Recovery for UK Businesses and Households
UK Introduces Digital-First Passport Rules for Dual Citizens in Border Control Overhaul
Unable to Access Live Financial Data for January UK Surplus Report
UK Government Considers Law to Remove Prince Andrew from Royal Line of Succession
UK ‘Working Closely with US’ to Assess Impact of Supreme Court Tariff Ruling
Trump Criticises UK Decision to Restrict Use of Bases in Potential Iran Strike Scenario
UK Foreign Secretary and U.S. State Chief Hold Strategic Talks as Tensions Rise Over Joint Air Base
Two teens arrested in France for alleged terror plot.
Nordic Fracture: How Criminal Scandals and Toxic Ties are Dismantling the Norwegian Crown
US Supreme Court Voids Trump’s Emergency Tariff Plan, Reshaping Trade Power and Fiscal Risk
King Charles III Opens London Fashion Week as Royal Family Faces Fresh Scrutiny
Trump’s Evolving Stance on UK Chagos Islands Deal Draws Renewed Scrutiny
House Democrat Says Former UK Ambassador Unable to Testify in Congressional Epstein Inquiry
No Record of Prince Andrew Arrest in UK as Claims Circulate Online
UK Has Not Granted US Approval to Launch Iran Strikes from RAF Bases, Government Confirms
AI Pricing Pressure Mounts as Chinese Models Undercut US Rivals and Margin Risks Grow
Global Counsel, Advisory Firm Co-Founded by Lord Mandelson, Enters Administration After Client Exodus
London High Court dispute over Ricardo Salinas’s $400mn Elektra share-backed bitcoin loan
UK Intensifies Efforts to Secure Saudi Investment in Next-Generation Fighter Jet Programme
Former Student Files Civil Claim Against UK Authorities After Rape Charges Against Peers Are Dropped
Archer Aviation Chooses Bristol for New UK Engineering Hub to Drive Electric Air Taxi Expansion
UK Sees Surge in Medical Device Testing as Government Pushes Global Competitiveness
UK Competition Watchdog Flags Concerns Over Proposed Getty Images–Shutterstock Merger
Trump Reasserts Opposition to UK Chagos Islands Proposal, Urges Stronger Strategic Alignment
Greek Prime Minister Kyriakos Mitsotakis advocates for a ban on minors using social media.
Liberal Senator Michaelia Cash Accuses Prime Minister of Lying to Australians
Meanwhile in Time Square, NYC One of the most famous landmarks
Jensen Huang just told the story of how Elon Musk became NVIDIA’s very first customer for their powerful AI supercomputer
A Lunar New Year event in Taiwan briefly came to a halt after a temple official standing beside President Lai Ching‑te suddenly vomited, splashing Lai’s clothing
Jillian Michaels reveals Bill Gates’ $55 million investment in mRNA vaccines turned into over $1 billion.
Ex-Prince Andrew Mountbatten-Windsor's arrested
Former British Prince Andrew Arrested on Suspicion of Misconduct in Public Office
Four Chagos Islanders Establish Permanent Settlement on Atoll
Unitree Robotics founder Wang Xingxing showcases future robot deployment during Spring Festival Gala.
UK Inflation Slows Sharply in January, Strengthening Case for Bank of England Rate Cut
Hide the truth, fake the facts, pretend the opposite, Britain is as usual
France President Macron says Free Speech is Bull Sh!t
Viktor Orbán getting massive praise for keeping Hungary safe, rich and migrant-free!
UK Inflation Falls to Ten-Month Low, Markets Anticipate Interest Rate Cut
UK House Prices Climb 2.4% in December as Market Shows Signs of Stabilisation
BAE Systems Predicts Sustained Expansion as Defence Orders Reach Record High
Pro-Palestine Activists Cleared of Burglary Charges Over Break-In at UK Israeli Arms Facility
Former Reform UK Councillors Form New Local Group Amid Party Fragmentation
Reform UK Pledges to Retain Britain’s Budget Watchdog as It Seeks Broader Economic Credibility
×