In the aftermath of the shock win for leave in the UK’s referendum on EU membership, there has been considerable uncertainty over the short- and long-term impacts on the UK economy. This report provides an overview of the impact Brexit has had on key economic indicators such as GDP, interest rates, unemployment and the housing market, and the subsequent impact on consumer confidence and retail growth and projections. Read More

The economy of the United Kingdom shrank by 0.3 percent in April 2025, after growing by 0.2 percent in March 2025. As of the most recent month, the UK economy is around 4.2 percent larger than it was in February 2020, just before the start of COVID-19 lockdowns. After a record 19.6 percent decline in GDP in April 2020, the UK economy quickly returned to growth in the following months, and grew through most of 2021. Cost of living crisis lingers into 2025 As of December 2024, just over half of people in the UK reported that their cost of living was higher than it was in the previous month. Although this is a decline from the peak of the crisis in 2022 when over 90 percent of people reported a higher cost of living, households are evidently still under severe pressure. While wage growth has outpaced inflation since July 2023, overall consumer prices were 20 percent higher in late 2024 than they were in late 2021. For food and energy, which lower income households spend more on, late 2024 prices were almost 30 percent higher when compared with late 2021. According to recent estimates, living standards, as measured by changes in disposable income fell by 2.1 percent in 2022/23, but did start to grow again in 2023/24. Late 2023 recession followed by growth in 2024 In December 2023, the UK economy was approximately the same size as it was a year earlier, and struggled to achieve modest growth throughout that year. Going into 2023, a surge in energy costs, as well as high interest rates, created an unfavorable environment for UK consumers and businesses. The inflationary pressures that drove these problems did start to subside, however, with inflation falling to 3.9 percent in November 2023, down from a peak of 11.1 percent in October 2022. Although relatively strong economic growth occurred in the first half of 2024, with GDP growing by 0.7 percent, and 0.4 percent in the first two quarters of the year, zero growth was reported in the third quarter of the year. Long-term issues, such as low business investment, weak productivity growth, and regional inequality, will likely continue to hamper the economy going forward.

The UK’s total loan balances outstanding (including credit card balances, personal loan balances, and residential mortgage balances outstanding) recorded a compound annual growth rate (CAGR) of 3.3% during 2014-18 to reach £1,626.6bn ($2,075.6bn). The majority of loan balances outstanding are from home loans, with residential mortgage balances outstanding accounting for 86.7% of total balances in 2018, followed by personal loans (8.8%) and credit cards (4.5%). However, uncertainty on account of Brexit and its impact on the economy will affect the growth of total loan balances outstanding in the coming years. As a result, we estimate total loan balances outstanding to record a subdued CAGR of 2.7% over 2019-23. The UK lending space is dominated by Lloyds Banking Group, Barclays, and RBS Group – a trend that is anticipated to continue over the coming years. However, they may face increased competition from non-bank lenders, digital banks, and digital lending platforms breaking into the market and offering low interest rates and hassle-free loan approvals. The savings market in the UK recorded a CAGR of 3.9% over 2014-18 to reach £1,433.7bn ($1,829.4bn) in 2018. The market grew at a higher rate compared to loan balances during the five-year review period due to economic uncertainty surrounding Brexit. Read More

During 2022, the GBP/USD exchange rate reached its lowest value ever recorded, after the UK government announced its initial plans to combat inflation. Prices did increase again after these plans were turned back shortly after. As of June 27, 2025, one pound was valued at roughly 1.37 U.S. dollars. What affects an exchange rate? There are several factors that can impact an exchange rate. In terms of the current situation, the political and economic standings surrounding Brexit is probably the largest driver in the current form of the British pound. Other factors include inflation and interest rates, public debts, deficits as well as the country's export prices to import prices ratio. British pound to Euro Since the United Kingdom (UK) held a referendum on its European Union membership in June 2016, the British pound's (GBP) standing against the Euro has also been impacted. During the first half of 2020, the British pound against the Euro weakened overall.

