UK Economy News Today, 9 December 2025: Spending Slump, Weak Jobs Market and Rate‑Cut Hopes Define Outlook

UK economic data and commentary out today paint a picture of an economy that is cooling rather than crashing: households are cutting back, the labour market is softening, inflation is easing but still painful, and markets are betting the Bank of England will start cutting interest rates soon.

Below is a full rundown of today’s key UK economy news, forecasts and analysis as of 9 December 2025.

Key takeaways at a glance

Household spending fell 1.1% year‑on‑year in November, the sharpest drop since early 2021, despite Black Friday, according to Barclays card data. ^[1]
Retail sales are barely growing in value and falling in volume, with British Retail Consortium (BRC) figures showing only modest nominal growth that lags inflation. ^[2]
Unemployment has risen to around 5% and business surveys suggest employment is at its weakest since 2011, with permanent hiring falling but temp work holding up in some regions. ^[3]
Headline inflation has eased to 3.6%, but grocery price inflation is still 4.7%, continuing to squeeze real incomes. ^[4]
The Bank of England (BoE) is holding Bank Rate at 4%, but the narrow 5–4 vote and weaker data mean markets see a December rate cut as likely. ^[5]
Latest official data show the economy grew just 0.1% in Q3 2025, with September GDP falling 0.1% and business investment slipping. ^[6]
New forecasts from the OBR, OECD, investment banks and consultancies cluster around weak but positive growth (0.8%–1.5% a year) and inflation only slowly returning to the 2% target by 2027. ^[7]

1. Consumers cut back despite Black Friday boost

The headline domestic story today is a clear pullback in consumer spending heading into Christmas.

Barclays, which processes around 40% of UK card transactions, reports that consumer card spending in November fell 1.1% year‑on‑year, the steepest decline since February 2021. ^[8] This drop is in nominal terms, meaning that once inflation is factored in, the real fall in spending is even larger.

Spending on pubs and bars declined, particularly among younger adults who are increasingly opting for alcohol‑free lifestyles.
There was weakness in hospitality, hotels, restaurants and department stores, while modest growth appeared in pharmacies, beauty and health retailers. ^[9]
By contrast, travel spending rose 10.7% and streaming subscriptions increased by 3–4%, suggesting consumers are still prioritising experiences and low‑cost home entertainment. ^[10]

The British Retail Consortium (BRC) figures reinforce this picture:

November retail sales grew only around 1.4% year‑on‑year, the weakest in six months and below inflation, implying falling sales volumes. ^[11]
Food sales rose about 3%, driven by higher prices, while non‑food sales barely grew (+0.1%). ^[12]

The BRC and retailers blame:

Uncertainty around the November Budget, which included around £26bn of tax rises, for making households cautious about big-ticket purchases. ^[13]
Persistent cost‑of‑living pressures, especially food and housing costs.

A separate BRC/Opinium survey found net expectations for the UK economy over the next three months plunged to –44% in November from –35%, the weakest since April, while confidence in personal finances also fell. ^[14]

Taken together, the data suggest that 2025’s “golden quarter” is turning out to be anything but golden for retailers.

2. Inflation is easing on paper, but food prices still sting

Official figures from the Office for National Statistics (ONS) show inflation continuing to edge lower, but still above target:

The Consumer Prices Index (CPI) rose 3.6% in the 12 months to October 2025, down from 3.8% in September.
The broader CPIH measure (including owner-occupiers’ housing costs) came in at 3.8%, down from 4.1%. ^[15]

However, today’s grocery data underline why many households don’t feel that inflation is under control:

UK grocery inflation remained stuck at 4.7% in the four weeks to 30 November, according to Worldpanel by Numerator, as reported by Reuters. ^[16]
Total grocery sales values rose 3.4%, less than the inflation rate, implying falling sales volumes as shoppers trade down or cut back. ^[17]

This divergence – headline inflation easing while food remains expensive – is central to today’s commentary from economists and retailers. The Bank of England has flagged food prices as a key risk to inflation expectations, even as the overall CPI rate drifts lower. ^[18]

3. Jobs market: official slowdown meets “14‑year low” headlines

New data and surveys show a labour market that is loosening significantly after years of extreme tightness.

Official ONS figures

The ONS Labour Market Overview for November 2025 (covering July–September) shows: ^[19]

Employment rate (16–64): 75.0%, down on the quarter but still slightly above a year earlier.
Unemployment rate (16+): 5.0%, up on the quarter and the highest in over a year, with around 1.79 million people unemployed.
Economic inactivity (16–64): 21.0%, little changed on the quarter but lower than a year before.
Vacancies: broadly flat, with around 723,000 vacancies in August–October, a small uptick of 2,000.

