Trade, City of London, sterling and EU markets
The IMF has upgraded its growth forecast for the UK economy, offering a more optimistic outlook than previous projections, though the organization warns that significant economic risks persist for Britain.
The UK government has published its Spring Forecast 2026, presenting what it calls the right economic plan for Britain as the country addresses ongoing financial challenges and growth opportunities.
The UK housing market has recorded three consecutive months of price declines, with geopolitical tensions and economic uncertainty cited as key factors dampening buyer confidence and transaction activity.
The FTSE 100 has held above 10,300 with energy heavyweights BP and Shell lifted by Monday’s surge in Brent crude. The resource-heavy index has outperformed European peers even as UK consumer confidence stays weak and growth forecasts hover around 1%.
UK house prices fell 0.6% month-on-month in May 2026 according to the Nationwide Building Society, leaving annual growth at 1.7% and the average price at around 278,024 pounds. Higher borrowing costs and stretched affordability continue to keep the market in a low gear.
The Bank of England’s Monetary Policy Committee meets on 18 June 2026 with Bank Rate at 3.75%, and economists are split between a hold and a cut. A renewed surge in oil prices and sticky services inflation are pulling against signs of a softening labour market.
The European Commission’s proposed 28th company-law regime, dubbed EU Inc, aims to give startups a single pan-European legal form and cut cross-border scaling costs. As part of the post-Draghi competitiveness agenda, it promises a unified market entry across 27 states but raises concerns over labour standards and national co-determination.
Markets are positioned for the European Central Bank to raise its deposit rate by 25 basis points to 2.25% on 11 June 2026, the first move after five consecutive holds since July 2025. A Reuters poll found 59 of 70 economists expect a hike, driven by an energy-led rise in euro-area inflation to 3.0%.
Brent crude jumped close to 6% to around $97 a barrel on Monday 1 June 2026 after Iranian agency Tasnim reported the suspension of nuclear talks with the United States. The reversal reinstates a geopolitical risk premium and complicates the European Central Bank’s policy assessment ahead of its 11 June meeting.
The Bank of England’s next rate decision on 18 June is in sharp focus after the Monetary Policy Committee held Bank Rate at 3.75% in April by an 8-1 vote, with UK inflation at 3.3% and the Middle East energy shock keeping the prospect of higher rates firmly alive.
