UK Business Activity Shows Modest Improvement Amid Ongoing Weakness

The Bank of England's survey for mid-August shows UK business activity is improving in some areas, but overall growth remains patchy.

The survey indicates output growth in services and manufactured exports, while confidence and investment intentions have picked up slightly from a low base. However, consumer-facing activities, construction, and property sectors remain weak, with little expectation of a near-term turnaround.

Average pay settlements for 2026 edged up to 3.6% from 3.5%, but firms expect limited further upward pressure and early 2027 expectations are stable or slightly lower. Credit supply continues to outstrip demand, with low distress rates as banks favor large existing clients, while companies prioritize deleveraging and margin protection over new borrowing.