For the data behind the commentary, download the full July 2025 UK Economy & Housing Report.
One year on
July 4th saw the one-year anniversary of the General Election. However, the occasion was married by a U-turn on the Welfare Bill, which impacts the Government’s fiscal headroom. Nevertheless, the implications are that the Autumn budget will need to be tightened in the region of £30 billion – likely through tax increases.
While there are other publications better suited to taking a view on the performance of the government, there continues to be a number of positive steps towards looking to drive investment, as highlighted in Visions – through housebuilding as per the recent spending review, and the more recently released 10-year infrastructure strategy and the Modern Industrial Strategy – more of which you can read here. These two frameworks are geared towards investment across not only eight identified sectors, but as importantly for the real estate sector towards identified locations.
However, in the short-term, three have been a number of worse-than-expected economic data releases. Monthly GDP for May fell by 0.1% after a 0.3% fall the previous month, while the labour market has softened further – with unemployment as high as 4.7% (albeit with caveats). The flip side to this is that this will prompt the MPC to cut interest rates in August despite inflationary data surprising on the upside.
Pause for thought?
July 9th was due to be the deadline for the 90-day pause for the majority of countries on the US’ Reciprocal Tariff policy. On July 7th, it was announced that this would be pushed back further., with four deals agreed – between the UK, China, Vietnam and Indonesia. The new timeframe is August 1st, with further announcements pending of a 50% tariff on copper imports, and as high as 200% on pharmaceuticals.
