Don’t buy into the negativity. Here’s why I’m optimistic for the UK economy
In the New Year, the UK economy has been lost in a sea of headlines about its impending decline. UK Finance chair Bob Wigley says he’s done with the doom and gloomerism
For too long, the UK has been cast in a narrative of decline. This week’s news is peppered with predictions downplaying the UK’s prospects. I don’t buy it. As we enter the new year, I see lots of reasons to be positive, particularly for those in the City who drive innovation, create global connectivity and are visionary.
Since the election, the government and regulators have begun to implement pro-growth regulatory change for financial services, many based on the Plan for Growth UK Finance proposed last April.
In 2026, the focus is on accelerating delivery. The forthcoming Financial Services Bill — which we expect to be part of this year’s King’s Speech — will take forward long-overdue and much-needed reforms, helping to create a clearer, more proportionate framework that supports innovation, competition and growth, and creates a better balance between risk taking and consumer protection.
The financial services sector is cementing its global leadership in green finance, and I expect to see this continue this year. Banks are not only lending more, but shifting toward adaptive projects, those that prepare economies for climate realities rather than just mitigate risk. This isn’t ESG box-ticking; it’s taking advantage of the biggest economic opportunity since the advent of the Industrial Revolution, emerging markets or digitisation and isn’t based on political rhetoric but customer demand.
Good news for the UK economy in 2026
This year, we will reclaim our leading global position in payments technology. The National Payments Vision, designed by the banking and finance industry, Bank of England and HM Treasury, aims to deliver world-class infrastructure, including tokenised sterling deposits. Add to that the government’s plans to issue digital gilts and create the world’s best regulatory environment for the tokenisation of real-world assets, and you turbocharge the UK’s financial ecosystem to rival any global hub.
AI will play a key role with 75 per cent of UK banks already using the technology. The range of uses and number of users will increase further, driving gains in customer service, fraud detection and cybersecurity.
Public-private partnerships are also accelerating. The development of E-ID and E-government initiatives, if done right, promise not just hugely improved convenience for consumers, but substantial cost savings for government. For financial institutions, they could deliver streamlined onboarding, huge fraud and other cost reductions, and build trust needed for the new digital economy.
A prominent part of the recent negative narrative around the UK has been London’s poor performance in capturing IPOs and internationally low domestic self-investment rates. Recent regulatory changes, the investment campaign and further ideas being worked up will improve the UK’s stock market competitiveness and liquidity.
And finally, lasting peace in Ukraine is my biggest hope for 2026. One that will clearly have a large positive impact on many people’s lives. I witnessed first-hand the effect of the war when I drove to Ukraine to donate an ambulance to help the war effort. But in terms of the economics, forecasters are not yet incorporating the substantial upside of stability in the region and economies recovering.
This would benefit energy and food prices and improve consumer confidence. The war drove global oil prices up 11 per cent, pushing UK wholesale gas prices 40 per cent higher, and contributed to a painful inflation peak of 11 per cent. A reversal of those dynamics, if only in part, would be very meaningful given current stubborn inflation and low growth forecasts.
So, if we drown out the naysayers with facts, 2026 can be a great year for all these reasons. Our challenge is clear: deliver the agreed regulatory change, finalise the remainder, seize these massive opportunities and the UK will remain firmly one of the world’s most important global financial hubs.
Bob Wigley is chair of UK Finance