NatWest’s latest UK macro note argues Britain had begun to build a fragile recovery, but the Middle East conflict has reversed sentiment and revived inflation pressure before momentum could fully take hold.
- UK GDP rose 0.5% month-on-month in February, beating expectations and showing broad-based early-year strength.
- March PMIs then softened as energy costs rose and business confidence weakened.
- NatWest notes regional activity deteriorated sharply, with only 6 UK regions expanding, down from 10 the prior month.
- The IMF now expects the UK to suffer the largest growth downgrade among advanced economies, cut to 0.8% for 2026 from 1.3% previously.
The underlying message is blunt: Britain may have escaped stagnation, only to be dragged back by imported energy shocks.
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