UK Economy Holds Up, But Headwinds Are Building

NatWest's Momentum Meets Headwinds argues that the UK economy has proven more resilient than expected, but rising energy prices, slowing business activity and persistent structural weaknesses continue to cloud the outlook.

• The report notes that UK growth has held up better than many surveys suggested, supported by resilient consumer spending and a stronger services sector, although business momentum has begun to soften heading into the summer.

• Renewed tensions in the Middle East have pushed oil prices back toward $90 per barrel and tightened LNG markets, increasing inflation risks and making Europe's efforts to replenish gas storage ahead of winter more difficult.

• While exports have improved, the UK continues to struggle with weak productivity, a persistent goods trade deficit and subdued business investment, leaving the economy vulnerable despite encouraging short-term data.

Read the full report for a broader assessment of the UK economy, inflation and the global macro outlook.