RSM UK Real Economy Economic Indicators
Our three economic indicators focus on the data that matters to middle market businesses: financial conditions, credit availability and growth in the real economy.
13 June 2025
Tariffs denting UK growth prospects, but domestic factors holding up against headwinds
Our three economic indicators map a real economy rolling with the global trade tension reverberations. The UK’s already slim growth prospects for 2025 have been trimmed further, impacting businesses’ investment decisions, credit conditions and the UK’s future competitiveness.
In the latest Quarterly Economic Outlook, our Chief Economist, Tom Pugh, warned us that GDP growth is likely to take us on a rollercoaster ride this quarter and into next. The RSM Real Economy Barometer (based on the latest official GDP data) shows us at the start of this. Last month’s impressive growth in the real economy has been replace by a 0.5% shrinkage in April. That said, underlying momentum in the real economy looks positive.
The RSM UK Credit Impulse – a predictor of growth – returned to trend in April after March’s bumper month for mortgages. Consumers continue to borrow as household savings and employment rates remain high, suggesting households have shrugged off Trump’s tariffs. However, low business confidence and uncertainty again depressed new business borrowing.
The RSM UK Financial Conditions Index has steadied after April’s tariff turmoil, but foreign exchange markets continue to readjust to the economic shock.
Our next set of indicators, published in July, will express how UK businesses, consumers and financial markets continue to respond to uncertainty as government spending starts to flow through the real economy. Until then, sign up to receive our regular economic updates and read RSM Economist Tom Pugh’s commentary of key datapoints, weekly Economic Voice briefings and UK Quarterly Economic Outlook.
- UK Credit Impulse
- UK Real Economy Barometer
- UK Financial Conditions Index
UK Credit Impulse
Last updated: 03 June 2025
Private sector borrowing continues to stimulate the UK economy. This despite the latest three-month average falling from March’s 1% of GDP to 0.7% in April. Fewer mortgage approvals in April after March’s rush to beat changes to stamp duty thresholds accounts for most of the fall. This brings the amount of new credit flowing in the economy back in line with February’s figure. New business borrowing continues to be flat and close to its October 2023 low, while consumers continue to account for the bulk of new credit flows. They doubled credit card borrowing from the previous month to £0.8bn.
Measuring the UK’s economic momentum
The RSM Credit Impulse is a real-time snapshot of new credit flowing into the UK’s private sector.
As a gauge of future economic momentum, it tracks both household and business borrowing, offering middle-market businesses insight into the direction of future growth.
How to use The RSM Credit Impulse
The RSM Credit Impulse gives you the ability to anticipate changes in the economic landscape.
It outlines capital investment and consumer spending intentions as a proportion of GDP.
- Positive values are a sign of good credit flows, investment and consumer confidence.
- Negative values suggest a tightening credit environment and caution in spending and investment.
How we calculate The RSM Credit Impulse indicator
The RSM Credit Impulse uses data from the Bank of England for lending flows and the ONS for nominal GDP. The change in lending flows is then calculated and divided by quarterly GDP to give a %.
UK Real Economy Barometer
Last updated: 13 June 2025
Last month, growth in the real economy in the figures for March confounded expectations to come in at 0.9% q/q. That put it well on track for the 1.2% we forecast. This month, however, data for April shows a 0.5% shrinkage. The bulk of this contraction came from a 0.9% fall in manufacturing output as tariff front-running unwound. Services in the real economy also gave up some of March’s strong gains, falling -0.6%, as activity to beat various tax rises unwound in April. Construction provided some relief, growing by 0.9% m/m thanks to the sunniest April on record. Both the real economy and official GDP remain broadly on track to meet our expectation for a 1.2% expansion.
Providing clarity for business leaders operating in the UK’s real economy
The Real Economy Barometer more accurately describes the economic landscape as experienced by middle-market businesses.
Focusing on the UK’s goods- and service-producing sectors, it filters out certain public-sector components from official GDP data to provide business leaders with actionable insights.
How to use The Real Economy Barometer
We can better understand where growth is coming from, the factors influencing this and what it takes in the coming months to meet growth forecasts by comparing data for real economy output with official UK GDP.
Every month, following the release of official UK GDP data, our economists calculate how the real economy – accounting for 79% of the UK economy – is performing against the:
- UK economy’s total output
- our growth forecast (currently 1.2%).
Negative values show shrinkage in the size of the economy and positive values show growth.
How we calculate The Real Economy Barometer indicator
The Real Economy Barometer strips out the impact of imputed rents, public administration, education, human health, residential care, social work, libraries and museums, and social clubs from official GDP data.
UK Financial Conditions Index
Last updated: 03 June 2025
The level of stress in the UK’s equity, money, bond and foreign exchange markets has largely returned to where it was before April’s trade tariffs shock. Our Financial Conditions Index (FCI) has recovered to +1. This is a notch below the +1.1 seen at the end of March and up from 0.2 in early May. Equities have regained most of their losses from last month’s figure of -0.8 after stock markets calmed, reaching +0.7. However, foreign exchange markets continue their readjustments and are yet to regain their pre-tariff levels. Nevertheless, they remain, at 0 (from -0.3), in line with normal conditions. Despite volatility elsewhere, money markets remain orderly, fluctuating between +1.2 and +1.5 in recent months.
A real-time gauge of financial stress
The RSM Financial Conditions Index (FCI) is a powerful metric that monitors the level of financial stress in the UK’s money, bond, equity and foreign exchange markets.
It offers near real-time insight into financial market movements, helping business leaders to gauge how shifts might impact the broader economy and its stability.
How to use The Financial Conditions Index
The FCI shows exactly how far current financial conditions diverge from historical norms.
This means we can understand if current financial conditions are supportive of business growth, investment and consumer spending, or not.
- Positive values indicate more accommodating financial conditions and easier credit availability – prerequisites for economic expansion.
- Negative values indicate tighter financial conditions, less credit availability and higher costs – dampeners for investment, confidence and growth.
How we calculate The Financial Conditions Index indicator
Items included in the composite RSM UK Financial Conditions Index are normalised by subtracting the mean and dividing by the standard deviation for each series. The FCI, as a Z-Score, indicates the number of standard deviations by which current financial conditions deviate from normal levels.
Explore our economic commentary
