The week ahead 05 January 2026 - FTSE 100 hits record high
What to watch out for in the UK economy and property market this week.
The FTSE 100 UK blue chip shares index cleared the 10,000 mark last Friday morning – a record high – before receding in the afternoon to close at 9,951.1. This follows an increase of 21.5% for the equity index in 2025, its strongest annual performance in over 15 years. By way of comparison, the German Dax 40 rose by 19.9% in 2025, and the US S&P 500 by 16.4%.
The FTSE 100 contains many firms that draw a lot of their earnings from overseas, including large banking, energy and mining groups. In contrast, the FTSE 250, whose firms are smaller and more exposed to the UK domestic economy, rose by just 3.5% in 2025. Consequently, we suspect that large, internationally facing UK corporations are starting 2026 with more optimism than SMEs. This could mean, at least for the opening months of 2026, property market activity (especially leasing demand) might be weighted towards the big cities and the districts surrounding major ports and airports.
The enthusiasm among investors for the FTSE 100 also reveals a desire to diversify investment portfolios. The political dramas in Washington DC throughout last year, and the growing unease surrounding Silicon Valley’s Artificial Intelligence boom, appears to have persuaded investors to seek safety beyond the USA. This could be a trend that favours UK real estate, particularly given the investment market is re-priced and in most cases the leasing market data appears reasonably healthy.
In other news, two companies plan to launch self-driving taxi services in London this year, according to the Financial Times. Several US cities now have robotaxis on their streets, including Atlanta, Los Angeles, Pheonix and San Francisco. US firm, Waymo, began testing autonomous taxis on London’s streets last month, and hopes to begin services to the public in 2026. Chinese group, Baidu also plans to launch in London this year.
This week is a relatively quiet one for economic data, as the business world returns to work after the festive break.
Tomorrow sees the publication of figures on new car sales in the UK. UK consumers have been cautious on spending lately. Plus, with inflation up in recent months, the temptation will have been high for households to avoid big-ticket purchases, like a new car. We are forecasting a modest fall for car sales in December.
On Thursday, the Eurozone releases inflation data, which we believe will please the ECB rate setters by falling to the 2.0% target.
This week's figures
Tuesday 6 January
UK New Car Sales, December 2025
151k previous
145k forecast
With the consumer feeling squeezed by high food price inflation, plus the other spending demands of December, we suspect car sales declined last month compared to November.
Thursday 8 January
Euro Area HICP Inflation, y-on-y, December 2025
2.1% previous
2.0% forecast
Given the sluggish conditions in the economy for most Eurozone countries, we are forecasting inflation to nudge down slightly to 2.0%, taking it to the target level.
