In 2023, the UK experienced its slowest rate of new business creation since 2010, with only 316,000 start-ups compared to 337,000 in 2022, according to the Office for National Statistics (ONS). This decline reduced the ‘business birth rate’ to 11.0%, the lowest in over a decade. Conversely, business closures also decreased, with 309,000 shutting down, resulting in a ‘business death rate’ of 10.8%. Economists warn that these trends could hinder productivity growth and living standards, as older businesses may struggle to innovate. The ONS data also shows an increase in ‘high growth’ employers – businesses with at least 10 staff who had increased staff numbers by 20% a year for three years. The proportion of businesses in this category rose to a five-year high of 4.7% in 2023, from 3.9%.

Higher interest rates and higher business costs due to measures set out in the Budget are likely to drive an increase in insolvencies, Begbies Traynor has warned. The firm’s executive chairman, Ric Traynor, said: “Additional headwinds for UK business from increased employment costs and the prospect of higher for longer interest rates are likely to extend the period of elevated insolvency levels.” He added that insolvencies had run “at heightened levels for the last 18 months or so. We see that continuing maybe for another year.” The Budget saw Chancellor Rachel Reeves increase employers’ National Insurance contributions by 1.2% and lower the threshold at which employers must start paying the tax from £9,100 to £5,000. She also announced a 6.7% increase in the minimum wage. Data from the Insolvency Service show that company failures had fallen 7%, to 1,973, in September compared with last year but that the number of insolvencies remained much higher than those seen during the pandemic.

Consumer confidence fell from 47.3 in October to 46.9 in November, according to the S&P Global UK Consumer Sentiment Index survey, an index where 50 is the neutral point. Chris Williamson, chief business economist at S&P, said that “ongoing pressure on household finances has resulted in squeezed spending, higher debt and lower savings.”

Analysts at Goldman Sachs have warned that the rise in employers’ National Insurance contributions announced in the Budget will lead to slower wage growth for staff. Saying they expect consumer spending growth to moderate in H2 2025, the analysts say this will come “as real disposable income growth falls back.” The report adds: “This partly reflects slowing real wage growth; we expect private sector pay increases to cool, partly because of the employer NI increase being passed onto consumers.” Goldman also said disposable incomes “will be dented further still” by the continued freeze to income tax thresholds.

Britain is among nations losing £389bn annually due to the exploitation of tax havens by large corporations and the wealthy, according to the Tax Justice Network. The report highlights that the UK alone is missing out on £35bn because of these loopholes. Liz Nelson, director of advocacy and research at the Tax Justice Network, said: “Tax is our most powerful tool for choosing the kind of societies we want to live in.” She added: “Our governments chose to use tax as a tool to make the super-rich and their corporations even richer.”

Rachel Reeves is facing a potential conflict with the incoming Trump administration regarding the digital services tax (DST) aimed at American tech giants. The DST, which imposes a 2% charge on UK sales of large tech companies, raised £700m last year and has generated £2.3bn since its introduction in 2020. However, it has drawn criticism from Washington, where it is seen as an unfair burden on US firms. Jonathan McHale, a former US trade official, said the US “is likely to feel the need to redress a set of unilateral measures that already costs US firms billions of dollars annually.” The Treasury’s decision to review the DST could provoke retaliatory tariffs from the Trump administration, complicating UK-US trade relations.

Analysis by the Centre for Economics and Business Research (CEBR) suggests that Donald Trump’s plan to impose tariffs on US imports will cost the UK economy around £20bn by the end of his presidency. With Mr Trump saying that he plans to introduce a 20% levy on most imports to the US, it is calculated that this will hit the UK’s economic output by 0.9%. The US is the UK’s second-biggest trading partner after the EU and Britain sent £188.2bn of exports to the US in the 12 months to the end of June. CEBR economist Sara Pineros said: “Seemingly, the clearest path for the UK to avoid Trump’s tariffs would be to agree to a free trade agreement.”

High domestic energy prices are likely to be “the new normal,” according to consultancy Cornwall Insight. Dr Craig Lowrey, principal consultant at Cornwall Insight, told the BBC’s Today programme that prices have been “well above the historic norms,” before warning that there “doesn’t seem to be any sign of a return to pre-energy crisis levels.” Energy regulator Ofgem will announce the next official quarterly price cap later this week and Cornwall Insight expects a 1% increase that will take the typical annual bill to £1,736.