Bank of England officials are privately concerned that UK GDP data may be sending false signals that complicate rate-setting, according to a Bloomberg report published on 7 May 2026. With Q1 2026 GDP figures due next week and likely to “paint a rosy picture,” the Bank’s quiet scepticism reflects broader doubts about the Office for National Statistics’ methodology in the post-pandemic era. The disclosure comes as the Financial Conduct Authority launches a separate, high-profile investigation into Mastercard, Visa and PayPal over potential anti-competitive practices linked to digital wallets and payment systems.
Why GDP statistics are under question
The ONS has been criticised in recent years for repeated revisions to its headline figures, with quarterly GDP estimates often substantially adjusted in subsequent releases as more comprehensive data flows in. The post-pandemic period has been particularly difficult to measure, with shifts in working patterns, supply-chain reorganisations, and a fragmented services sector all complicating the standard methodology. According to people familiar with the matter cited by Bloomberg, Bank of England Monetary Policy Committee members and senior staff have grown increasingly cautious about reading the headline GDP prints at face value when calibrating Bank Rate decisions. The concern is that an apparently rosy Q1 2026 figure could mask underlying weakness, or vice versa — making the choice between holding, hiking or eventually cutting rates harder than it appears from the headline numbers alone.
The macro context: weak growth, sticky inflation
The British Chambers of Commerce downgraded its 2026 GDP growth forecast to 1.0% in March, with growth expected to recover modestly to 1.3% in 2027 and 1.1% in 2028. The construction and manufacturing sectors are forecast to contract this year by -1.3% and -0.3% respectively. Business investment is expected to flatline (0% growth in 2026, recovering to 1.3% in 2027). Export growth has been downgraded sharply to just 0.7% from a previous forecast of 1.8%, reflecting global uncertainty. The Bank’s challenge: if Q1 GDP comes in stronger than the underlying economy actually warrants, the MPC may delay the rate cuts the BCC and others believe are needed to support investment.
FCA versus the digital-wallet duopoly
The Financial Conduct Authority‘s investigation into Mastercard, Visa and PayPal targets potential anti-competitive practices in digital wallet ecosystems. The probe focuses on whether the dominant card networks — Mastercard and Visa together process the overwhelming majority of UK card transactions — are using their position to disadvantage smaller payment providers, restrict merchant choice, or impose terms that suppress innovation. PayPal is included given its role as both a competitor and increasingly a partner in the digital wallet space. For UK SMEs managing margins and cashflow, payment-processing costs remain a persistent and material expense; an FCA finding of anti-competitive practice could mandate caps or behavioural remedies with direct cost benefits.
AI lending: a third of UK private credit, rising stability concerns
The Financial Stability Board warned this week that rapid growth in private credit lending to AI companies could create wider financial risks. According to the FSB, AI businesses now account for more than a third of UK private credit deals this year, raising concerns about concentrated exposure among lenders and investors. UK private credit funds — many marketed to institutional and high-net-worth investors as alternatives to public bond markets — have piled into AI infrastructure, data centres, and software companies. If AI valuations correct sharply, or if revenues fail to materialise at the scale that has been priced in, the spillover to UK pension funds and insurance balance sheets could be material. The FSB is reportedly examining whether new disclosure requirements or capital treatment changes are warranted.
Consumer AI adoption: 74% have used it, 14% trust it
EY research released this week found that while 74% of UK consumers have used AI recently, only 14% are comfortable with fully autonomous systems making decisions on their behalf. Businesses continue to face concerns around data protection, accountability and AI skills shortages. The result: slow AI adoption in customer-facing applications may reduce the productivity gains that policymakers and lenders are factoring into UK long-run growth forecasts. The UK consulting industry is forecast to grow just 5.7% in 2026 as clients reduce spending and delay AI implementation projects, citing security concerns and skills shortages.
Defence, retail, mortgages: a divergent earnings season
Corporate results paint a divergent picture. BAE Systems said trading remained strong in early 2026 as rising global defence spending — driven by the Iran war and broader geopolitical realignment — continued supporting demand. The company maintained forecasts for sales, profit and cash-flow growth. Uber reported 14% revenue growth but weaker profits after losses linked to Asian equity investments, though the company issued stronger-than-expected bookings guidance. The QE programme cost at the Bank of England has risen to £125 billion as higher interest rates increase the cost of financing the BoE’s Asset Purchase Facility — a number that economists argue questions the long-term sustainability of the current monetary framework. For UK households, the Bloomberg report on private GDP doubts and the FCA probe on payments together signal an economy whose surface measures are increasingly distrusted by the people closest to them.