Volatility in financial markets has been high in recent years, which has, at times, benefitted the brokerage industry through greater trading activity as investors look to capitalise on price swings. Most notably, the COVID-19 pandemic, the Ukraine conflict and aggressive interest hikes from Central Banks facing rampant inflation have incited severe volatility. Revenue is expected to grow at a compound annual rate of 2.7% over the five years through 2023-24 to £38.1 billion, including estimated growth of 3.9% in 2023-24. Although volatility can benefit the industry, it can also deter investors, incentivising them to delay investments until economic uncertainty subsides. In recent years, uncertainty has mainly stemmed from the aggressive interest rate hikes and their expected trajectory, hitting stock and bond markets in 2022 and hurting trading activity. Although interest rate uncertainty persisted going into 2023-24, stock markets improved thanks to exceptional growth from large-cap tech stocks and a sharp rally at the end of the year as investors bet on the end of rate hikes. Competition has softened as considerable consolidation activity has occurred between SMEs in the brokerage industry. However, the Markets in Financial Instruments Directive II has ramped up operating costs for brokerage firms, hurting profitability. Continued investment in software to help automate compliance procedures have benefitted margins, although the brokerage industry remains labour-intensive. Revenue is forecast to grow at a compound annual rate of 3.5% over the five years through 2028-29 to £45.2 billion, while the average industry profit margin is expected to reach 24.8%. The market narrative for interest rates is higher for longer, weighing on stock markets and hitting demand for brokers as trading activity slows. However, rate cuts are expected to occur in the second half of 2024-25, supporting bond values and stocks driving revenue growth in the short term. Further regulations related to Basel III are set to come into force in January 2025, adding pressure to brokers' operating costs. Due to Brexit, large international brokers are also shifting employees to overseas domiciles, adding downward pressure to revenue growth.

Metal structure manufacturers have faced a series of hurdles in the past years, as macroeconomic headwinds dampened downstream demand from key markets, mainly construction. Over the five years through 2024-25, metal structure makers' revenue is forecast to fall at a compound annual rate of 2.2% to £8.4 billion. Metal structure manufacturers faced considerable challenges in 2020-21. Supply chain disruptions, economic instability and fluctuating commodity prices, particularly steel, tanked revenue. Costs associated with raw materials, mainly influenced by steel prices, were passed through the supply chain, resulting in lower-end prices and diminished profitability. Despite a rebound in 2021-22, revenue dipped over the two years through 2023-24 amid rising inflation and project delays in the construction sector. Commercial construction has been a key support for the industry, especially as business capital expenditure is rising in 2024-25, boosting structural steel sales, particularly for multi-storey office buildings and large-frame projects. Government initiatives like the Help to Buy scheme and the Housing Infrastructure Fund have also bolstered residential construction, somewhat offsetting the adverse effects of falling prices and surging interest rates limiting residential construction activity. Looking ahead, Brexit-induced trade challenges pose a significant threat to the industry's steel supply. Sales to the commercial and residential construction sector are expected to climb, driven by government policies and investments in infrastructure projects like the High Speed 2 railway and Hinkley Point C power station. Mitigating international competition through measures like tariffs on Chinese steel could provide some relief for domestic manufacturers, enabling them to better compete in a fluctuating global market. The industry’s outlook relies heavily on navigating these trade regulations and maintaining a steady supply chain. Metal structure manufacturers' revenue is forecast to creep upwards at a compound annual rate of 1.6% over the five years through 2029-30 to £9.1 billion.

Fasteners are essential components in many products and structures, and UK manufacturers typically target niche high-value segments, like the aerospace and automotive sectors. The domestic industry is small compared with the global market, and most UK companies are subsidiaries of foreign-owned global companies. A booming UK construction activity and resilient industrial production sector supported revenue growth and fastener sales. However, motor vehicle manufacturing contracted amid high uncertainty following the EU referendum. The weak pound has aided export growth, but intense import penetration from overseas manufacturers has intensified competition. Over the five years through 2023-24, industry revenue is expected to drop at a compound annual rate of 0.7% to £752.6 million. The economic downturn caused by the COVID-19 outbreak significantly reduced manufacturing revenue over 2020-21, exacerbated by disrupted supply chains, trade flow and weak investment. 2021-22 and 2022-23 saw a recovery in the UK construction and manufacturing sector, contributing to a 12.5% rebound in revenue. Over 2023-24, revenue is forecast to edge downwards by 0.3% as downstream markets face sky-high inflation and high-interest rates. Fierce import competition and supply chain bottlenecks have constrained profitability since the COVID-19 outbreak, preventing manufacturers from expanding output capacity. At 5.7%, the average industry operating margin remains below pre-pandemic levels over 2023-24. Over the five years through 2028-29, industry revenue is forecast to expand at a compound annual rate of 2.4% to reach £846.9 million. Domestic and foreign downstream market activity will drive revenue opportunities, particularly within the automotive and aerospace sectors. UK industrial production activity will improve as the UK slowly overcomes the slow puncture of Brexit on the economy and raises its productivity to the levels seen across the G7. A free trade deal between the UK and the EU will minimise the export disruption associated with Brexit. Assisted by government schemes, residential construction activity will continue expanding. However, the rising value of the pound could weigh on export prospects.