The House of Commons Library notes that unemployment has risen by about 282,000 over the last year, with payrolled employee numbers slipping and early data for October pointing to another small decline. ^[20]

Business surveys: “weakest jobs market since 2011”

Beyond official data, business surveys released and discussed today are much bleaker:

Accounting firm BDO’s Business Trends report describes employment as “at a 14‑year low”, with its Employment Index at the weakest level since 2011 and its Output Index seeing the biggest monthly fall in more than three years – particularly in services – during what should be the peak “golden quarter”. ^[21]
Media summaries based on BDO’s data, including reports in the Telegraph and specialist outlets, frame this as the jobs market “plunging” to its weakest point since 2011 as firms cut hiring plans. ^[22]

Meanwhile, the latest KPMG and REC “Report on Jobs”, compiled by S&P Global, shows: ^[23]

Permanent staff placements falling again in November, with declines across all monitored sectors.
Employers citing economic uncertainty, higher staffing costs and the November Budget as reasons to delay or freeze hiring.
A “weaker but still marked” reduction in demand for permanent workers, but rising candidate availability as more people look for work.

Regionally, the Midlands stands out: a KPMG/REC regional survey released today reports that temp billings there rose at their fastest rate in 17 months, marking a fourth straight monthly increase, even as permanent placements continued to fall. ^[24]

That two‑speed pattern – weak permanent hiring, relatively resilient temp work – is often seen when firms are nervous about the outlook but still need flexibility.

Currency strategists have picked up on this theme too. A new note from CIBC, highlighted by PoundSterlingLive today, argues that a “rising tide of unemployment” will put downward pressure on sterling versus the euro in 2026. ^[25]

4. Growth: Q3 GDP barely positive, productivity only just above pre‑Covid

Latest official GDP figures continue to show an economy stuck in low‑growth mode:

The UK economy grew just 0.1% in Q3 2025, half the 0.2% quarter‑on‑quarter growth economists had expected. ^[26]
Monthly GDP fell 0.1% in September, with a cyber‑attack on Jaguar Land Rover causing a nearly 29% collapse in motor vehicle output, dragging down manufacturing. ^[27]
Nominal GDP (not adjusted for inflation) was up 1.2% in Q3 and 5.1% year‑on‑year, driven mainly by rising employee compensation. ^[28]

ONS productivity data show output per worker around 2.1% above its pre‑pandemic level, but the trend remains weak by historical standards. ^[29]

Economists at the British Chambers of Commerce warn that this combination of sluggish output, persistent inflation and weak business investment risks leaving the UK stuck in a “low‑growth trap” without stronger pro‑investment policies. ^[30]

5. Fiscal policy and the Autumn Budget: higher taxes, modest growth

Today’s data are being interpreted against the backdrop of Chancellor Rachel Reeves’ Autumn Budget (26 November)and the accompanying Office for Budget Responsibility (OBR) forecasts.

Key points from the OBR and parliamentary summaries: ^[31]

The OBR now expects GDP growth of around 1.4–1.5% each year from 2025 to 2030 – positive but historically weak.
It has revised up its inflation forecast, predicting CPI inflation of 3.5% in 2025 and 2.5% in 2026, before returning to the 2% target in 2027.
Reeves’ package of tax rises and targeted spending is forecast to trim inflation by about 0.4 percentage points in 2026–27, mainly via lower energy bills, but it will also keep the tax burden at record highs as a share of GDP.

An OECD assessment published last week is more critical. It warns that Reeves’s £26bn of tax increases will constrain growth, projecting: ^[32]

GDP growth of 1.4% in 2025, 1.2% in 2026 and 1.3% in 2027.
Inflation remaining the highest in the G7 in 2025 (around 3.5%), and still above the 2% target in 2026.
Unemployment hovering around 5% until 2027.

Private‑sector forecasters are similarly downbeat but differ on the exact numbers:

RSM UK expects growth of just 0.8% in 2026, citing a “large fiscal contraction” combined with weak consumer and business confidence. ^[33]
Goldman Sachs projects UK GDP to expand around 1.1% next year, with inflation easing to 3.4% in 2025 and 2.3% in 2026, and Bank Rate falling to 3% by mid‑2026 via several cuts. ^[34]
A Bloomberg consensus cited by RBC Wealth Management sees UK growth at around 1.2% in 2026, slowed by the 2025 tax increases but helped by lower inflation and future BoE rate cuts. ^[35]

The broad message across today’s analysis: policy has stabilised the fiscal outlook and reassured bond markets, but at the cost of years of only modest growth.

6. Interest rates: BoE holds at 4%, December cut increasingly priced in

With growth slowing, unemployment rising and inflation drifting down, attention is turning to the Bank of England’s next move.

