The Global Economy Is Slowing Into Something That Looks Like Stagflation

NatWest’s latest “Rising Growth Risks” note reads less like a warning and more like an early diagnosis: the global economy is entering a phase where growth weakens, but inflation refuses to follow. 

• UK businesses are already feeling the shift: over half expect higher supply-chain costs, while energy and transport disruptions are pushing inflation expectations higher.
• At the same time, forward-looking indicators suggest cooling labour markets and softer hiring, pointing to weakening demand beneath the surface.
• The broader global picture is similar: labour markets remain tight for now, but momentum is fading, leaving economies exposed to persistent inflation combined with fragile growth.

It is an uncomfortable combination. Not a collapse—but not stability either.

And in that kind of environment, policy mistakes tend to matter more than usual.