Profit warnings from UK-listed companies reached a two-year high between July and September, analysis by EY-Parthenon shows. Data shows that there were 84 alerts issued in the three-month period, with this up 11% on Q3 2023. It was also shown that almost one in five UK-listed companies (19.2%) issued a profit warning in the past 12 months, with this the highest percentage since during the pandemic. Contract and order cancellations or delays were cited by 38% of companies that issued warnings, while lower sales contributed to 33%. The hardest hit sectors in Q3 were industrials and technology. Jo Robinson, turnaround and restructuring strategy leader at EY-Parthenon, said: “Time will tell whether this rise in profit warnings is a temporary spike or indicative of a longer-term trend but companies must proactively address emerging issues before they escalate.”

Analysis by Calastone shows that UK equity fund withdrawals reached their largest on record in October, with investors pulling out money amid concerns over tax rises in the Budget. The report shows that investors withdrew £2.7bn last month, up from £564m in September, with sell orders up 36% month-on-month. UK-focused funds were hardest hit, with UK equity funds losing £988m during October. Charles Hall, head of research at Peel Hunt, said the outflows show “the scale of negative vibes around the Budget and reinforces exactly why the Government urgently needs to encourage investment in UK assets.” While there had been speculation that the top rate of capital gains tax could be hiked to 39% in the Budget, the Chancellor actually increased the rate from 20% to 24%.

Entrepreneur Sir James Dyson has criticised last week’s Budget, accusing the Chancellor of “killing off family businesses, individual aspiration and economic growth.” He argued that a hike in inheritance tax on family-run businesses would be “the death of entrepreneurship” and warned: “In a single ignorant swipe at aspiration, Rachel Reeves is killing off established family businesses, and any incentive to start new ones.”

The new pension policy, effective from April 6, 2027, is set to impose a significant tax burden on families, with potential losses of up to 70.5% on unused pension funds. According to Andrew Marr, managing partner at Forbes Dawson, the proposed changes will apply a 40% inheritance tax on unused pension funds at death, followed by income tax on withdrawals. Mr Marr said: “The impact of this one is massive and does smack of retrospective taxation.”

A study by the Global Payroll Association reveals that fewer than 20% of UK office workers have requested a pay rise, despite a significant number staying with their current employer for extended periods. Out of 1,012 surveyed employees, 71% have remained in their current roles for over five years, and 12% for three to four years. While 91% have received a pay increase at some point, 31% reported waiting over two years between raises. Notably, 64% received annual increments. The study highlights a lack of active negotiation for pay adjustments, suggesting potential hesitation or uncertainty about how to discuss salary with employers.

Economists expect the Bank of England’s (BoE) Monetary Policy Committee to cut the base rate by a quarter point to 4.75% this week in what will be only the second cut in 2024. Analysts are eager to see whether the Bank offers a more cautious message about further reductions now the Chancellor has delivered the Budget. George Buckley, chief UK economist at Nomura, said: “The market will be much more focused on whether there are signs that December is clearly in play for easing or not,” adding: “Higher growth and inflation should lead to a less dovish BoE.” Modupe Adegbembo, an economist at Jefferies, says the Budget “will be too big for the BoE to ignore,” and “increases the risk the BoE skips the December cut.” Ales Koutny, head of international rates at Vanguard Asset Management, says the Budget may have reduced the likelihood of a rate cut, putting the odds of a reduction at 50-50.

A poll of leading economists shows that there is uncertainty over whether the Budget will deliver economic growth over the next five years. Asked whether the Chancellor’s financial plans will increase GDP growth, the economists surveyed were evenly split between yes and no. Julian Jessop, economics fellow at the Institute for Economic Affairs, said: “On paper, the additional borrowing in the Budget should provide a small fiscal stimulus,” but added that this “could be more than offset by the drag from higher taxes, more state intervention and the crowding out of private investment.” The Office for Budget Responsibility (OBR) expects the economy to expand by 2% in 2025 before taxes on businesses limit growth to around 1.5% in 2029/30. Suren Thiru, economics director at the ICAEW, said: “Tax rises on businesses combined with poor productivity could mean that growth is shallower than the OBR is expecting.”

The motor finance scandal poses a significant threat to banks’ credit ratings, Fitch has warned. The agency highlighted that “lenders face considerable uncertainty and potentially significant implications” following a Court of Appeal ruling that favoured consumers against MotoNovo Finance and Close Brothers. The court determined that car dealers must fully disclose commissions, leading to potential claims and liabilities for lenders. The Royal Bank of Canada estimates that compensation costs could reach £13bn. The Financial Conduct Authority is reviewing the ruling’s impact and will report by May 2025.