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Halifax reports the average UK house price at £298,806 in May 2026, a third consecutive monthly fall of 0.1%. Average prices peaked in February 2026 at £301,051; March, April and May each recorded a decline. Annual nominal growth, at +0.5%, is barely distinguishable from zero.

The annual growth rate has fallen from 2.8% in May 2025 to 0.5% now. Adjusted precisely for CPI inflation of 2.8%, house prices are falling by about 2.3% a year in purchasing-power terms. For households already carrying higher mortgage, energy and everyday living costs, that represents a quiet but meaningful erosion on the asset side of the balance sheet.

First-time-buyer annual growth is a modest +0.3%, confirming that the entry tier remains under sustained affordability pressure. Halifax points to Middle East uncertainty, inflation expectations and mortgage rates remaining above their January levels. Premium southern markets are bearing the greatest weight: higher valuation multiples amplify rate sensitivity, and the repricing in London and the South East reflects that directly.

12-month price trend — May 2025 to May 2026 Average price peaked in February 2026 at £301,051 — three consecutive monthly declines followed

Business employment expectations weaken again Expected Employment Growth Over the Next Year — 3-Month Average (%)

The Bank of England's Decision Maker Panel — a monthly survey of chief financial officers — shows expected employment growth at −0.28% in the three months to May 2026. The series began a marked descent after late 2024, first moved below zero in September 2025, briefly recovered in February and March 2026, and returned to negative territory in April and May.

The Bank's analysis indicates that firms planning to reduce employment in response to higher employer National Insurance contributions report materially weaker employment expectations, although the tax change is not the only force at work. Services firms and smaller employers remain particularly exposed to higher labour costs and weak demand. The next ONS labour-market release is Thursday 18 June, that will provide the next hard-data test of whether the survey deterioration is feeding through into payrolls, unemployment and earnings.

Source: ONS Business Insights & Conditions Survey, May 2026

Above 50 = expansion; below 50 = contraction. The composite at 49.7 is marginal, but construction at 38.2 is the real story — fastest contraction since May 2020, new orders falling at their sharpest in six years. The government's housebuilding ambitions are running into a contractor base under genuine strain. Planning reform cannot fix weak demand or expensive finance.

Manufacturing at 53.9 is the exception, though much of the strength reflects precautionary stock-building rather than underlying demand. The broader picture is deteriorating.

The OECD's June 2026 outlook cuts through the government's growth narrative. UK GDP at sub-1% for 2026 is weak in absolute terms and against peers — the US holds at 2.0%, even Canada recovers to 1.7%. Britain's direction is downward, not upward.

The core problem is structural. Fiscal buffers are thin, the deficit is above 4% of GDP, debt is heading through 105%, and the Chancellor's rules are under formal pressure. Add a 3.7% inflation forecast driven by energy costs, and the Bank of England faces a stagflationary squeeze — slowing growth and sticky prices simultaneously. That's not a scenario standard monetary policy handles well. Unemployment reaching 5.5% is the labour-market consequence, compounded by higher employer NICs making it more expensive to hire precisely when demand is softening.

The housing market is fading from its pre-conflict peak. Completions will likely remain soft through Q2 and Q3 as the approval pipeline normalises. Consumer credit growth at 8.8% — unchanged from March — is holding up household spending, but it is borrowed resilience rather than income-driven demand. Business credit is a genuine bright spot: annual growth of 9.4%, with large firms at 12.3%. Broad money is no longer contracting. Taken together, this is an economy muddling through at low speed — neither in recession nor growing in any way that addresses the underlying productivity gap.

Gilts continue to provide an uncomfortable backdrop for a government with a heavy financing requirement and thin fiscal headroom. US equities turned red into the close as strong jobs data pushed back Fed easing expectations and renewed Middle East risk added to the caution. Friday's April GDP will sharpen the domestic easing debate, but the gilt response depends on composition as much as headline.