The week ahead 09 February 2026 - Bank of England has ‘good news’ on the economy
What to watch out for in the UK economy and property market this week.
The Bank of England Monetary Policy Committee (MPC) left the Base Rate steady at 3.75%, mirroring the US Fed and ECB, last week. However, at the subsequent press conference, Governor Andrew Bailey told journalists: “my main message today is one of good news”. The Bank’s latest forecasts have inflation returning close to target by April, which is 12-months sooner than previously projected. This puts the MPC in a strong position to cut the Base Rate this year. Last week’s meeting saw four of the nine committee members vote for a 25 bps cut. Our forecast is for two interest rate cuts of 25 bps each over the course of 2026. Full analysis of the interest rate decision can be found here.
The ECB’s decision to leave its policy rate unchanged was supported by data that showed inflation in the Euro Area has fallen below target, from 2.0% in December 2025 to 1.7% in January 2026. Core inflation (which excludes volatile prices, like petrol) slid from 2.3% in December to 2.2% in January. Inflation appears to be under control in the Eurozone, which will offer a firm foundation for its economy in 2026.
The UK housing market saw some good news last week, with the Halifax House Price Index increasing by 0.7% month-on-month in January 2026, reversing December’s decline of -0.5%. This is encouraging, as January is normally a quiet month for the housing market.
In the US, data suggests the employment market has slowed again. The number of job cuts has increased from 35,500 in December 2025 to 108,400 in January 2026, according to employment services firm, Challenger. Also, government data showed the number of job vacancies fell from 6.9 million in November 2025 to 6.4 million in December.
This week sees figures released on UK GDP growth and Eurozone employment growth.
A number of indicators suggest the UK economy has seen a post-budget bounce. Also, there are certain industries that had a difficult summer and early autumn that appeared to stage a recovery towards the end of 2025. Consequently, we believe that Q4 2025 GDP growth will be slightly up on Q3.
Turning to the Euro Area jobs data, in most advanced economies the widespread adoption of AI by firms has been a brake on jobs growth lately, particularly in the services sector, and we expect this to be a continuing theme in 2026. However, with inflation low and interest rates levelling out, we are forecasting employment growth in the Eurozone in Q4 2025 of a level similar to that seen in the previous quarter.
This week’s figures
Thursday 12 February
UK GDP Growth, q-on-q, Q4 2025
0.1% Previous
0.2% Forecast
Survey indicators suggest the UK economy did see a post-Budget increase in activity, so we are predicting a strong December to have lifted Q4 GDP growth to 0.2%, which would be up on Q3 but low by historic standards.
Friday 13 February
Euro Area Employment Growth, q-on-q, Q4 2025
0.2% Previous
0.2% Forecast
Due to the fast adoption of AI, calling employment growth levels in advanced economies has become difficult. However, we believe the stabilisation of inflation and interest rates in the Eurozone will have supported jobs growth.
