Crowdfunding reforms threaten the economy

The UK Crowdfunding Association has warned that the Financial Conduct Authority’s (FCA) stringent reforms could cost the economy up to £16bn in “lost investment” and hinder small businesses’ access to finance. In a letter to City Minister Tulip Siddiq, Bruce Davis, chairman of the association, warned that the UK is now perceived as having one of the most heavily regulated crowdfunding markets globally. There are concerns that the FCA’s reforms – which include risk warnings; the banning of “inducements” to invest; the introduction of “frictions” to ensure investors do not rush into making decisions; and tougher “appropriateness” tests – have deterred potential investors and increased marketing costs for platforms. The letter says there is evidence of companies which previously raised money through crowdfunding platforms considering using EU jurisdictions “to avoid what were perceived as excessive costs, uncertainties and barriers to capital raising” in the UK. The Treasury said: “We are committed to ensuring retail investors have access to financial markets, while also making sure that appropriate consumer protection measures are in place.”

CBI poll sees growth expectations slide

Growth expectations among UK companies have significantly declined. The Confederation of British Industry’s (CBI) latest indicator reveals that for the first time this year, a majority of firms anticipate a decrease in activity over the next three months. The services sector is particularly affected, with many businesses planning to reduce headcount due to rising costs from increased National Insurance contributions. Alpesh Paleja, the CBI’s interim deputy chief economist, said: “As we head into 2025, expectations for growth have taken a decisive turn for the worse,” adding: “Our surveys suggest that anticipated activity was already weakening heading into the October Budget, and the Chancellor’s announcements have left businesses with even more tough choices to make.” The CBI is calling on the Government to move “quickly and decisively to reform business rates, deliver apprenticeship levy flexibility, and boost occupational health incentives to support the health of the workforce.”

NatWest: Mid-sized firms being hindered

NatWest has called for increased support for midmarket companies, which it describes as “the engine of growth” for the UK economy. The bank estimates there are around 13,000 such firms, representing 0.5% of all businesses in the UK. Challenges like red tape, planning delays, and restrictions on hiring skilled overseas workers hinder their potential. If these issues are addressed, turnover could rise by £115bn by 2030. Business Secretary Jonathan Reynolds acknowledged the report’s findings, saying: “This Government’s number one mission is growing our economy.”

‘Bossware’ devices harming workers’ wellbeing

A report from the Institute for the Future of Work has raised concerns about the growing use of software and devices designed to track emotions in workplaces, warning that they may harm workers’ wellbeing. It found that the tools, particularly those integrated into workplace surveillance management software, often lack adequate safeguards. The report highlights the example of Microsoft’s Copilot software, which includes a “wellbeing” feature for monitoring employees, and Zoom’s AI tool that detects emotional states during video calls. A survey of 380 workers found that 45% believed these tools had no positive impact on their health or safety. Additionally, between 29% and 34% of workers reported increased stress, stemming from demands such as faster work or stricter deadlines due to the use of ‘bossware’ technology. The report, commissioned by the Trust for London and the Joseph Rowntree Charitable Trust, concluded that the UK’s current regulations are inadequate to protect worker privacy and mental health.

Firms fight back against work-from-home fakers

A growing number of hybrid and remote workers are engaging in activities unrelated to their jobs during work hours, with over 80% admitting to watching TV for an average of two hours daily, according to a survey by TonerGiant. Additionally, 10% of British workers take naps during work hours, often between 3 pm and 4 pm, while others juggle two jobs simultaneously. A recent study by Workhuman revealed that over one-third of UK workers feign productivity in remote settings. Many remote workers use tactics to appear active, such as moving their mouse frequently or employing devices like mouse jigglers. However, employers are increasingly implementing surveillance measures to counteract these behaviours. During the pandemic, workplace monitoring surged, with 60% of employees believing they were being tracked by 2022, a figure projected to rise to 70% by 2025, according to Gartner. Surveillance methods include keystroke logging, screen monitoring, time tracking, and webcam usage, with some software even capturing screenshots or photos of employees’ activities.

Job-hopping could boost pension pots and pay

Research by investment platform Wealthify shows that those who have frequently moved jobs have saved £12,304 more into their pensions than those who have moved just once. Frequent job-hoppers have an average pension pot worth £105,538, while those who remained in one job typically have £93,234. The Resolution Foundation says the amount required for a basic standard of living in retirement is currently £107,800, with this equivalent to an annual income of £19,300. Pension and Lifetime Savings Association figures show that a pensioner needs £31,300 a year for a ‘moderate’ lifestyle and £43,100 for a ‘comfortable’ lifestyle, with these totals requiring a pension pot worth between £300,000 and £790,000. The Wealthify analysis also shows that those who frequently switch jobs have an average salary of £39,276 compared to £35,403 for those who have moved once.

