Leading Indicators - Shifting ground: weak productivity, stronger investment
Here we look at the leading indicators in the world of economics. For in-depth analysis into commodities, trade, equities and more.
Stuck in low gear, will tech change the trend?
The OBR鈥檚 anticipated downgrade to productivity forecasts highlights the UK鈥檚 long-standing productivity challenges, a structural drag on growth potential and fiscal flexibility. However, the recent £150bn in US investment tied to the UK-US tech deal, including Microsoft鈥檚 UK data centre expansion and joint AI commitments may offer a potential offset. These inflows could support efficiency gains, narrow the productivity gap, and improve the UK鈥檚 medium-term outlook within Reeves鈥� fiscal framework.
Unlocking growth through infrastructure investment
The UK has approved Gatwick鈥檚 £2.2bn second runway, a project aligned with Starmer鈥檚 infrastructure agenda and expected to create 14,000 jobs. The expansion will add around 100,000 flights a year, lift capacity to 80m passengers, and inject an estimated £1bn annually into the economy. For UK CRE, these developments could potentially signal stronger logistics and hospitality demand around key hubs, reinforcing investor confidence in real assets.
All Property returns eased, but Retail still leads鈥�
In the latest IPF survey, the 2025 All Property total return forecast has been revised down by -70bps to +7.4%, driven by a weaker capital value growth outlook (from +3.2% to +2.5%). Between 2025-2029, both Retail Warehouse and Shopping Centres are expected to be the best performing sector with a total return of +8.4% pa (per annum).
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