Leading Indicators | UK economy rebalancing amid early signs of investment momentum?
Here we look at the leading indicators in the world of economics. For in-depth analysis into commodities, trade, equities and more.
14 October 2025
Lower household debt offers scope for gradual spending rebound
UK household balance sheets are the strongest in over two decades after a prolonged period of spending restraint that has weighed on growth. Debt as a share of household incomes has fallen to 117.1% in Q2 2025, the lowest since 2002, according to the ONS. This improved position, supported by pandemic-era savings, could underpin retail and discretionary spending as rates begin to ease from 2026. The extent of any recovery will hinge on fiscal decisions in Chancellor Reeves’s upcoming budget.
Cooling labour market adds to case for policy easing…
The latest UK labour market data points to a gradual cooling, with unemployment rising to 4.8% in the three months to August, the highest since 2021, and private sector wage growth easing to 4.4%, a near four-year low. The figures precede the November 26th budget, where expected tax increases may further curb demand. Softer labour conditions are reinforcing expectations for a more dovish Bank of England, with markets now pricing earlier rate cuts in 2026.
UK CRE investment volumes up +8% YTD, cross border capital driving growth
YTD 2025 UK CRE investment volumes total £36bn, up +8% year-on-year and +20% versus 2023 (including pending deals, subject to revision). Overseas appetite remains strong, with cross-border capital accounting for 47% of total investment, up +12% YTD and +20% quarter-on-quarter in Q3, reinforcing the UK’s appeal as a key global market. Investor focus is returning to core sectors, (office, retail, and industrial), where volumes are up +11% YTD, reflecting renewed conviction in long-term fundamentals.
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