London Daily

Focus on the big picture.
Friday, Jul 03, 2026

Londoners brace for blockbuster economy week with interest rate hike and prices  data

Londoners brace for blockbuster economy week with interest rate hike and prices data

Bank of England tops the bill in a key week that will set the tone for the economy and consumers into 2023
Londoners are facing a blockbuster week for the economy, one which will set the tone for homeowners, consumers and investors alike into 2023.

We will find out if there is hope that inflation may have peaked in the run up to Christmas during a cost-of-living crisis with interest rates poised to go up, and there will also be numbers on joblessness and average earnings.

The Bank of England is top of the bill, with its December announcement on interest rates at high noon on Thursday. A hike is all but certain and will pile pressure on mortgage holders, with policymakers determined to tame double-digit inflation.

City experts agree that the only question is how big the Monetary Policy Committee’s hike will be after it voted for 0.75% last time, which took base rates to 3%. Andrew Goodwin, chief UK economist at Oxford Economics predicts a “pivot back to a 0.50% rise,” adding:

“There’s a good chance a minority of members will support a smaller rise or even keeping rates unchanged, which would support our view that investors remain too bullish on how high rates will peak.” Markets currently expect the BoE’s base rate to top out between 4.5% and 4.75% as the MPC tries to bring inflation down toward its 2% target

Its nine members will have plenty to discuss before their rate vote from a slew of important numbers due out earlier in the week.

First up is the monthly number on the size of the economy. Due on Monday at 7 a.m., the gross domestic product reading tracks the value of all the goods and services produced in the UK and will shed further light on whether it is already in recession.

The widely accepted recession definition kicks in with two consecutive quarters of contraction. After a decline in the third quarter, the data won’t take the UK past that line until the end of December. But the October numbers will offer another signpost on the journey, with many economists already convinced recession has arrived, while the Bank of England itself says it is on the way.

According to forecasts from Deutsche Bank, October GDP will rise by 0.4%, bouncing back from a drop of 0.6% in September, which was largely driven by the public holiday held for the funeral of Queen Elizabeth II.

Sanjay Raja, chief UK economist at Deutsche, predicts that when fourth quarter data arrives, it will indicate recession, which he expects ”to last four quarters, with GDP shrinking by around 1.5% peak-to-trough.” He adds: “The ongoing cost of living crisis, elevated economic uncertainty, and rising cost pressures all point to a deteriorating outlook in the months ahead.”

So far, the jobs market has been resilient during the downturn. Employment data, out on Tuesday at 7 a.m., is expected to show a relatively low jobless rate at 3.6%. Average earnings data will be paid close attention by the BoE as it fights inflation. HSBC estimates that the weekly rise in pay will reach 6.2%

Wednesday will also be a busy day, bringing headline inflation data for November. HSBC expects it ease back slightly to 10.9% from 11.1% in October. But that will leave it significantly above the BoE’s official target of 2%, leaving the way wide open for rate hikes.

But James Hughes, chief analyst at Scope Markets said: “It’s vital to remember that the inflation we saw a year ago has not been sustained. Wheat and crude oil are now back at level seen before the Russian invasion of Ukraine, suggesting that some significant contraction will be seen here in the next few months.”

By the end of a stellar week for economic data, Londoners should have a clearer picture of where they stand in terms of recession, the cost-of-living crisis and the outlook for interest rates and mortgage costs.
Newsletter

