Week ahead: UK economy in focus ahead of spending review [Video]

1) UK Unemployment/Wages (Apr) – 10/06 – in an unwelcome sign for the government headline unemployment edged up to 4.5% in March, and the highest level since August 2021. The number of vacancies also saw a sharp drop of 5.3% over the quarter. The construction sector was notable for seeing the biggest decline. There was also evidence of a slowdown in hiring in the retail and hospitality sector, where recent pay growth has risen fast. There were some encouraging signs for the Bank of England as wages slowed to 5.6%, down from 5.9% in February, which while still above the central bank's 2% inflation target may signal that the recent surge in wages could abate quicker than feared. The big concern for the MPC would be if wage growth remained high, something that they do need to consider with the latest public sector pay round coming up, and for unemployment to continue to rise towards 5% by year end.

2) UK Spending Review – 11/06 – next week the government will lay out its plans for its spending over the next 3 years. This will give markets the ideal opportunity to gauge how this government will balance the competing demands of defence, the NHS, the police as well as other public services. Having already caved on the winter fuel allowance, as well as coming under pressure to lift the 2-child benefit cap and pledging to deliver defence spending of up to 2.5% of GDP, as a minimum requirement, it will be interesting to see whether the Chancellors plans add up, and what she will do if they don’t. Any indication that the government doesn’t come across as being serious about the problems facing the UK economy could see the effects play out in the bond market quite quickly.

3)  UK GDP (Apr) – 12/06 – after a strong start to the year, can Q2 sustain the momentum that surprised many people during January, February and March. Although, on a monthly basis the UK economy got off to a slow start with a modest contraction of -0.1%, the February and March readings saw a strong improvement of 0.5% and 0.2% respectively as the economy delivered its best quarter for growth since Q1 of 2024. The challenge now is for recent momentum to be maintained in a month that saw multiple tax increases kick in as well as a number of changes in tax thresholds and increases in national insurance contributions on the part of employers. Some decent wage growth is helping to offset some of the initial impact of these; however, it is also becoming clear that some increases in taxes have managed to reduce the tax take, prompting concerns that more tax increases could well be coming. We’ll also be getting the latest numbers for manufacturing and industrial production which saw large declines in their March output.

4) US CPI (May) – 11/06 – depending on who you talk to, inflation in the US appears to be settling back towards its 2% target, with President Trump once again calling for the Federal Reserve to start cutting rates, as if that will magically lower the cost of borrowing across the economy. As we already know here in the UK markets don’t always work like that, and while headline CPI in the US slowed to 2.3% in April, other key inflation measures are much higher, with core CPI at 2.8%. When one looks at other price metrics like prices paid in the ISM manufacturing survey, they are also well above where the Fed would like them to be, while Trump’s tariffs are also keeping prices high. For now, the US economy continues to look reasonably resilient although the recent ADP jobs report showed some evidence of a slowdown in May, however on the whole there is little sign that the economy is on the cusp of an economic shock at the moment, despite the unpredictable nature of the current US administration.

5)    Tesco Q1 26 – 12/06 – when Tesco reported its full year numbers back in April the shares underwent a sharp decline slipping to a 9-month low, despite a strong set of numbers. The fall proved to be fleeting, in what looks now like a classic bear trap, with the shares this week matching the 11-year highs seen back in February. As a reminder, full year adjusted profits rose 10.6% to £3.1bn. On guidance Tesco said they expected group adjusted operating profit for the upcoming fiscal year to be lower, between £2.7bn and £3bn. LFL sales rose 3.1%, with the UK market seeing a 4% increase, while revenues rose 2.5% to £69.9bn. In a sign that Tesco is already feeling the effects of the increased national insurance and minimum wage costs, which it said would cost it £250m, management announced that some Tesco stores would operate shorter operating hours in an attempt to lower its cost base. The area to keep an eye on as a bellwether to the wider hospitality sector will be its Booker business. This business was the main drag in 2025 when it came to underperformance with LFL sales falling 1.8%, largely due to weakness in its tobacco business as well as the fast-food market serviced by Best Food logistics. This business supplies the likes of Burger King, Pret a Manger, Pizza Express, Zizzi, Nando’s and Pizza Hut and saw a LFL sales decline of 5.1% to £1.44bn.   

6) Bellway and Crest Nicholson trading updates – 10/06 and 12/06 – are housebuilders optimistic about their fortunes as we head into a new tax year, and the elimination of the recent stamp duty tax break. While mortgage demand still looks reasonably healthy there are signs in some areas of slowing prices and activity. When Bellway reported in March the housebuilder said that house completions had risen by 11.3%, and revenues were up 12.3% to £1.43bn for H1, helping to push profit before tax up by 19.9% to £140.8m. With house completions at 4,577 management said that they remained confident to deliver 8,500 for the full year, and for full year selling prices to be around £310k, and underlying operating margin of 11%. With the shares still below pre budget levels a good set of numbers could help reverse those losses further. Crest Nicholson was also optimistic in March and like Bellway has seen its share price improve since then. They reported an encouraging start to the year saying that trading was in line with expectations but did warn that slower interest rate increases could weaken demand.   

7) Apple WWDC – 09^th to 13/06 – this is always a keynote event for Apple watchers and even more so at a time when Apple needs to show that it can compete in the AI sphere at a time when technological progress is moving at breakneck speed. With the likes of Microsoft, Alphabet and Amazon leading the way the iPhone and Siri is lagging behind. Aside from that there is some talk that the iOS operating system could get a complete redesign so that it has a similar look and feel across all of its suite of products. There is also chatter that its new visionOS 26 could introduce new gaming features for the Apple Vision Pro. This is an area where Apple could make some progress, especially since VR gaming is still in its infancy with very few games available in this genre.   

8) GameStop Q1 26 – 06/06 – we’ve seen slow progress on GameStop since the company reported in Q4, with the shares pushing up to their highest level in almost a year this month. The shares briefly dipped to a four-month low in the aftermath of their last set of numbers before rebounding from $21. Net sales fell to $1.28bn in Q4, a sharp fall from the $1.79bn the previous year, however profits were much better than expected, coming in at $131.3m, over double from the same period a year ago. On the full year numbers there was a similar drop in revenue, down from $5.27bn to $3.8bn, however profits were much better due to its closing loss making operations in Italy, as well as Germany. With money now burning a hole in its pocket the shares dropped sharply this week after the company announced it had made its first investment in bitcoin, buying $512.6m in a move that could well backfire on it. GameStop does have previous when it comes to questionable investments, at market tops, namely crypto exchange FTX, as well as NFT’s, or non-fungible tokens, both of which cost the company millions of US dollars.