With the budget over, bar the inquest<\/a>, attention is again turning to the health of the UK economy.<\/p>\n We\u2019ll get a healthcheck on Britain\u2019s manufacturing sector this morning, and an assessment of the mortgage and credit market but first, there are a flurry of economic surveys to digest.<\/p>\n KPMG<\/strong> have predicted that the UK economy will cool in 2026 as weak consumer sentiment and a slowing job market weighs on growth. They predict UK GDP will rise by 1.0% in 2026, down from 1.4% in 2025, with unemployment rising next year too.<\/p>\n That\u2019s a weaker forecast than the Office for Budget Responsibility \u2013 which predicted last week that growth would fall to 1.4% in 2026 from 1.5% this year.<\/p>\n KPMG<\/strong> UK\u2019s<\/strong> latest Economic Outlook also predicts the unemployment rate will rise to 5.2% in 2026, reflecting slower hiring, increasing participation and job cuts as companies look to automate some job fnctions.<\/p>\n Wage growth is expected to slow, falling towards 3% by mid-2026 \u2013 something that might encourage the Bank of England to lower interest rates.<\/p>\n Yael Selfin, <\/strong>chief economist at KPMG<\/strong> UK<\/strong>, said:<\/p>\n \u201cThe outlook for growth in 2026 is subdued, reflecting the impact of a cooling labour market and weak household spending. But there are pockets of strength emerging in the form of data infrastructure and green energy investment. The medium-term picture could improve further if planning reforms unlock housing delivery and uncertainty reduces for investors.<\/p>\n \u201cWith ongoing headwinds continuing to weigh on household activity, consumer spending is likely to remain subdued over the coming year. Although the Autumn Budget avoided front-loaded tax hikes, the decision to maintain frozen tax thresholds until 2031 means that fiscal drag will persist.\u201d<\/p>\n<\/blockquote>\n The CBI<\/strong> also have downbeat news \u2013 they report that business sentiment and activity dropped further across the services sector in last three months.<\/p>\n The CBI\u2019s<\/strong> latest Service Sector Survey found that business volumes dropped again, marking over a year of declines. Meanwhile, average selling prices were unchanged despite cost growth remaining elevated.<\/p>\n Looking ahead, service sector firms expect volumes to keep falling over the next quarter.<\/p>\n And to round off the gloom, the IoD Directors\u2019 Economic Confidence Index<\/strong> has remained at a record low.<\/p>\n The index was unchanged at -73 in November, matching October\u2019s reading, but did inch up to -72 immediately after the budget.<\/p>\n The agenda<\/p>\n 9am GMT: Eurozone manufacturing PMI report<\/p>\n<\/li>\n 9.30am GMT: UK consumer credit and mortgage approvals<\/p>\n<\/li>\n 9.30am GMT: UK manufacturing PMI report<\/p>\n<\/li>\n 3pm GMT: US manufacturing PMI report<\/p>\n<\/li>\n<\/ul>\n Share<\/a><\/p>\n Key events<\/p>\n Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/p>\n Alexander Wheeler<\/strong>, analyst at RBC<\/strong>, had correctly predicted the market reaction to the collapse of the \u00a35.3bn infrastructure merger, telling clients:<\/p>\n HICL and TRIG have announced the proposed combination of the two funds will not be pursued following broad engagement with HICL shareholders which means it no longer expects the transaction to achieve sufficient shareholder approval.<\/p>\n We think a larger, higher-return combined vehicle had merits but the pricing of the deal on a NAV-NAV basis despite a c.11% delta in the funds\u2019 share price discounts to NAVs had been a key focus for HICL shareholders.<\/p>\n We would expect this announcement to be positive for HICL shares and negative for TRIG shares this morning.<\/p>\n<\/blockquote>\n Share<\/a><\/p>\n The stock market is open, and investors are giving their verdict on the collapse of the HICL\/Trig merger.<\/strong><\/p>\n Shareas in HICL<\/strong> have jumped 4.2%, putting them on the top of the FTSE<\/a> 250 index of medium-sized companies.<\/p>\n But Trig<\/strong> are the worst-performing FTSE 250 member \u2013 its shares are down 4.9%.<\/p>\n Share<\/a>Oil price up 2% after Opec+ decision and Ukraine attacks<\/p>\n The oil price has jumped this morning, after the Opec+ cartel agreed to leave output unchanged and Ukraine attacked two Russian \u2018shadow fleet\u2019 tankers.<\/strong><\/p>\n Brent crude is up around 2% this morning, hitting $63.82 per barrel for the first time since 20 November.