# Roundup of the week: 20 February 2026

_A quiet week by recent standards — but possibly the calm before the storm, with a US strike on Iran looking increasingly likely. Meanwhile, a raft of UK economic data on labour markets, inflation, retail sales and government borrowing all point in the same direction._

Neil Woodford · 20 February 2026 · 6 min read

![Roundup of the week: 20 February 2026](https://cdn.sanity.io/images/v3acfbvo/production/608c467b2cbcb9dd0f9a69ced7f2671dd986055a-2114x1636.jpg?w=1600&fit=max&auto=format)

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Although this has, thankfully, been a relatively quiet week by the standards of recent months, I fear it may prove to be the calm before the storm. The US military build-up in the Middle East has gathered momentum in recent days, and some reports I have read today suggest the President may order a strike on Iran over the next few days. In a week when the US President has again criticised the UK Chagos Islands deal championed by Keir Starmer, the fact that he has apparently also blocked the US from using UK airbases for an attack on Iran will definitely not endear him to the White House.

Although it has been a quiet week for corporate results by and large, and markets have been relatively well behaved, a couple of things really stood out for me. Despite the lack of financial media attention paid to them, I think they are very significant — and indeed very welcome. (More below.)

## Politics

Geopolitical issues have been on the back burner this week for financial markets, but as the week closes, fears that war is about to break out between the US and Iran have understandably started to be reflected in a rising oil price. Talks between the US, Ukraine and Russia have also been ongoing in various locations across Europe, but as yet there have been no reports of substantive progress — albeit that the sides are still talking. Meanwhile, the war in Ukraine rages on.

## Economics

There is important inflation and GDP data out this afternoon in the US, which I will comment on in next week's round-up. The standout feature this week, for me, was a series of labour market, inflation, retail sales and government borrowing data from the UK, all of which reinforced my view that the overwhelming consensus on the UK economy is wrong, and that my more upbeat perspective is going to prove right.

Despite my best efforts to promote an evidence-based positive narrative about the UK economy and stock market, I have to say it is often met with an overwhelmingly sceptical response. Indeed, this week it was described as naïve, and some of the comments about the UK stock market — including "dead", at a "ludicrous" level, and from which one should be ready to "flee" — tell you all you need to know about how that consensus negativity has infected the investment community.

My response to this scepticism is that it reinforces my view that the economy, and particularly the stock market, can continue to positively surprise. If everyone were bullish, conversely, I really would be worried.

So, to the data.

UK labour market data released on Tuesday were, once again, really interesting. The LFS (Labour Force Survey), which the ONS relies upon to measure employment and which the Bank of England and the OBR use for their dire prognostications about productivity, was a central part of the release. Once more, this survey-based series showed something that is quite clearly wrong, and which directly contradicts HMRC (payroll) data. In fact, these two series have diverged even more dramatically in recent months, as the chart below makes clear.

The difference between these two numbers is now stark. The LFS survey shows employment increased in 2025 by 380,000, or a little over 1%. HMRC data, on the other hand, showed employment falling by 120,000 — a difference, in total, of 500,000. Importantly, productivity as measured by the LFS was flat in 2025, but when measured using HMRC data it increased by 2%, in line with what we see in the US and what the OBR and the Bank of England say the UK seems incapable of achieving.

As I have been saying for some time, official commentary on productivity in the UK is based on a fundamentally flawed measure of the number of people in work (and of the hours they work), which is the denominator in the calculation of UK productivity. Flawed measures of productivity then, in part, dictate what the Bank of England decides to do with rates and what the OBR says about future fiscal policy. This is madness. The Bank thinks that the non-inflationary growth potential of the economy is lower than it actually is, and the OBR dreams up fiscal deficit numbers five years hence that are in part based on productivity forecasts which are patently wrong.

Either way, this ONS release showed, importantly, that the labour market is softening — as evidenced by both the HMRC data and the vacancy numbers. Pay growth, something the MPC has been fretting about for a long while, also slowed and has pretty much halved in the private sector over the last twelve months to 3.4%. With private sector pay settlements now averaging about 3%, there is clearly very little inflationary impetus coming from the UK labour market. This must, in my view, finally persuade the MPC to get on with cutting interest rates. (I am confident there will be a cut at the next meeting in March.)

The next important release was the inflation data on Wednesday. In summary, inflation in January fell to 3% from 3.4% in December. This was better than expected and should give further encouragement to the MPC to cut rates at the next meeting — something it should have done at the last one. In the detail, goods, food, energy, rental and clothing inflation all fell. Restaurant inflation rose slightly, but this is a direct product of the government's minimum wage policies, which have significantly increased costs for the sector (along with employers' NI).

Another piece of good and important economic news came today with the announcement that the government received a record monthly budget surplus of £30.4bn in January, driven by much higher tax receipts than forecast. The surplus was double that recorded last year, a record for any month since records began in 1993, and importantly was £6.3bn above the OBR's November forecast — which was itself deemed too optimistic at the time. In the first ten months of this fiscal year, borrowing is estimated to be £112.1bn, 11.5% less than the prior year and over £10bn less than the OBR's forecast.

Once again, the reality is not just better than expected — it directly contradicts the appallingly stupid NIESR-prompted narrative that the UK economy faces a £50bn fiscal black hole.

Finally, the ONS also reported today that January's retail sales were better than expected, even after preliminary survey-based data showed the same trend a few weeks ago. In fact, they are very substantially better: retail sales excluding auto fuel were up 2% month on month, compared with an expectation of 0.3%.

My summary after a week of important data is that I am even more confident that the consensus narrative about the UK economy is wrong. I am more encouraged that my upbeat view is right, so expect lower interest rates, better growth, lower inflation, better fiscal data and maybe — just maybe — a mea culpa from the establishment admitting they got it all wrong. (Sorry, I was getting carried away. That last bit will never happen.)

## Markets

Financial markets have had a quiet week, with perhaps the standout feature being gently falling government bond yields in the UK, Europe and the US. This is broadly good news for equity markets, albeit that if war breaks out in the Middle East again next week, I would expect some nervousness to return.

## What to Look Out for Next Week

Next week is extremely busy for corporate results, especially in the UK. There are also important economic data releases in the US. Today's US inflation data will be closely watched, and I will comment on their implications for US interest rates in next week's round-up.