Time to wrap up….

The mood among UK households about their finances is “dismal”, according to research which suggested consumer spending remains sluggish and debts are mounting.

Consumer confidence in the UK is running at its lowest level in two years, a survey by S&P Global found, as households worry about their debts, their future financial prospects, and their savings.

S&P said consumers’ pessimism “matches the dismal weather seen so far this year” and said the recent wet weather had “not helped to lift the low spirits seen among households”.

The UK Consumer Sentiment Index survey, which has been running since 2009, posted a reading of 44.8 in February. Any reading above 50 signals a general improvement in consumer confidence, while anything below suggests a deterioration.

While this month’s index reading was up slightly from 44.6 in January, it remained among the weakest figures over the past two years. The S&P report contrasts with recent business surveys, which have suggested a rise in optimism among companies since the start of the new year after uncertainty over the government’s autumn budget lifted.

In other news

• Bad weather in Europe and North Africa is expected to hit supplies of fruit, and could also boost Morocco’s wheat production significantly

• Japan and Switzerland have both avoided falling into recession…

• …while Israel’s growth rate picked up last year.

• The asking average price on UK houses was flat last month,

• Defence company stocks have rallied, on reports that the UK goverment is considering accelerating its plans to boost spending on the sector

UK government borrowing costs are likely to fall significantly by the end of this year, Goldman Sachs have predicted today, as political uncertainty eases.

Goldman analyst George Cole predicted that the yield, or interest rate, on 10-year UK bonds will fall to 4% by the end of this year down from 4.4% today.

Cole points out that UK bond yields have risen this year, coinciding with “with a rise in political uncertainty” (which culminated in Keir Starmer surviving a threat to his leadership last week).

With the upcoming Greater Manchester by-election on 26 February and local elections on 7 May, ongoing political uncertainty is likely to keep the “risk premium” on UK bonds elevated, Cole predicts – but it should still ease through the year:

Meanwhile, the ongoing decline in macro uncertainty, further disinflation, and the prospects for more BoE rate cuts all tighten the bounds on potential moves in Gilts.

While UK risk premium and political uncertainty will likely remain elevated through upcoming local elections, we think the favourable macro backdrop will drive Gilt yields lower.

We have a third growth report today – and this one shows that Israel’s economic growth accelerated last year for the first time since the start of the war in Gaza.

Israel’s economy grew 3.1% in 2025, official data showed on Monday, rebounding from a slowdown to just 1% growth in 2024.

Growth last year was led by a 7.1% rise in investment and a 5.9% gain in exports, along with a modest uptick in consumer spending. Heavy state expenditure during the two-year Gaza war, particularly on defence, gave an added boost to the economy, Reuters reports.

Israel’s economy grew at an annualised rate of 4.0% in the fourth quarter of 2025, with GDP supported by a 33% jump in exports following the October ceasefire between Israel and Hamas.

The Israeli economy grew by 2.1% in 2023 – the year of the October 7 attack – and 1% in 2024.

Growth is expected to continue in 2026.

Yonie Fanning, chief strategist at Mizrahi Tefahot Bank, said:

“The economy is recovering.

The indications for the first quarter of 2026 are also positive - you see that in the trade balance data, etc. So I think it ... sets the basis for continued recovery.”

Britain’s financial watchdog has fined the former chief executive of construction firm Carillion almost a quarter of a million pounds for his part in misleading statements before the company’s collapse eight years ago.

The Financial Conduct Authority has fined Richard Howson £237,700, after finding that he had failed to reveal Carillion’s serious financial troubles in company announcements or alert its board and audit committee.

The FCA found that Howson acted recklessly and was knowingly concerned in breaches by Carillion of the Market Abuse Regulation and the Listing Rules.

Steve Smart, executive director of enforcement and market oversight at the FCA, said:

‘Carillion’s failure was significant. Jobs were lost, public sector projects put at risk and investors, who trusted the company to give them accurate information, suffered large scale losses. That’s why the FCA worked diligently to hold the company and its senior leaders to account.’

Last month, the FCA fined two former Carillion finance directors – Richard Adam and Zafar Khan – for misleading investors before Carillion entered liquidation with £7bn of debts in January 2018, resulting in 3,000 job losses.

The wet weather which has been hitting Europe and northern Africa in recent weeks is hurting fruit production, but is good news for wheat farmers.

In Morocco, grain traders are expecting the cereals harvest to double this season after abundant winter rains.

Omar Yacoubi, head of Morocco’s wheat trading federation FNCL, told Reuters:

“We expect a good cereals harvest this year of 8 to 9 million tons, including around 5 million tons of soft wheat.”

The previous harvest was 4.4 million tons, including 2.4 million tons of soft wheat.