<\/p>\n The rise comes after Opec+ decided to stick with their existing plans to pause production increases during the first quarter of 2026, amid growing signs of a glut in global oil markets.<\/p>\n Ipek Ozkardeskaya<\/strong>, senior analyst at Swissquote, <\/strong>explains:<\/p>\n US crude is up more than 2% this morning as OPEC reiterated yesterday that they want to stabilise oil prices into next year, implying tighter control of output to address the supply glut that has weighed on prices \u2013 except during brief periods of geopolitical tension.<\/p>\n And even those tensions haven\u2019t been enough lately to bring buyers back, which shows how much oil is currently sloshing around the planet. As discussed in previous reports, OPEC alone can\u2019t reverse the broader negative price dynamic, but it can help put a floor under the latest selloff.<\/p>\n<\/blockquote>\n The attack by Ukrainian naval drones on two sanctioned tankers in the Black Sea could also indicate that supplies from Russia will be lower than expected, especially as the Caspian Pipeline Consortium, which handles more than 1% of global oil, halted operations last weekend after a mooring at Russia\u2019s Black Sea terminal was significantly damaged by a Ukrainian naval drone attack.<\/p>\n Share<\/a><\/p>\n China\u2019s factory activity unexpectedly contracted last month, new data today shows, with demand remaining soft.<\/strong><\/p>\n The RatingDog China General Manufacturing PMI, conducted by S&P Global, dropped to 49.9 in November, below analysts\u2019 expectations of 50.5. That suggests a very small dip in activity.<\/p>\n \u201cManufacturing production growth came to a halt as new orders nearly stalled in November,\u201d S&P Global and RatingDog said in a statement.<\/p>\n Yao Yu<\/strong>, founder of financial technology company RatingDog<\/strong>, added:<\/p>\n \u201cManufacturers reduced their workforce and purchasing volume, and became more cautious in inventory management.\u201d<\/p>\n<\/blockquote>\n Share<\/a>\u00a35.3bn infrastructure merger collapses after investor revolt<\/p>\n Just in: A deal to create the largest listed UK infrastructure investment company has collapsed.<\/strong><\/p>\n The propsed combination of two UK infrastructure investment companies, HICL<\/strong> Infrastructure<\/strong> and the Renewables<\/strong> Infrastructure<\/strong> Group<\/strong> Limited<\/strong> (TRIG),<\/strong> would have created a new investment trust worth \u00a35.3bn. However, it has failed to win enough support following a revolt by investors in HICL<\/strong>, which had proposed the merger with fellow FTSE<\/a> 250 member, TRIG<\/strong>.<\/p>\n In a statement this morning, the two companies say the proposed combination will not proceed, adding:<\/p>\n Both Boards remain convinced of the strategic rationale for the combination. However, following broad engagement with shareholders, the HICL Board determined that it cannot progress the transaction without a substantial majority of support from its own investors.<\/p>\n<\/blockquote>\n HICL\u2019s<\/strong> investments are focused on infrastructure in hospitals, schools and transport, while Trig<\/strong> invests renewable energy sources such as wind farms, solar and battery plants.<\/p>\n A group of HICL<\/strong> investors had opposed the deal, claiming it had been priced and structured to favour Trig<\/strong>.<\/p>\n Trig\u2019s board say they regret that investors won\u2019t get to vote on the deal.<\/p>\n Richard Morse<\/strong>, chair of TRIG<\/strong>, says:<\/p>\n \u201cOur focus now returns to delivering TRIG\u2019s attractive standalone strategy. TRIG is a well-established platform with high quality assets, a competitive pipeline of opportunities, and deep renewables and energy storage expertise.<\/p>\n We are uniquely placed to capitalise on the demand growth for low carbon, reliable power and to capture the commercial opportunities as economies across the UK and Europe electrify and decarbonise. Doing so will allow us to deliver sustainable value and growth for our shareholders, with whom we will continue to engage on the path ahead.\u201d<\/p>\n<\/blockquote>\n Share<\/a><\/p>\n Updated at\u00a002.33 EST<\/p>\n Introduction: UK economic growth forecast to slow next year as unemployment rises<\/p>\n![\"KPMG\u2019s](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/12\/726.jpg\")
KPMG\u2019s economic forecasts, December 2025 Illustration: KPMG<\/p>\n\n
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