The UK economy is expected to face setbacks as the construction sector experiences a significant decline. Economists predict a 0.1% contraction in GDP for June, reversing earlier gains. Analysts from Pantheon Macroeconomics noted a “sharp fall in construction activity” and stagnation in services and production output. Despite some positive indicators, such as increased retail sales, the overall outlook remains cautious. Sanjay Raja from Deutsche Bank stated that household consumption could provide a “modest boost” in the second quarter, but business investment is likely to remain subdued.

Consumer confidence in the UK reached its highest level in 21 months in July, according to Barclays’ survey. About 30% of respondents expressed optimism about the economy, a 6% increase from June. Consumer card spending was up 2% with discretionary spending also up 1.6%.

The Office for National Statistics has said its new so-called Transformed Labour Force Survey is showing lower levels of inactivity due to long-term sickness than the existing Labour Force Survey, which is currently used to produce the UK unemployment figures. It is thought a steep fall in response rates during the pandemic led to an overly pessimistic picture of the UK jobs market. The ONS added that it intended to switch to the new dataset in November 2027.

Ongoing heatwaves have dealt a multi-billion-pound blow to the UK economy, experts suggest. A hit to productivity and retail sales could have cost the country £3bn, says Martin Beck at WPI Strategy, although he admits there is “inevitably a wide margin of uncertainty around that figure.” Heatwaves also mean the UK is paying more for electricity from Europe, with the cost of power imports in May hitting £439m – the highest monthly total ever recorded outside of the Ukraine energy crisis.

Top shareholders of London-listed firms are increasingly resisting takeover bids, fearing buyers are exploiting low valuations. In 2023, there were 154 bids for UK companies valued over £100m, erasing £165bn in market capitalisation. Henrik Persson, head of public M&A at Cavendish, noted: “Investors have become much more willing to be vocal in takeover situations.” While some firms accept initial offers, others, like Segro and Intertek, have pushed back, urging boards to negotiate better deals. Despite this pushback, some companies, like DCC Energy, have accepted controversial offers, highlighting the ongoing tension in the market.

Matt Benchener, the CEO of Hargreaves Lansdown, says in the FT that Britain faces an investment gap, with high capital gains taxes discouraging investment and hindering economic growth.

John Healey, the new Chancellor, will present his first Budget on 28 October. Adam Smith says in the Telegraph that, provided there is no oil shock, Healey should be able to meet his fiscal rules comfortably and therefore have no reason to hike taxes. Smith says that although some of the fiscal headroom has disappeared, there should be higher tax receipts from stronger equity markets. Overall, Smith expects Labour to engage in some political theatre when it comes to devolving power to the regions on Budget day, leaving underlying cost of living struggles unchanged.

Cotswolds District Council and Sefton Council are exploring dynamic pricing for public lavatories, adjusting fees based on demand. Cotswolds is considering higher summer prices, while Sefton plans to install contactless payment systems. Both councils face financial pressures and have not yet implemented these changes. Mike Samoon, a Liberal Democrat councillor, stated: “Dynamic pricing really would give a whole new meaning to spending a penny.” Public lavatories in England have decreased by 14% over the past decade.