Investor platforms accused of distorting rules

DIY investment platforms have been accused of bending consumer rules, with it suggested that they have forced investment trusts to continue following scrapped EU rules which made them appear more costly to investors. Accusing the platforms of “putting themselves above the law” and using “self-interest to deny customers access to undervalued investments,” Baroness Ros Altmann said: ‘Threatening to bar access to retail investors, unless a company acquiesces to providing misleading or false information, is a Kafkaesque distortion of consumer duty.” Baroness Sharon Bowles took a similar stance, saying investment trusts were “bullied into providing conflicting and confusing information” to investors.

Tories vow to fight tax hike

Mel Stride, the shadow Chancellor, has announced that the Conservatives will oppose Labour’s proposed increase in employers’ National Insurance contributions (NICs), saying that “warning lights from all sectors of the economy have been flashing ever more urgently” since the Budget. The Tories plan to vote against the NIC changes, which require primary legislation, when presented in the House of Commons. Additionally, they will debate Labour’s proposal for a 20% inheritance tax on farms valued over £1m, which has sparked protests from farmers. Mr Stride criticised Labour’s approach, asserting that there are “other and better choices” than imposing higher taxes on businesses. Shadow Environment Secretary Victoria Atkins has also hit out at Labour’s “vindictive” tax, saying it threatens to destroy British farming. A spokeswoman for the National Farmers’ Union said the “destructive” family farm tax is “bad policy, built on bad data, with no consultation.”

LSE takeover bids exceed £50bn

The value of takeover bids for firms listed on the London Stock Exchange has hit £52bn this year. Analysis from investment bank Peel Hunt shows that 45 London-listed firms have been approached, agreed to, or completed acquisitions since January. Charles Hall, head of research at Peel Hunt, has described the level of takeover activity among FTSE 350 businesses as “unprecedented,” with 21 bids this year. Analysts say a surge in takeover attempts involving overseas bidders stems from the relatively cheap valuations of London-listed companies compared to their international counterparts. Dan Coatsworth, investment analyst at AJ Bell, said M&A activity is “red hot,” adding: “So many UK-listed companies are being taken over because the market didn’t spot the value on offer.”

Rathi defends FCA progress

Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), has defended the regulator after MPs suggested it had failed to deliver reform despite a number of scandals. In an interview with BBC Radio 4’s Money Box, Mr Rathi said the City watchdog is making “record numbers of financial crime prosecutions” and that it is “one of the most evolved consumer protection regimes in the world.” This comes after a cross-party group of MPs said the FCA was “incompetent” and that its culture has “got worse rather than better.” Going on to suggest that the FCA has failed to properly investigate the banks and other financial organisations it regulates, the report said the watchdog has yet to resolve a “long list of problems.” Defending the watchdog, Mr Rathi said: “We will always stay focused on improving our operational performance, but I don’t think it would be fair to characterise the position as nothing has happened.”

Corporate confidence in the economy falls

Business leaders’ confidence in the prospects for the UK economy fell to levels not seen since the pandemic during November, according to analysis by the Institute of Directors (IoD). The institute’s Economic Confidence index fell to -65 in November, down from -52 during October. This marks the fourth consecutive monthly fall and is the second lowest reading the index has seen since its launch in 2016, with only the -69 seen in April 2020 coming in lower. Business leaders’ confidence in their own organisations fell from +2 in October to -7 in November, while investment and headcount expectations were also down. Revenue expectations slipped to +4 from +15, wage expectations dropped to +21 from +47, and export intentions declined from +6 in October to +2. Much of the downturn in confidence was attributed to the decision to increase firms’ National Insurance bills, with Anna Leach, the IoD’s chief economist, saying: “Far from fixing the foundations, the Budget has undermined them, damaging the private sector’s ability to invest in their businesses and their workforces.”

Bank of England in trade warning

The Bank of England has warned that global trade barriers could hit economic growth, saying: “Global fragmentation, namely a reduction in the degree of international trade and policy co-operation, could have several consequences.” The Bank went on to warn that for the macroeconomy, this “could weigh on growth and increase the uncertainty of economic outcomes including around inflation, which could in turn feed into volatility in financial markets.”