Roundtable Highlights: Economic signals and sector predictions 

As 2026 begins, UK lenders are operating in a very different economic environment from the pre-pandemic years. Growth is slower, inflation has eased but not disappeared, and confidence remains fragile.

At Credit Strategy’s first Premium Member Roundtable of the year, senior leaders from across the UK lending market joined James Sproule, Chief Economist at Handelsbanken, to discuss what this means in practice for lenders over the next 12–24 months.

This summary highlights the key signals shaping the outlook.

A steady, but subdued economic backdrop

The UK economy is expected to grow modestly over the coming years. While recession risks have receded, growth is likely to remain below long-term historical averages.

For lenders, this points to a period of stability rather than acceleration. The focus is shifting away from chasing volume and towards sustainable, well-priced lending in the right sectors and regions.

Consumers remain under pressure

Household spending is central to the UK economy, but confidence remains weak.

While wage growth has improved, higher taxes and the lingering impact of inflation mean many households still feel constrained. This has limited the bounce-back in consumer spending that might normally be expected after a period of economic stress.

The result is a cautious consumer who is saving more and spending less than in previous cycles.

Confidence matters more than headlines

One of the strongest themes from the discussion was confidence. Despite improving economic data, many households and businesses remain uncertain about the future.

Frequent policy changes, complex tax measures, and mixed messaging continue to weigh on sentiment. This uncertainty has a real economic impact, delaying investment decisions and holding back discretionary spending.

Higher rates are here to stay

Although interest rates are expected to edge down over time, the era of ultra-low rates is over.

This has important implications for lending markets:

• Credit pricing discipline matters more

• Asset values need to reflect higher long-term rates

• Borrowers face a structurally higher cost of capital

For lenders, this reinforces the importance of risk assessment and long-term resilience.

Property markets remain selective

The UK property market continues to adjust. Affordability has improved slightly, but confidence remains uneven.

Rather than a broad-based recovery, conditions are diverging by region and segment, with stronger demand in attractive regional locations and ongoing weakness in less resilient areas.

Looking ahead

The discussion made clear that 2026 is not about rapid growth or easy wins. Instead, lenders are navigating a more complex environment where patience, discipline, and confidence are critical.

Those able to focus on resilience, understand shifting sentiment, and adapt to structurally higher costs are best placed to find opportunity.

Want the full picture?

This article only scratches the surface of a wide-ranging discussion that covered fiscal policy, inflation risks, geopolitics, taxation, productivity, and long-term structural change.

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