Britain’s construction sector experienced its slowest growth in six months in December, with the S&P Global UK Construction Purchasing Managers’ Index (PMI) dropping to 53.3 from 55.2 in November. This decline was attributed to a reduction in housebuilding activity for the third consecutive month, driven by high borrowing costs and weak consumer confidence. Tim Moore, economics director at S&P Global Market Intelligence, noted that “concerns about the demand outlook” adversely impacted growth forecasts. Despite the challenges, nearly half of the surveyed firms anticipate output expansion in 2025, with only 15% expecting a decline.

Halifax anticipates “modest house price growth” in 2025, despite a slight dip of 0.2% in December. The average UK house price now stands at £297,166, reflecting a 3.3% annual increase. Amanda Bryden, head of mortgages at Halifax, noted that the housing market remained steady at the start of 2024, with growth expected to resume in the summer. Changes to stamp duty, effective from April, are likely to motivate first-time buyers, as the “nil rate” band decreases from £425,000 to £300,000. However, Bryden cautioned that mortgage affordability will continue to challenge many buyers, especially with the Bank of England’s base rate expected to decline slowly.

The UK’s Competition and Markets Authority (CMA) is set to initiate three investigations this month into major tech firms, leveraging its new powers aimed at fostering investment and innovation. The CMA will designate companies as having “Strategic Market Status” (SMS) before launching investigations. Officials can then put requirements on their conduct and intervene for consumers and other businesses. Notably, the CMA has expressed concerns that Apple may be stifling innovation in smartphone browsers and is considering probing the duopoly of Apple and Google in mobile ecosystems. A third, as yet unspecified, probe into digital activity is expected in the summer.

Recent polling by Freshwater Strategy indicates that 54% of voters believe inheritance tax should be lowered from its current flat rate of 40% on estates exceeding £325,000. The Office for Budget Responsibility estimates that this tax will generate £7.5bn in 2024/25. While 24% of respondents advocate for a slight reduction, 30% desire a more significant cut. Critics argue that the tax represents double taxation and discourages economic activity. Furthermore, loopholes in the system often result in effective rates being much lower than the headline rate. Rachel Reeves announced changes to inheritance tax in the recent Budget, which included capping relief for agricultural land and including pension pots in the tax’s scope.

Twenty-four professional football clubs are currently in arrears to HMRC over PAYE debt, with concerns that this number may increase due to Rachel Reeves’s Budget. Clubs such as Reading and Southend United have received winding-up petitions from HMRC in 2024. Graham Caddock, tax investigations director at Lubbock Fine, warned that changes to employer National Insurance contributions could exacerbate financial difficulties, stating: “The finances of so many football clubs are already precarious so the sudden burden of the extra NICs is going to push many of them dangerously into more debt.” The situation is further complicated by potential changes in tax regulations affecting overseas earnings for players, which could lead to an exodus from the Premier League. Sophie Dworetzsky from Charles Russell Speechlys noted: “The lack of an attractive longer-term tax regime for individuals moving to the UK from abroad might be regarded as an own goal.”

Deutsche Bank has warned UK businesses that more borrowing and tax rises will be likely this year as a result of a flatlining economy and fewer interest rate cuts. In a note to investors, Sanjay Raja, Deutsche Bank’s chief UK economist, said: “We think Chancellor Reeves will likely need to lift taxes at least one more time following last year’s historic tax raising event. More stealth tax increases are likely in our mind.”

Next has reported a £67m increase in wage costs for the year ending January 2026, primarily due to the Labour Government’s plans to raise employer national insurance contributions and the minimum wage. The retail giant anticipates a “unwelcome” 1% price rise to mitigate these costs. Despite a strong 5.7% rise in underlying full-price sales for the fourth quarter, Next expects sales growth to slow to 3.5% in the upcoming financial year, with profits projected to rise by 3.6% to £1.05bn. The company stated: “We believe that UK growth is likely to slow, as employer tax increases, and their potential impact on prices and employment, begin to filter through into the economy.” Additionally, overseas sales growth is expected to decline as marketing expenditures are curtailed.

According to a recent City AM Freshwater Strategy poll, nearly one in seven workers in the UK feel insecure about their jobs, particularly among those earning less than £30,000, where 18% reported feeling this way. Neil Carberry, Chief Executive of the Recruitment and Employment Confederation, said Labour’s Employment Rights Bill will only increase the level of insecurity as businesses are left less able to provide it.

British stock funds experienced their worst year on record in 2024, with a net withdrawal of £9.6bn, according to Calastone. This decline highlights a significant investment drought in the London Stock Exchange, as UK-focused funds are increasingly shunned by investors. The situation has led to a surge in foreign takeovers, reaching a 14-year high, as UK equity valuations remain low. Additionally, only 6.6% of pension pots are now allocated to UK stocks, down from 48% in 2008. Despite changes by the Financial Conduct Authority to attract listings, UK funds continue to struggle, with £27.2bn flowing into global equity funds instead.

A man who was paid to be the sole director of more than 400 companies has been banned from being a company director for nine years after playing a key role in a scheme designed to undermine the UK insolvency system. Atherton Corporate (UK) Ltd paid Neville Taylor more than £250,000 to run the companies, 12 of which had ceased trading but not yet entered liquidation. The Insolvency Service said that when the firms eventually entered liquidation, more than £7.6m in assets was unaccounted for. “Neville Taylor hampered efforts by liquidators to identify assets, caused a widespread loss to creditors and breached his duties as a director to act in the best interest of the companies and creditors,” said Dave Magrath, director of investigation and enforcement services at the government agency.

Yields on 30-year gilts rose by 0.08 percentage points on Tuesday to 5.25%, surpassing the level hit after the Liz Truss mini-budget in 2022 and the highest in 27 years. Borrowing costs on ten-year gilts also climbed to a 14-month high of 4.68%. The rise in gilt yields will mean a higher borrowing bill for the Treasury and put the Chancellor’s fiscal rules at risk. “Reeves could soon face a nasty choice of breaking her fiscal rules or announcing more tax rises and or spending restraint at a time when the economy is already weak,” Gregory said. “We suspect she would choose the latter.”

According to a survey by Santander UK, some 80% of 18 to 21-year-olds have never created a budget, with 31% seeking financial advice from social media influencers. The research, conducted by Savanta, revealed that 35% of young adults worry about their finances daily. Alarmingly, 76% have never paid a bill, and 77% have not saved for unexpected expenses. William Vereker, chairman of Santander UK, stressed the importance of financial education, stating: “Young people’s understanding and effective management of money is essential in their own lives, but also for wider society and economic growth.” Santander UK plans to launch a financial education programme in 2025 to address these issues.