TLDR News have put together a video showing that the economy is showing signs of recovery.
After a difficult few years marked by high inflation and even talk of a possible IMF bailout, the UK economy is finally showing signs of stabilising. Recent data suggests the picture is not brilliant, but it is noticeably better than many expected, and there are growing reasons for cautious optimism.
One of the biggest changes is the potential return of domestic consumption. Since 2018, UK household spending has largely stagnated, driven by Brexit uncertainty, the pandemic, rising prices and higher interest rates. As a result, many households chose to save rather than spend, pushing the savings rate to unusually high levels. However, inflation is now expected to fall sharply, interest rates are easing, and financial uncertainty has reduced. Crucially, years of saving mean UK households are now less indebted than many international peers, giving them room to spend again as confidence returns.
At the same time, investment is beginning to recover after decades of underperformance. Business investment has risen steadily over the past 18 months, supported by improved confidence and greater fiscal clarity. Early signs suggest this is already helping productivity growth.
Finally, public finances have stabilised somewhat, with borrowing costs normalising and government borrowing coming in below forecasts. While challenges remain, the UK economy looks far healthier than it did a year ago.
