GDP is under serious threat from the oil shock. A recession is possible in the first half of the year. Inflation is set to rise above 4%. Yields are surging. Financing costs are rising. Risks are mounting for the UK real estate and equity markets.

Key points

• The UK confirms near-stagnation in Q4
• A difficult end to the year and a major geopolitical shock in 2026
• An imminent reversal in PMI leading indicators
• A deterioration in the labor market
• Household confidence set to take a hit
• Inflation once again threatened by the oil shock
• BoE maintains status quo in the face of inflationary threat
• Sharp rebound in bond yields
• Changes in expectations for the pound sterling
• Real estate penalized by the rate reversal
• Negative outlook for the FTSE 250 in H1 2026

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