The week ahead 17 November 2025 - Weak UK data ups pressure on Bank of England rate setters
What to watch out for in the UK economy and property market this week.
Last week saw unexpectedly poor figures on UK GDP growth and the labour market, which makes a Bank of England interest rate cut next month even more likely.
UK GDP in Q3 grew by just 0.1% quarter-on-quarter, which was below the consensus forecast of 0.2%. The economy contracted in September on a month-on-month comparison, in part due to the cyber attack on Jaguar Land Rover (JLR), which caused a production shutdown that reverberated through the automotive supply chain. Turning to the jobs market, the unemployment rate jumped to 5.0% in September, up from 4.8% in August, exceeding the consensus forecast of an increase to 4.9%. This comes ahead of the Chancellor’s autumn Budget, which is widely expected to contain tax rises that will further hit growth.
That GDP growth in Q3 was half the level the Bank of England was forecasting further builds the case for a Base Rate cut in December. We are predicting a 25 bps reduction next month, followed by a further 50 bps in 2026. News that grocery price inflation slowed to 4.7% in the four weeks to 2nd November, according to Worldpanel, down from 5.2% previously, increases the chances that CPI inflation fell in October.
The Budget speculation continued unabated last week, with the government now briefing that a hike in income tax is unlikely. This was thanks to the Office for Budget Responsibility forecasts having proved to be less negative than expected. The media is speculating that instead the Chancellor will tinker with the tax thresholds, plus increase a range of secondary taxes that only a minority of people or firms tend to pay.
This week will see figures released on UK inflation, as well as the early drafts of the PMI indices for various major global economies, including Britain.
With pay growth and food inflation slowing, and given the general sluggishness in the economy, we are forecasting UK CPI inflation may have eased slightly in October. We see inflation now gradually slowing over the next 18 months.
Turning to the PMI data. The convention of the index is that a reading of over the 50 mark indicates growth in the commercial side of the economy. There was a rebound for the UK index last month, which was partly thanks to JLR restarting production. However, we believe that the approach of the Budget has probably persuaded many firms to go into ‘wait-and-see’ mode in November. So, we are predicting a decline for the PMI index compared to October.
This week's figures
Wednesday 19 November
UK CPI Inflation, y-on-y, October
3.8% previous
3.7% forecast
With evidence mounting that the economy, labour market and food prices are all decelerating, we believe there was a small reduction in CPI inflation in October.
Friday 21 November
UK 'Flash' Composite PMI, November
52.3 previous
51.8 forecast
Given the ongoing Budget speculation, plus the run of disappointing economic news, we are anticipating a decline for the November PMI figure, but to a level that still indicates growth.
