UK Economy Shows Surprising Resilience Amid Household Financial Deterioration

The UK economy has shown surprising resilience in recent months, with real GDP growth reaching 0.4% in Q2 and an estimated 0.4% growth for the three months to July.

This is largely due to strong services growth, which has been driven by developments in artificial intelligence (AI).

The OECD has upgraded its 2026 UK growth forecast from 0.9% to 1.1%, with Cebr's own forecast remaining at 1.2% for the year.

However, despite this growth, most UK households are unlikely to have seen a meaningful improvement in living standards due to falling vacancies and declining numbers of payrolled employees.

The real earnings growth rate fell back below 1.0% in July, with Cebr expecting real disposable incomes to fall by 0.6% this year.