But heavy rain, and floods, have badly damaged fruit farmers in Morocco and Spain, as journalist Harry Wallop shows here on X:

Food supply company Fresh Direct has warned that the availability of ‘multiple products’ will be affected for “some time due to delayed plantings and weatherrelated quality issues”.

Fresh Direct explains:

Poor weather continues across several key European growing regions, with storms and heavy rainfall disrupting both harvest and transport.

This affects quality, availability and logistics, with ferry routes struggling to recover from delays.

Britain’s auditors regulator is considering allowing firms from China listing in London to apply Chinese Standards on Auditing for UK listing purposes.

It’s all part of the government’s push to boost UK economic growth and increase the competitiveness of London’s financial markets.

The Financial Reporting Council (FRC) says it is consulting on an amendment to its Third Country Auditor (TCA) policy, to temporarily permit auditors of Chinese-registered entities listing Global Depositary Receipts (GDRs) in London to use Chinese Standards on Auditing (CSAs) for UK listing purposes.

GDRs represent shares in a foreign company which are traded on a local stock exchange, allowing investors to get access to the stock without a full-blown primary stock market listing.

The eurozone’s factory sector ended 2025 with its biggest monthly fall in activity since last April.

Eurozone industrial production fell by 1.4% month-on-month in December, statistics body eurostat reports, led by a decline in capital goods (physical assets such as tools and machinery).

The survey found that industrial production:

• decreased for intermediate goods by 0.1%,

• decreased for energy by 0.3%,

• decreased for capital goods by 1.9%,

• increased for durable consumer goods by 0.2%,

• decreased for non-durable consumer goods by 0.3%.

UK consumer sentiment continued to sink this month, as households grow more worried about debt levels.

A poll of consumer confidence from data firm S&P Global has found that morale continued to drop in February, although not as quickly as in January.

The report shows:

• Consumers signal stronger rise in debt alongside a quicker deterioration in loan availability

• Appetite for major spending recedes to weakest in ten months

• Sentiment regarding labour market conditions at lowest since last June

This left the S&P Global UK Consumer Sentiment Index (CSI) at 44.8 in February, up from 44.6 in January, but still below the 50-point mark that shows no change compared with the prior month.

Maryam Baluch, economist at S&P Global Market Intelligence, said:

“The mood among UK households matches the dismal weather seen so far this year across the country. Although the overall degree of gloom has lifted slightly since January, consumer confidence continues to run at one of the lowest levels seen over the past two years.

A period of prolonged rain and a dearth of sunshine have no doubt not helped to lift the low spirits seen among households, but there’s more going on here than just bad weather. Households are growing increasingly worried about debt in particular, especially as a rising need for credit was met with the steepest decline in availability of loans since August 2024.

Households’ appetite for major purchases was impacted by the lack of confidence and debt worries, with sentiment around big ticket expenditure slipping to the lowest in ten months. The low appetite to spend bodes ill for the broader impetus to purchase, hinting at a sustained drag on economic growth from sluggish consumer spending in the first quarter.”

Shares in UK defence companies are rising this morning, following a report that the British govermment could bring forward its target to spend more on defending the country.

The BBC reported that the British government is considering bringing forward the date by which it will spend 3% of economic output on defence, to the end of the current parliament. Previously, it has pledged to raise defence spending to 2.5% of GDP by 2027 and targeted 3% in the next parliament.

Engineering firm Babcock, which supports naval, land, air and nuclear operations - including the UK’s nuclear submarine fleet – have risen by 2.5%.

Aerospace parts supplier Melrose are up 2.2%, while BAE Systems has risen 1.3%.

On Saturday, Keir Starmer told the Munich Security Conference that the UK and Europe need to step up their commitments to Nato and avoid the risk of overdependence on the US for defence.

Japan’s currency has weakened following today’s GDP report showing weaker-than-expected growth at the end of last year.

Lee Hardman, currency expert at MUFG bank, explains:

After hitting a low of 152.27 at the end of last week, USD/JPY has risen back above the 153.00-level. The main trigger for the partial reversal of yen strength has been the release of the weaker than expected Q4 GDP report from Japan.

The report revealed that Japan’s economy expanded by an annualized rate of just 0.2% in Q4 following a downwardly revised contraction of -2.6% in Q3.

For the calendar year as a whole, Japan’s economy expanded by 1.1% after contracting marginally by -0.2% in 2024. It was the strongest calendar year of growth since 2022. Still, the loss of growth momentum in the second half

On the London stock market, there’s a cautious start to the new trading week… although shares in automotive technology firm Pinewood.AI have tumbled by almost a third.

Pinewood, which provides software management systems to car dealers, fell 30% in early trading after investment group Apax Partners walked away from takeover talks, due to. “prevailing challenging market conditions”.