Related Articles

0:00
0:00
Close
Luxury bags take over the World Cup: style, status symbol, or just showing off?
National Productivity Institute Highlights Weak Business Investment Outside Southern England
UK High Court Orders Reassessment of Environmental Impact in Major Highway Project
UK Cyber Security Centre Warns of Rising Threat From State-Sponsored Digital Espionage
UK Education Secretary Launches National Reform of Apprenticeships and Vocational Training
Financial Conduct Authority Tightens Climate Risk Disclosure Requirements for Listed Firms
Rail Union Suspends Planned Strike Action to Enter Formal Negotiations With Operators
Northern Ireland Businesses Seek Clarity Over Post-Brexit Trade Rules
Welsh Government Launches Regional Growth Plan Targeting Transport and Digital Infrastructure
North Sea Wind Sector Attracts £5 Billion Investment Amid Expansion of Offshore Capacity
Scotland and UK Governments Establish New Framework for Coordinated Investment in Energy and Infrastructure
UK Government Launches Major Immigration and Border Policy Overhaul Review
Bank of England Signals Interest Rates to Remain Elevated Despite Easing Inflation Pressures
National Health Service Warns of Severe Winter Capacity Strain Across Hospital Trusts
Chancellor Orders Urgent Treasury Review Amid Concerns Over Structural Public Finance Gap
Prime Minister Unveils Sweeping Legislative Programme Focused on Housing, Health Service Reform and State Energy Plan
UK Parliamentary Committee Launches Inquiry Into Falling Primary School Rolls and Public Service Impact
UK House of Lords Debates Electoral Commission Powers and Political Finance Reform
UK Parliament Considers Expanding Carbon Rules to International Aviation and Shipping Emissions
UK Traffic Commissioner Revokes Hampshire Haulage Operator Licence Over Regulatory Failures
UK Parliament Examines Risks in Public Contracts Awarded to Technology Firm Palantir
UK Competition Watchdog Moves Toward More Flexible Merger Rules to Support Efficiency and Growth
UK Government Seeks Approval for £1.15 Trillion Public Spending Plan Amid Scrutiny Over Department Budgets
UK Parliament Debates Sweeping National Security and Steel Industry Nationalisation Bills
UK Government Issues Formal Apology for Historic Forced Adoption Practices and Announces £4 Million Support Scheme
UK DEFENCE AND TECHNOLOGY STRATEGY TILTS TOWARD SOVEREIGN CAPABILITY AND INDUSTRIAL INVESTMENT
UK ECONOMIC POLICY OUTLOOK SHAPED BY LEADERSHIP TRANSITION AND FISCAL SIGNALS
STERLING STRENGTHENS AMID SHIFTING MONETARY OUTLOOK AND GLOBAL LABOUR MARKET SIGNALS
UK HPV VACCINATION PROGRAM NEARLY ELIMINATES CERVICAL CANCER DEATH RISK IN YOUNG WOMEN
UK EXPANDS PRISON SAFETY REVIEW AS GOVERNMENT SEEKS WIDER SYSTEM REFORM
UK DRIVES DIGITAL ASSETS STRATEGY WITH NEW STABLECOIN REGULATORY MODEL
UK TO EXPAND AI INFRASTRUCTURE THROUGH NEW EUROPEAN TECHNOLOGY PARTNERSHIP
UK LAUNCHES £15 BILLION DEFENCE TECH SHIFT TOWARD ADVANCED MILITARY SYSTEMS
CIVIL SERVICE FACES SHIFT IN POWER STRUCTURE AS REGIONAL GOVERNANCE PLANS EXPAND
WHITEHALL CONSIDERS MAJOR DECENTRALISATION PLAN WITH SECOND GOVERNMENT HUB IN MANCHESTER
UK TARGETS SERVICES EXPORT GROWTH IN TRADE TALKS WITH CHINA AMID GEOPOLITICAL TENSIONS
POLICE WATCHDOG PROBES OFFICERS OVER HANDCUFFING OF DYING TEENAGER IN HAMPSHIRE CASE
UK REGULATORS UNVEIL DUAL OVERSIGHT FRAMEWORK FOR STABLECOINS AND DIGITAL ASSETS
KEIR STARMER ANNOUNCES £15 BILLION DEFENCE TECHNOLOGY BOOST IN FINAL MAJOR POLICY MOVE
ANDY BURNHAM SIGNALS STRICT FISCAL RULES AS LABOUR LEADERSHIP RACE SHAPES MARKET OUTLOOK
POUND STERLING HITS ONE-YEAR HIGH AS BANK OF ENGLAND SIGNALS NO IMMINENT RATE CUTS
UK Government Confirms Rejected Asylum Seekers to Remain Amid Enforcement Challenges
UK-China Economic Talks Focus on Services Trade and High-Value Sectors
Buckingham Palace Revamp Plans Unveiled to Modernise Royal and Public Facilities
Two Dead After Light Aircraft Crash in Essex Field, Investigation Underway
Princess Diana Marked at 65 With UK Tributes Reflecting on Her Public Legacy
England Teachers Face New Pay Cap Rules for Academy School Leaders Under Education Reform
Dublin Security Alert Escalates After Stabbing and Reports of Transport Disruption
UK Government Faces Scrutiny Over £10,000 Asylum Living Cost Contribution Requirement
England Prepares World Cup Knockout Match Against Democratic Republic of Congo
×