Inside Economy Q2 2026

Christian Spence, Chief Economist at Economic Analytics, has released the latest Inside the Economy report for APSCo members. Here's what this means for the UK economic market and recruitment in Q2 2026.

APSCo members can click below to access the full report.

Some of the key takeaways include:

UK growth: A recovery interrupted

Early 2026 showed promising signs of recovery, but the US-Israel military conflict with Iran and closure of the Strait of Hormuz have significantly darkened the outlook. The Middle East situation is expected to weigh on the UK economy for anywhere between six months and two years.

Inflation heading in the wrong direction:

Inflation - previously expected to return to 2% - is now forecast to reach 3.5 - 4% by Q3 2026, potentially higher if the conflict continues.

Consumer spending:

Retail sales have still not returned overall to their pre-pandemic levels of late 2019, but there has been a steady but slow increase in households desire to spend over the last 12 months or so, which could be attributed to wage growth. Even though household disposable incomes have increased, spending has not increased at the same rate.

What this means for UK recruitment:

The cautious hiring environment of Q1 is set to intensify. Professional services face genuine headwinds, consumer-facing businesses continue to struggle, and clients are likely to become more budget-conscious. The key watchpoint for the rest of 2026 is how long the Strait of Hormuz remains closed and the knock-on impact on inflation and household spending.