Please see below, an article from EPIC Investment Partners providing a brief analysis of the UK economy following the recent GDP data release. Received today – 12/06/2025
The UK economy is exhibiting increasing signs of strain, with multiple indicators pointing to a marked downturn. The labour market, a key barometer of economic health, is under growing pressure. According to the Office for National Statistics (ONS), the unemployment rate has climbed to 4.6%, the highest level in four years, accompanied by weakening wage growth and significant job losses across critical sectors.
This uptick in unemployment follows April’s policy changes, including an increase in payroll taxes and the national minimum wage, part of Chancellor Rachel Reeves’ latest Budget. Wage growth has also faltered, with average weekly earnings (excluding bonuses) rising just 5.2%, below expectations and down from 5.5% previously. Growth in private sector pay has been particularly subdued, with recent public sector pay deals providing only modest support.
At the same time, consumer spending is showing signs of fatigue. Retail sales growth in May slowed to just 1%yoy, the weakest pace of 2025 and well below both the year-to-date average of 2.5% and April’s inflation rate of 3.4%, indicating a decline in real-term spending. According to the British Retail Consortium (BRC), lower consumer confidence is leading shoppers to cut back on discretionary purchases, particularly fashion and high-ticket items. While food sales remained resilient, the broader retail picture is increasingly fragile.
Financial markets responded, sterling fell against the dollar, while expectations for a Bank of England interest rate cut shifted to September (from November).
Attention now turns to Chancellor Reeves’ Spending Review later today, where a credible response to these gathering challenges will be closely scrutinised.
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Alex Kitteringham
12th June 2025