UK Business Activity Surges to 12-Month High as Economic Momentum Builds

British businesses just hit their fastest operational stride in a year—showing resilience despite regulatory headwinds and fiscal uncertainty.

Growth Catalysts

Multiple sectors report accelerated output, suggesting underlying economic strength rather than temporary spikes. Private enterprises lead the charge while public sector activity follows closely behind.

Market Implications

The surge signals robust domestic demand—enough to make the Bank of England reconsider its cautious stance. Bond markets already price in potential policy shifts.

Of course, City analysts will still find something to worry about—probably blaming Brexit for both the growth and the coming inflation. Typical finance folks: they'd panic if their champagne didn't have enough bubbles.

Hiring remained weak despite strong business activity

Employment measures fell for an eleventh month in a row. Many companies are reporting reduced hiring and layoffs. At the same time, new vacancies have been unfilled, which suggests that companies are cautious when hiring new talent.

The latest Office for National Statistics release also showed that July borrowing was the lowest for that month in three years. Borrowing typically dips in January and July because those months line up with key dates for income-tax payments. That seasonal pattern reflects the calendar of taxpayer deadlines and was visible again this year.

July’s total was helped by a £2.7 billion rise in self-assessed income-tax receipts and by interest payments on government debt coming in lower than expected. Revenues also picked up after the decision in October to raise employer national insurance contributions; the OBR said those payments were almost 24% higher than in July last year, boosting the monthly intake.

Even with the July undershoot, the broader picture is still fragile. From April to July, the first four months of the fiscal year, borrowing reached £60 billion. The running total is broadly in line with the OBR’s forecast published in March. 

The watchdog will issue fresh projections for growth and the public finances alongside the Budget. The Treasury is preparing for the risk that the OBR trims its productivity outlook, a change that WOULD likely push borrowing higher.

On the fiscal rule measure, the current budget deficit, excluding investment spending, stood at £42.8 billion for the year to date, £5.4 billion more than in the same four months of 2024 and £5.7 billion above the OBR’s profile for the period. 

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