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# The UK economy looks very weak
- URL: https://www.benchmarkanalytics.com.au/the-uk-economy-looks-very-weak/
- Published: 2026-08-29T21:47:47.000Z
- Updated: 2026-08-29T21:47:46.000Z
- Author: Nick Hossack

Australia and Britain face many of the same economic problems, but the latest data show Australia currently has the stronger economy — accompanied by a more difficult inflation problem.

Australian real GDP grew **2.5%** over the year to the March quarter, compared with just **0.9%** in Britain. Australia's unemployment rate is also lower, while employment has been growing more quickly. UK employment increased by about 0.7% over the latest year, compared with 1.3% in Australia.

But stronger Australian activity has been accompanied by greater price pressure. Australian CPI inflation reached **3.5%** in July, compared with **2.9%** in Britain. Underlying inflation shows an even larger difference: 3.6% in Australia compared with UK core inflation of 2.6%. UK regular wages are currently growing slightly faster, at 3.5% compared with Australia's 3.2%.

**The clearest distinction is monetary policy.** Australia's cash rate has risen from 3.60% to **4.35%** over the past year. Britain's Bank Rate has moved in the opposite direction, from 4.00% to **3.75%**.

Australia is therefore outperforming Britain on growth and employment, but that relative strength comes with an important qualification: inflation is proving more persistent and monetary policy has had to become considerably tighter.

Neither country, meanwhile, has much cause for celebration on productivity. Output per hour grew just **0.3% in Australia and 0.4% in Britain** over the year to March.

Australia v United Kingdom — latest outcomes 

| Indicator                                              | Australia | United Kingdom |
| ------------------------------------------------------ | --------- | -------------- |
| **Unemployment** Latest labour survey                  | **4.5%**  | **4.9%**       |
| **Employment** Latest labour survey                    | 14.81m    | 34.47m         |
| **Participation/activity rate\*** Latest labour survey | 66.9%     | 79.1%          |
| **Employment/population\*** Latest labour survey       | 63.9%     | 75.1%          |
| **Policy interest rate** August 2026                   | **4.35%** | **3.75%**      |

Change over the past 12 months 

| Indicator                                           | Australia     | United Kingdom |
| --------------------------------------------------- | ------------- | -------------- |
| **Real GDP** Year to Mar qtr 2026                   | **+2.5%**     | **+0.9%**      |
| **Headline CPI** Year to July 2026                  | **+3.5%**     | **+2.9%**      |
| **Underlying/core inflation\*\*** Year to July 2026 | **+3.6%**     | **+2.6%**      |
| **Employment** Latest annual change                 | **+1.3%**     | **+0.7%**      |
| **Unemployment rate** 12-month change               | +0.2 ppt      | +0.2 ppt       |
| **Wages** Year to Jun qtr 2026                      | **+3.2%**     | **+3.5%**      |
| **Labour productivity** Year to Mar qtr 2026        | **+0.3%**     | **+0.4%**      |
| **Policy interest rate** 12-month change            | **+0.75 ppt** | **−0.25 ppt**  |

**Notes:** ppt = percentage points. UK labour-market figures are three-month averages for April–June 2026, while Australian headline labour-market figures are monthly. \*Australian and UK participation/employment rates use different age-population definitions and their levels should therefore not be directly compared. \*\*Underlying inflation uses Australia's trimmed mean CPI and UK CPI excluding energy, food, alcohol and tobacco. Productivity is output per hour worked. UK productivity uses the ONS Labour Force Survey-based estimate. GDP uses the March quarter to ensure the same reference period. Sources: ABS, RBA, UK Office for National Statistics and Bank of England. Data available at 27 August 2026\.