The week ahead 08 December 2025 - UK business activity was stronger than expected in November
What to watch out for in the UK economy and property market this week.
Last week saw evidence emerge that the UK business environment was stronger in November than had originally been thought. The final version of the UK composite PMI business activity index read at 51.2 in November, which, while down on the 52.2 figure for October, marks an upwards revision on the early draft number of 50.5. The convention of the PMI index is that a reading over the 50 mark indicates growth in the commercial side of the economy. So, an upwards revision from 50.5 to 51.2 lifts activity out of marginal growth territory. The manufacturing sector PMI rose above the 50 mark in November for the first time since September 2024.
Post-budget, the pound has strengthened against the US dollar, rising from $1.32 the day before the Budget to $1.34 on Friday afternoon.
There was also encouraging news on the UK car industry, as figures from SMMT reported UK car sales between January and November 2025 had reached 1.87 million vehicles, compared to 1.81 million for the equivalent period of 2024. Further demonstrating resilience among consumers, the Nationwide House Price Index increased in November by 0.3% on the previous month, up from 0.2% growth in October and exceeding the consensus forecast of no change.
These two indicators show households have not avoided big ticket purchases in 2025, which is something that was originally feared for this year. This extends a run of data in recent weeks and months that show the UK economy, while clearly seeing sluggish growth, has not been as weak this year as many had predicted back in January.
Central banks are set to dominate this week’s economic news, with the US Federal Reserve and the Bank of Canada announcing their policy rate decisions on Wednesday. The Fed is widely expected to cut interest rates by 25 bps this week in the face of a decelerating labour market. However, the Bank of Canada has already cut its policy rate by 100 bps so far this year, so we are predicting no change this week.
Also, UK GDP figures for October are out on Friday. We are forecasting a rebound in output for the automotive sector, due to the resumption of production by Jaguar Land Rover, something which will have reverberated through its wider supply chain. This should counterbalance the Budget-related slowdown for most other industries, resulting in marginal aggregate growth.
This week's figures
Wednesday 10 December
US Federal Reserve Policy Rate Decision, December
3.75%-4.00% previous
3.50%-3.75% forecast
Evidence has been building for some time that the US labour market is in a slowdown. We are forecasting a 25 bps reduction of the Fed Funds Rate.
Friday 12 December
UK GDP, 3m-on-3m, December
0.1% previous
0.1% forecast
By October, pre-Budget speculation was weighing on the economy. However, following a cyberattack in September, Jaguar Land Rover restarted production in October, boosting the broader manufacturing sector. We are predicting modest growth.
