The UK economy has shown surprising strength in 2026, defying expectations with solid growth despite higher energy prices. However, this resilience is now being tested as inflation climbs again, putting pressure on households with rising mortgage and living costs. The National Institute of Economic and Social Research (NIESR) recently held a press conference to discuss these challenges and their forecasts for the coming year.
Key topics included the outlook for growth, inflation, interest rates, and public finances. The sharp increase in government bond yields across advanced economies was also examined, with speakers assessing its impact on growth, inflation, and UK fiscal policy. The discussion highlighted the difficult choices facing policymakers and consumers alike.
With inflation remaining above target and wage growth elevated, the labor market shows no signs of significant weakening. This poses a dilemma for the Bank of England as it considers future interest rate decisions. The NIESR event provided a platform for experts to share their insights on these critical economic issues.