UK Macroeconomic Snapshot – Shedding light on the diverse economic conditions

Amidst ongoing challenges, the UK's economic outlook continues to present a mixed picture. While inflation has eased slightly, particularly in food prices, persistently high inflation in services poses persistent challenges, potentially prolonging higher interest rates and adding pressure on households already facing rising arrears. The job market, as per the ONS, exhibits signs of weakness, with the unemployment rate climbing to 4.2% in February. The IMF's downward revision of UK's Real GDP growth to 0.5% further underscores uncertainties, especially considering ongoing pressure on arrears highlighted in the Bank of England's Credit Conditions Survey.
However, amidst these challenges, there are glimmers of hope. Consumer confidence, although stable since February at -21 points, had reached a two-year high in January 2024. Additionally, the PMI remains comfortably above the growth threshold, indicating sustained economic activity. New data from Pepper Advantage's upcoming Q1 Credit Intelligence report reveals a few potentially positive indicators, including falling direct debit rejections, that suggest some borrowers' resilience could be improving in the face of rising wage growth and lower inflation. These signals, along with improving real incomes and lower inflation, offer grounds for cautious optimism. Nonetheless, the UK economy's recovery remains tentative, with underlying weaknesses and uncertainties persisting, making the long-term outlook uncertain.


The following summary outlines the primary macroeconomic data we analyse, shedding light on the diverse and intricate economic signals within our outlook.


Macroeconomic Outlook March 2024