The FTSE 100 is expected to edge lower on the final full trading Monday before Christmas, as fresh signs of weakness in the UK economy temper investor confidence after a strong rally last week.
London’s blue-chip index is forecast to open around 10 points down, according to futures trading. That modest dip follows an impressive run that saw the FTSE 100 climb 248.42 points, or 2.6%, over the past week to close at 9,897.42 on Friday, one of its strongest performances in recent months.
With festive trading volumes thinning, markets are becoming more sensitive to economic data, and the latest figures suggest the UK economy is losing momentum as the year draws to a close.
Why Is the FTSE 100 Losing Momentum Before Christmas?
The immediate pressure on the FTSE 100 comes from renewed concerns about domestic growth.
A closely watched business survey from the Confederation of British Industry (CBI) has delivered a downbeat assessment of private sector activity, warning that output is likely to fall in the final quarter of the year.
The survey found declining activity across manufacturing, services, and construction in the three months to December.
More worryingly for investors, businesses expect conditions to remain weak into the first quarter of next year, suggesting the slowdown may not be short-lived.
“Output volumes declined across all sectors, with expectations remaining subdued for the start of next year,” the CBI said in its latest report.
For markets that had been buoyed by hopes of easing inflation and future interest rate cuts, the data was a reminder that the UK economy is still struggling under the weight of high borrowing costs and fragile demand.
What Does the Latest Jobs Data Reveal About the UK Economy?
Further evidence of cooling economic conditions came from the labour market. New figures from jobs website Adzuna showed that UK job vacancies fell 6.4% month-on-month in November, marking the fifth consecutive monthly decline.
Falling vacancy numbers are often seen as an early warning sign of slower growth. Employers tend to scale back hiring plans when confidence drops, which can eventually feed through to weaker wage growth and reduced consumer spending, both key pillars of the UK economy.
For investors, this trend reinforces the view that the Bank of England may face growing pressure to support growth in 2025, even as inflation concerns linger.
How Are Global Markets Influencing the FTSE 100?
Despite the softer UK outlook, global markets are largely in positive territory. US futures were pointing higher, with the S&P 500 and Nasdaq expected to rise, while Asian markets started the week strongly, led by a sharp gain in Japan’s Nikkei index.
This divergence highlights a familiar dynamic for the FTSE 100. Although many of its biggest companies generate revenues overseas, domestic economic sentiment still plays a significant role, particularly for banks, retailers, and other UK-facing stocks.
When confidence in the home economy fades, the index can lag its international peers, even during broader global rallies.
Why UK Data Still Matters for a Global Index?
While energy giants, miners, and multinational firms dominate the FTSE 100, UK-specific indicators remain crucial.
Business surveys and jobs data shape expectations around interest rates, consumer demand, and corporate earnings.
In quieter pre-Christmas trading, these signals can have an outsized impact on short-term market direction.
The current pause is therefore less about panic and more about caution, as investors reassess the balance between resilient global markets and a fragile domestic backdrop.
