According to BDO, British businesses are facing significant challenges due to supply chain disruptions and rising costs, with 32% of mid-sized firms indicating they require additional financial support, including bank loans and government grants. Richard Austin, a partner at BDO, said: “[Mid-sized businesses] are the engine room of the economy, employing more than eight million people across the UK. They need a more favourable operating environment, underpinned by policy and taxation, that enables better access to capital and encourages ongoing investment in new technologies.” However, the survey also found that 49% of businesses felt they were in a stronger position than before the pandemic with £4.6m investment earmarked by mid-sized companies over the next two to five years.

Confidence among UK businesses has significantly declined, with the British Chambers of Commerce (BCC) reporting that 63% of firms are concerned about taxes, the highest level since 2017. The survey, which included over 4,800 businesses, revealed that nearly two-thirds are worried about the impact of rising national insurance contributions (NICs) following the recent Budget. The BCC’s director general, Shevaun Haviland, said: “Businesses’ confidence has slumped in a pressure cooker of rising costs and taxes,” as many firms anticipate raising prices in the coming months. The economic outlook remains bleak, with growth figures disappointing and businesses cutting back on investment. However, a separate report from KPMG suggests that UK economic growth could more than double this year, driven by interest rate cuts and increased government spending.

Labour’s proposed Employment Rights Bill, led by Deputy Prime Minister Angela Rayner, aims to enhance workers’ rights but has raised significant concerns among small business owners. A poll by the Federation of Small Businesses (FSB) revealed that 92% of small employers fear the legislation will lead to job losses, with 67% planning to hire fewer staff. Tina McKenzie, FSB’s Policy Chair, said: “Small firms have made it crystal clear that the Bill will not motivate them to hire more whatsoever.” Critics argue that the Bill’s provisions, including changes to unfair dismissal laws, could deter hiring and exacerbate the benefits bill, ultimately impacting living standards across the UK. The Government maintains that the Bill is essential for economic growth and worker welfare.

Labour’s upcoming “modern industrial strategy” aims to attract investment and stimulate economic growth, but it faces significant challenges, writes Seema Shah, chief global strategist at Principal Asset Management, in the Sunday Times. She highlights that the strategy must address key barriers, including the UK’s relationship with the EU and business taxation. “Launching an industrial strategy to lower barriers to investment, while ignoring the tax burden… is like hanging an ‘open for business’ sign above a boarded-up shop,” Shah states. The strategy’s success hinges on meaningful engagement with the EU and reforming the tax landscape, particularly in light of the chancellor’s national insurance hike and the UK’s comparatively high capital gains tax. Without these changes, the UK’s appeal to investors may remain limited.

The number of businesses filing accounts over six months late has surged, resulting in record fines of £34.4m in 2023-24, a significant increase from £10.2m in 2019-20.

Last year marked a significant downturn for the London Stock Exchange (LSE), with 88 companies delisting or transferring their primary listings, the highest number since 2009, according to analysis by EY. Major firms like Just Eat, Flutter Entertainment, Tui, and Ashtead opted to leave the UK market, citing declining liquidity and lower valuations as key factors. Flutter’s move to New York was driven by the desire to access “the world’s deepest and most liquid capital markets.” Just Eat Takeaway abandoned its LSE listing due to the “administrative burden, complexity and costs” involved. The year also saw a record low of 18 initial public offerings (IPOs) in London, five times fewer than those that delisted. However, Scott McCubbin, EY’s IPO lead for the UK and Ireland, expressed cautious optimism for 2025, highlighting potential opportunities for a rebound in activity.

Karan Bilimoria, founder of Cobra Beer, has taken on the role of UK chair of the International Chambers of Commerce (ICC). Commenting on the Labour Government’s tax policies, Bilimoria said: “Business feels… let down. We are disappointed.” He highlighted the negative impact of tax increases on enterprise and warned of a potential recession. He also critiqued the previous Conservative government’s tax hikes, particularly the rise in corporation tax from 19% to 25%, calling it a “huge mistake.” Bilimoria, who has a rich history in business and was the first ethnic minority president of the Confederation of British Industry, aims to advocate for reforms in business rates and increased investment in research and development. He also believes that fostering a closer relationship with the European Union would benefit UK businesses.

In the first three days of 2025, executives at Britain’s largest companies earned more than the average employee’s annual salary. According to The Mail on Sunday’s Fat Cat Files, the typical FTSE 100 chief executive made £4.7m in 2023, which is 125 times the average worker’s earnings of £37,430. The pay gap is particularly stark at Tesco, where chief executive Ken Murphy earned nearly £10m, 431 times the salary of a typical worker. Critics argue that the growing pay differentials contribute to workplace inequality, especially as real wages have stagnated since the 2008-9 financial crisis.

Andrew Goodwin from Oxford Economics has warned that the Chancellor’s fiscal headroom may diminish significantly, dropping from £9.9bn to £3.5bn by 2030 if borrowing costs remain elevated. The situation will limit her capacity to enhance public service funding and may necessitate future tax increases, despite a previous £40bn tax hike. Goodwin says that “fiscal sustainability concerns are not going to go away” for Reeves, who has committed to borrowing solely for investment and reducing national debt. The current government debt stands at £2.8trn, making finances susceptible to rising interest rates.

Traffic on England’s main roads is officially slowing down, with the average speed forecast to drop to 55mph by 2025, down from 59mph a decade ago. This trend poses a challenge for Sir Keir Starmer’s Government, which is concerned that congestion is hindering economic growth. A report by PwC highlights that the increase in freight traffic, driven by online shopping, and the shift to electric vehicles are contributing factors. Jack Cousens, head of roads policy for the AA, said: “The reduction in speed would indicate there is that knock-on effect on the impact on UK plc’s bottom line.”

The UK’s plan to shift away from North Sea oil and gas production has been labelled a “very big mistake” by US President-elect Trump, who called for Sir Keir Starmer’s government to open up the North Sea and get rid of windmills. His comments appear to have been prompted by news that US oil producer Apache would be winding down its North Sea operations due to high taxes and onerous regulations. The attack on UK energy policy is the latest in a series of criticisms of Labour from Trump’s team and puts Ed Miliband’s drive for net zero and clean energy in the spotlight. The Energy Secretary, has pledged not to issue any new North Sea drilling licences and has vowed to make Britain’s power system “clean” by 2030.