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

Nationwide, the building society, is kicking the day off by reporting that UK house prices have risen by 0.9% in March compared with the prior month, and by 2.2% on an annual basis.

Robert Gardner, the chief economist at the lender, says that the pick up in growth suggests the market has regained momentum after a slow end to 2025. But this could be the calm before the storm, he says:

The sharp rise in global energy prices in response to developments in the Middle East represents a significant shock to the global economy, clouding the outlook.

In the near term, UK economic growth is likely to be slower and inflation higher than previously expected, although ultimately the impact will depend on the duration of the shock as well as the policy response. The outlook for interest rates is particularly uncertain and dependent on whether the demand or supply side of the economy is more adversely affected.

In the first quarter of the year, the average price of a house in the UK was £274,930, up 1.5% compared with same period in 2025.

Gardner adds that interest rates have changed dramatically since the start of the conflict in the Middle East.

Towards the end of March, three interest rate increases were priced in over the next twelve months, compared to two rate cuts being anticipated before the strikes on Iran. This shift has resulted in a sharp rise in longer term interest rates (swap rates) that underpin fixed rate mortgage pricing.

If sustained, this could reverse some of the improvement in housing affordability that has taken place in recent years. With consumer sentiment also likely to be dented by the uncertain outlook and the prospect of rising energy costs, housing market activity is likely to soften.

Tom Bill, head of UK residential research at the estate agent Knight Frank, adds that the fact mortgage offers last for six months means the effect of higher borrowing costs will filter into the market this spring and summer, which could put “downward pressure on prices and transaction volumes”.

The longer-term impact hinges on the intensity and length of the conflict. That said, one mitigating factor is the amount of equity in the system and the fact more homes are now owned outright than with a mortgage.”

Elsewhere this morning, official stats confirm that the UK economy barely grew at the end of last year.

The Office for National Statistics confirmed that gross domestic product grew by just 0.1% in the October to December quarter. That followed growth of 0.1% in the preceding three months too.

However, the ONS did revise annual growth for the whole of 2025 up slightly, from 1.3% to 1.4%.

The figures for the final quarter are not very inspiring, but the Treasury has put out this statement:

In an uncertain world we have the right economic plan. The decisions we have taken have put us in a better position to protect the country’s finances and family finances from global instability.

We were the fastest growing European economy in the G7 last year and now we’re going even further by using regional growth, AI and a closer relationship with the EU to get our economy growing.”

Thomas Pugh, chief economist at the audit, tax and consulting firm RSM UK, takes a more critical stance:

GDP growth for Q4 was unchanged at 0.1% q/q, suggesting that the economy entered the current crisis with very little momentum, even though growth in 2025 as a whole was revised up slightly.

Of course, backward looking is an understatement for Q4 data, the outlook for growth is now materially weaker for this year and 2027 as higher energy prices will squeeze real incomes and further weigh on an already weak employment market.

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