Monitoring trade prices in the wake of trade tensions

Marco Garofalo and Thomas Prayer

The US administration raised US import tariffs in April, reigniting trade tensions. This sparked concerns about cheaper exports being diverted to other markets, potentially lowering global prices. Using detailed product-level data, we build a novel timely indicator to consistently track trade prices across countries. Chinese export prices have risen less than global ones since April and remain below March levels. Prices of other Asian exporters, Canada and Mexico have also grown more slowly than global prices, but to a more limited extent, while export prices for Europe grew faster than global patterns. UK import prices mirror those in Europe, whereas US import prices (excluding tariffs) have declined since March 2025. Our results and future updates are publicly available online.

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Generative AI: degenerative for jobs?

Edward Egan

Headlines warn of a looming ‘jobpocalypse’, but the reality is more complex. Rather than simply causing a wave of job losses, the economic literature suggests generative AI could influence the labour market through several – potentially offsetting – channels: productivity gains, job displacement, new job creation, and compositional shifts. The balance between these effects, rather than displacement alone, will shape AI’s aggregate impact on employment. The latest research suggests that overall effects remain limited so far, but there are some early signs of AI’s impact. I find that, since mid-2022, new online vacancies in the most AI-exposed roles have decreased by more than twice as much as the least exposed group. This highlights the need for ongoing monitoring as AI adoption accelerates.

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Retail investors’ participation in the gilt market

Sarah Munson and Callum Ashworth

In recent years, retail investors’ demand for UK government bonds (gilts) has increased, marking a change in the composition of market participants. The growth of retail investors, comprised of individuals managing their own portfolios, has been a global phenomenon (Foxall et al (2025)). But what’s driving this change, and what does it mean for the gilt market’s role in monetary policy and financial stability? In this post we explore how UK-based retail participants’ presence in the gilt market is changing and what that might signal for the future. We find that retail holdings of gilts remain modest, with positions concentrated in a handful of bonds. This has limited impact on aggregate liquidity indicators but can impact liquidity in these specific bonds.

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The Bank Underground Christmas Quiz 2025

Image of the Bank of England during Winter with partial snowfall.

Bank Underground is about to take a break for the festive season. In keeping with tradition, we are pleased to present the annual Bank Underground Christmas Quiz! This year, it’s been prepared with the kind assistance of the Bank of England’s Archive team. We hope you enjoy testing your knowledge of the Bank’s history, especially how it has marked Christmas in years past. We wish our readers a very happy festive season!

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Who owns the buildings where Britain shops, works – and stores its data?

Katherine Blood

We have developed a new measure tracking UK commercial real estate (CRE) ownership at property level, mapping the latest investor landscape at end-2025 Q3 and its shift since the pandemic. Our estimates show a diversified, international base: overseas investors hold around one third of UK CRE, while private equity funds own 8% after post-pandemic growth. Investor-owned CRE has tilted towards warehouses, logistics, rental housing and properties serving innovation-led sectors – like data centres and life-sciences. Why does this matter? CRE ownership shapes how shocks play out – affecting refinancing waves, upgrade costs and valuation swings. History shows the sector has seen boom-bust cycles before and contributed to financial stability challenges in the UK and abroad.

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How does lower inflation uncertainty affect households’ financial behaviour?

Christoph Herler and Philip Schnattinger

Macroeconomic Environment Theme

The Bank of England Agenda for Research (BEAR) sets the key areas for new research at the Bank over the coming years. This post is an example of issues considered under the Macroeconomic Environment Theme which focuses on the changing infaton dynamics and unfolding structural change faced by monetary policy makers

The recent inflation surge has sparked concerns about how uncertainty over price dynamics shapes households’ financial behaviour. Often, lower uncertainty about inflation coincides with lower expected inflation – when inflation is low and stable, households feel more confident about future trends. In a new paper, Johannes J. Fischer, Christoph Herler and Philip Schnattinger employ a randomised controlled trial (RCT) to disentangle the effects of households’ uncertainty about inflation from the expected level. This disentangling is important: lower expected inflation can discourage immediate spending, while lower inflation uncertainty may push them towards spending more. We show that reduced inflation uncertainty leads to higher planned spending, lower saving rates, and a shift towards liquid assets with fixed returns.

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Trade fragmentation and inflationary pressures

Ludovica Ambrosino, Jenny Chan and Silvana Tenreyro

Macroeconomic Environment Theme

The Bank of England Agenda for Research (BEAR) sets the key areas for new research at the Bank over the coming years. This post is an example of issues considered under the Macroeconomic Environment Theme which focuses on the changing inflation dynamics and unfolding structural change faced by monetary policy makers.

Global economic trends have changed markedly over the past two decades. The global financial crisis represented a turning point, with trade openness plateauing and fragmentation steadily increasing before rising sharply during the pandemic and Russia’s invasion of Ukraine. Trade fragmentation is increasingly driven by national security concerns, the rise of ‘friendshoring‘, and the emergence of competing trade blocs. For policymakers, this raises a central question: how will trade fragmentation shape inflation dynamics, and what are the implications for monetary policy? A recent paper addresses this question by analysing trade fragmentation in a model where the inflationary effects depend on the adjustment of demand alongside supply.

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The debt trigger: how household debt can amplify the effect of rising rates

Tuli Saha and Alexandra Varadi

High levels of household indebtedness can amplify negative economic shocks, if highly indebted mortgagors make larger cuts to spending in response to them or are more vulnerable to defaulting on mortgage payments adding to bank losses. These are tail risks which can pose significant financial instability. In this post, we present quantitative evidence on these risks using a local projection model. We find that when the share of highly indebted households increases, aggregate consumption drops more sharply and mortgage arrears increase more in response to interest rate shocks. Our work highlights the importance of managing risky lending through macro and microprudential policy. And it highlights how debt burdens can interact with the monetary transmission mechanism.

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The keys to house price growth

Arno Hantzsche and Harriet Jeanes

Houses account for the largest share of total assets held by the UK household sector. Households’ spending and saving decisions depend in part on the price of these assets. What causes house prices to move can therefore have important consequences for macroeconomic policy and financial stability. Our house price model decomposes movements in house prices into contributions from key economic drivers. Among these, measures of real household income explain much of their variation over time. The rise in mortgage rates during the recent tightening cycle is estimated to have kept house prices nearly 10% lower than had interest rates not moved, with some of this effect offset by real income growth.

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