UK Economy Loses Steam as Optimism Index and Retail Sales Slow

The UK economy showed signs of slowing down in August, according to recent data releases. The Small Business Optimism Index for August came in at 98.7, a decline of 1.1 points from July's high of 99.8. This marks the first decrease in the index since August 2025, but it remains above its 52-year average of 98.0.

Meanwhile, British retail sales growth slowed to a four-month low in August, with total retail sales growing by an annual 0.7% compared to July's 1.3%. Like-for-like growth also declined, indicating that the surge in sales driven by record-hot weather earlier in the summer has faded.

The UK housing market is also facing challenges, with house prices falling by -0.2% over the month of August. This marks the first annual fall in house prices since November 2023. However, despite this decline, prices are still marginally up (+0.2%) since the start of the year.