Pinewood told the City this morning that it is well-positioned to continue executing its strategy, saying:

The Board of Pinewood.AI remains very confident in the positive long-term prospects for the Group. The Company occupies a leading position as a mission-critical, full-service, embedded technology provider to automotive retailers and OEMs, benefitting from high recurring revenues and long-standing OEM partnerships.

This platform positions Pinewood.AI to remain at the forefront of technology innovation and provide best in class technology and secure solutions across its existing and future customers.

Newsflash: Switzerland has also escaped recession, despite the economic damage caused by US tariffs.

Swiss GDP expanded by 0.2% in the fourth quarter of 2025, a new estimate shows. That follows a 0.5% contraction in the third quarter of 2025, when the US trade war hurt its exporters.

Switzerland’s State Secretariat for Economic Affairs says that “growth in the services sector was muted, while the industrial sector stagnated,” in Q4, adding:

According to provisional results, the Swiss economy grew by 1.4% in 2025 overall, following 1.2% the previous year.

This is well below Switzerland’s average economic growth (1.8% since 1981). The challenging international environment slowed the export‑oriented industry.

By contrast, the services sector grew at an above‑average rate by historical standards

President Trump hit Switzerland with 39% tariffs under his trade war, before agreeing to lower them to 15% in November.

Competition among UK house sellers is running at an eleven-year high, giving buyers more opportunities and keeping prices pegged this month.

Property portal Rightmove is reporting this morning that the average asking price for a newly listed homes dipped by just £12 this month, to £368,019.

And with more houses on the marker – after a record number of early-bird new sellers coming to market sinceBoxing Day and in January – potential buyers have plenty of choice.

Rightmove says the high number of homes for sale is continuing to benefit buyers, giving them more choice and more power to negotiate.

And with last November’s budget behind us, net confidence among buyers and sellers in January has risen back to its highest level since September 2025, Rightmove reports.

Should the Bank of England cut interest rates at its next meeting, in March, that could give borrowers another lift, as the peak spring selling season approaches.

According to Rightmove, the average asking price is the same as a year ago, after that £12 shuffle lower.

That’s despite a record asking price increase for the time of year in January, which means prices are up by 2.8% since December

As the market is “still very price-sensitive,” sellers need to pitch their properties realistically, says Colleen Babcock, property expert at Rightmove:

“Virtually flat prices in February really needs to be viewed alongside what happened in January.

After the prolonged uncertainty in the run up to the late November Budget, plus the usual Christmas slowdown, we saw activity pick up again from Boxing Day. Many sellers, some of whom had been holding back because of the Budget, came to market in early 2026 with renewed confidence, which helped to drive that bumper January price rise.

But the market fundamentals haven’t changed. There are still lots of homes for sale, and buying activity isn’t as strong as this time last year, when many buyers were rushing to move before the stamp duty increase in England. So in February, sellers have taken a more cautious approach by holding onto January’s gains rather than pushing prices higher, at a time when competition is high and the market is still very price-sensitive.”

Shares fell in Tokyo as investors digest today’s weaker-than-expected growth report.

The Nikkei 225 index dipped by 0.24%, while the broader Topix shed 0.8%.

Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management, said:

“I figured the GDP figures would be treated as past figures, but seeing the Nikkei average struggling to gain, there may be some slight impact.”

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Japan has escaped falling into recession, just, with a weak return to growth that highlights the need for punchy measures from its new government to spur the economy on.

Japanese GDP expanded by just 0.1% in October-December, fresh data from Japan’s Cabinet Office shows, missing forecasts of 0.4% growth.

That follows a contraction of 0.7% in July-September, and means Japan has avoided a technical recession – two negative quarters of growth in a row.

Private consumption drove the expansion, while exports and public spending were weak.

Shinichiro Kobayashi, chief economist at Mitsubishi UFJ Research and Consulting, explained:

“Personal consumption showed resilience, but whether this resilience can be sustained will depend on whether price relief measures will make an impact and whether real wages will turn positive.”

Japan’s economy has been hurt by Donald Trump’s trade war, which increased tariffs on Japanese goods entering the US.

The diplomatic row between Beijing and Tokyo over the security of Taiwan also weighed on the economy, with Chinese tourism to Japan almost halving.

The data comes just a week after prime minister Sanae Takaichi won a landslide election victory, having promised “responsible and proactive fiscal policies”.

Takaichi was due to meet with Bank of Japan governor Kazuo Ueda, in their first bilateral meeting since the election.

Last November, Takaichi unveiled a massive ¥21.3tn (£100bn) stimulus package in an effort to spur economic growth and protect households from the rising cost of living. Further measures may be needed….

The agenda

• 10am GMT: Eurozone industrial production data

• 2pm GMT: Eurogroup finance ministers meeting