Leading Indicators | Cooling momentum, steady fundamentals

UK labour market shows signs of loosening as wage momentum fades

Today’s UK labour market data showed the unemployment rate unchanged at 5.1% in the three months to November 2025, its highest level since early 2021. Private sector wage growth, closely monitored by the Bank of England as a gauge of domestic inflation pressure, slowed to 3.6%, its weakest pace since November 2020, from 3.9% previously. Attention now turns to tomorrow’s inflation release, which will help assess whether the BoE can continue easing policy at its February meeting, with rates potentially moving towards 3.50%.

UK forecast to stay ahead of its European peers

President Trump’s announcements of proposed tariffs over the weekend highlight how quickly geopolitical risks can disrupt global trade. In this environment, relative growth resilience is increasingly important. The UK appears well positioned, with the IMF expecting it to be Europe’s fastest-growing G7 economy this year and next, with growth of +1.3% this year and +1.5% in 2027. The IMF also points to rising AI investment as an emerging support for economic activity.

Real estate offers steadier returns across cycles

Across market cycles, real estate has delivered relatively stable and consistently positive returns compared with the greater volatility seen in equities, oil and gold. While other asset classes show wide variation from decade to decade, property returns have been more consistent. The MSCI UK All Property Index returned +8.8% between 1990–2000 and +6.5% over 2010–2020, outperforming both equities and commodities in those periods. From 2020 to YTD, returns are around +7.0%, reinforcing real estate’s role as a stable, income-supported asset class across varying market conditions.