The Temporary-Employment Placement Agencies industry revenue is forecast to decline at a compound annual rate of 1% to £56.7 billion over the five years through 2024-25. The COVID-19 outbreak meant key employers of temporary workers in the sports and music events spaces completely shut their doors and businesses froze hiring, reducing clients for agencies. Sign-ups for temporary employment declined, hitting revenue in 2020-21. Companies pressed play immediately on hiring as the economy reopened in 2021-22 with record vacancies, particularly in the service sector, boosting revenue for recruiters since. A tight labour market is encouraging employers to rely on temporary-employment placement agencies to fight in an increasingly competitive market. Revenue is expected to rise by 1% in 2024-25. Rises in the National Living Wage (NLW) have disincentivised hiring additional staff to some extent. The NLW grew again to £11.44 in April 2024, raising the cost of temporary hires. With economic uncertainty continuing to dampen employer and candidate confidence in the two years through 2024-25, most recently stemming from the Autumn 2024 Budget that will increase employer national insurance contributions, businesses have slowed their hiring activity, disrupting agencies since there are fewer jobs to fill. This has dented the profit of many agencies who have had to cut costs by laying off employees throughout 2024-25. Inactivity is another mounting problem that recruiters are being confronted with. The number of available temporary employment positions has overall remained subdued in the aftermath of the COVID-19 outbreak due to widespread business uncertainty amid an inflationary environment, Brexit-related recruiting challenges and high interest rates, limiting industry revenue growth. Still, temporary placements have fared better than permanent positions. Agency revenue is anticipated to climb over the five years through 2029-30 at a compound annual rate of 2.3% to £63.4 billion. Legislation relating to wage rates will adversely affect agencies, with a rising National Minimum Wage dampening demand for low-wage temporary employees. A talent shortage in the UK workforce will continue to challenge companies looking to fill vacancies, which are set to remain historically high despite gradually falling. Employers will keep turning to placement agencies for their databases to track and identify the right candidates. The gig economy is exhibiting signs of thriving through 2029-30, with the ONS anticipating 14.9 million participants in some capacity by 2026, another positive signal for temporary-employment placement agencies.

The staycation trend has been a key driver of demand for caravan and camping sites. The plunge in the pound's value following the Brexit vote made the UK a more affordable destination for international and domestic holidaymakers. Many Britons have looked to UK holiday hotspots for quick domestic retreats to replace holidays abroad. However, high competition, forced closures during the COVID-19 outbreak and recent inflationary pressures have hindered site operator’s performance. Revenue is expected to mount at a compound annual rate of 0.6% over the five years through 2024-25 to £4.7 billion, including a 1.6% hike in 2024-25. Domestic tourists drive demand in the caravan and camping holiday market. The forced closure of caravan and camping sites when COVID-19 restrictions caused revenue to tumble over 2020-21. However, the pandemic accelerated the staycation trend, helping site operators quickly bounce back, with long international travel rules and health fears enticing many Britons to holiday domestically. After a sharp uptick in 2021-22, revenue growth had been subdued due to the cost-of-living crisis restricting consumer spending. In combination with poor weather, this has restricted domestic travel and spending over the two years through 2023-24. Nonetheless, severe inflation also forced sites to hike their prices, benefitting revenue. In 2024-25, subsiding inflation and improving consumer confidence support domestic holidaying; however, lingering financial difficulties and heightened uncertainty suppress holiday spending and weaken the number of domestic trips, restricting revenue growth in 2024-25. Intense competition and higher operating costs, mainly wages, have weighed on site operators’ profitability. Revenue is forecast to swell at a compound annual rate of 3% over the five years through 2029-30 to £5.5 billion. Despite the recent slowdown, domestic tourism will flourish as Britons seek quick getaways in rural areas. Domestic outdoor trips will be aided by improving finances, amid anticipated falls in inflation and interest rates, and the digital detox trend, where consumers seek to disconnect from screens. Glamping opens up opportunities for sites to attract a broader range of guests and charge premium rates, boosting revenue and profit. Improving economic conditions will make people more willing to spend on holidays, but will also likely encourage more Britons to replace camping breaks for foreign holidays or to stay at other holiday accommodation types. Rising price pressures and elevated wages will constrain profit growth.