Key economic indicators set to shape UK Budget amid mixed growth signals

The UK will receive a cascade of economic data over the next two weeks, beginning with Thursday’s GDP figure that rose to 5.2% in early 2026, nearly matching the 5.3% recorded during the Covid-19 pandemic before a modest decline. Labour’s employment statistics have been questioned for years, yet recent trends suggest unemployment is now higher than when the party assumed power in July 2024, while vacancy numbers and annual earnings growth have both slipped.

Inflation, which fell to 2.6% in June, has climbed each month thereafter, reaching 3.1% in August, largely because of rising fuel and energy prices tied to ongoing conflicts in the Middle East and Ukraine. The ONS data are also expected to update the count of economically inactive people - those of working age not seeking work due to illness, study or choice. Government borrowing is projected to stay below last year’s level but exceed the Office for Budget Responsibility’s forecast, constraining Chancellor John Healey’s fiscal room, while public-sector debt hovers just under £3 trillion, about 93.8% of GDP. Retail sales showed a modest recovery in August, helped by online and department-store activity, but September’s figures may be dampened by higher fuel, energy and grocery prices, a key gauge of consumer confidence before the winter budget period.