At its November meeting, the Monetary Policy Committee:

Kept Bank Rate at 4% in a close 5–4 vote, with four members pushing for an immediate 0.25‑point cut to 3.75%. ^[36]
Signalled that rates remain on a “gradual path downwards”, but stressed the need for clearer evidence that inflation is heading sustainably back to 2%. ^[37]

A House of Commons Library briefing summarises the journey so far: Bank Rate rose from 0.1% in late 2021 to 5.25% in August 2023, then was cut once every three months to reach 4.0% by November 2025; the next MPC decision is scheduled for 18 December. ^[38]

Market and bank commentary gathered over the last month – and updated today in light of the weak spending and jobs data – suggests:

A December rate cut is now seen as “more likely than not”, according to ING and other bank economists. ^[39]
Currency analysts expect further BoE easing in 2026, with markets pricing Bank Rate around 3.25% by end‑2026. ^[40]

For households and businesses, the near‑term reality is that borrowing costs are still much higher than pre‑pandemic, but the peak in rates is clearly behind us, and the debate now is over how fast and how far cuts will go.

7. Housing, credit and secured lending: “cautious growth” expected

Today also brings fresh analysis on the secured lending and housing side of the economy.

A new piece from Credit Strategy, published this morning, argues that UK secured loans are set for “modest growth” in 2026 as: ^[41]

Interest rates gradually ease from 4%.
House prices stabilise after previous corrections.
Lenders adopt more flexible underwriting, particularly for refinancing and debt consolidation.

The report stresses that growth will be “cautious” rather than exuberant, with tighter affordability rules and still‑high household debt limiting the upside – but it does offer a rare, slightly more optimistic note compared with broader macro forecasts.

8. Markets: FTSE near record highs, sterling’s outlook more mixed

One striking contrast in today’s coverage is between the muted real‑economy data and buoyant financial markets.

The FTSE 100 hit a record high near 9,900 on 11 November, helped by expectations of BoE rate cuts and strong performance from large multinationals. ^[42]
Today’s pre‑market commentary suggests the index is trading just below those record levels, with a slightly softer open expected as investors digest weak domestic spending numbers and global central‑bank jitters. TechStock²+1

On the currency front:

Sterling recently hit a five‑week high against the dollar and strengthened versus the euro, reflecting the perception that the UK economy, while weak, is avoiding recession and that rate cuts will be gradual. ^[43]
Yet the CIBC note referenced today argues that rising unemployment and fiscal tightening will likely push the pound lower against the euro over 2026, diverging from some more optimistic bank forecasts. ^[44]

Equity strategy pieces published this morning – including “best UK stocks to buy now” lists – frame the UK market as cheap but policy‑dependent, with upside hinging on rate cuts, stable politics and any sign that trend growth can be lifted above 1–1.5%. RBC Wealth Management+3TechStock²+3TechStock²+3

9. How bad is it really? The bigger‑picture analysis

Alongside the hard data, there is growing debate about whether the UK’s economic situation is as dire as public sentiment suggests.

A widely‑circulated Guardian analysis last week, referenced again in teaching resources and commentary today, makes several points: ^[45]

Real wages have finally caught up with the post‑pandemic inflation surge for most workers, but the costs of housing, energy and food remain elevated, hitting low‑income households hardest.
Public services are under severe strain, leading to dissatisfaction even among those whose incomes have improved on paper.
Wealth inequality has widened, with a sharp divide between asset‑rich and asset‑poor households, and high marginal tax rates on middle‑ and higher‑income earners fuelling discontent.

Think‑tank and business‑group commentary converges on a similar diagnosis:

The UK is facing a long period of low trend growth, constrained by weak productivity, underinvestment, demographic pressures and tight fiscal rules. ^[46]
Without a step‑change in business investment, planning reform, skills and infrastructure, the risk is persistent stagnation rather than a short, sharp recession.

In other words, today’s numbers don’t signal a sudden collapse, but they do reinforce the narrative of a slow‑growth, high‑tax, still‑high‑inflation economy that will feel uncomfortable for many households for some time yet.

10. What to watch next

Looking beyond today, the key dates and indicators for the UK economy are:

18 December 2025 – Bank of England MPC meeting: markets see a significant chance of the first rate cut since August 2024. ^[47]
17 December 2025 – next official CPI release, covering November, which will show whether headline inflation is following grocery prices down – or stalling. ^[48]
ONS labour market release on 16 December, which will confirm whether unemployment is continuing to climb from 5%. ^[49]
Early‑2026 data on retail sales, business investment and productivity, which will test the forecasts of weak but positive growth.

For now, the story of 9 December 2025 is clear:

The UK economy is slowing, not crashing. Households are tightening belts, the jobs market is cooling, and inflation is easing but still uncomfortable. The next move belongs to the Bank of England – and today’s data make a December rate cut harder to resist.