Business confidence among finance chiefs has reached a two-year low, according to a Deloitte poll. With many respondents attributing the downturn to the October Budget, which has increased employment costs, CFOs are responding to the tax raid by cutting costs or raising prices. Two-thirds of finance directors do not expect to increase hiring levels this year, with this a four-year high. The poll also shows that a net 26% feel more pessimistic about the prospects for their business than three months ago. More than half of those polled rated cutting costs as their top priority.

The FTSE 250 fell by almost 4% this week, marking its worst week since 2023 as investors grew concerned over the pound sinking and UK gilt yields rising. Deutsche Bank research strategist Jim Reid said a global bond sell-off came “with long-term borrowing costs continuing to move higher across the board.” While the FTSE 250 posted its worst weekly performance since August 2023, the FTSE 100 was up 0.5%. Russ Mould, investment director at AJ Bell, noted that while approximately half of the FTSE 250 generates earnings in the UK, “about three quarters of the FTSE 100 earns overseas, making that index less of a play on the state of the UK.”

With Rachel Reeves facing pressure to find new revenue sources without increasing taxes, Capital Economics analyst Ashley Webb considers the Chancellor’s options. While Ms Reeves has ruled out increases to income tax, National Insurance, VAT and corporation tax, Mr Webb says she could tweak other levies – such as capital gains tax and stamp duty – but suggests that doing so “would provide only marginal extra revenue.” He also suggests that the Chancellor could target existing tax relief on areas like ISAs and pensions; broaden the scope of existing levies; and stop paying interest on the £710bn of central bank reserves held by commercial banks at the Bank of England. Mr Webb says Ms Reeves’ “nuclear option” is to go back on her pledge and hike taxes on working people.

HMRC collected nearly £46bn as a result of investigations into taxpayers in the last financial year. According to analysis by Pinsent Masons, the tax office raised £45.7bn from tax investigations, a 28% rise from the £35.7bn recorded the previous year. The tax gap, which represents unpaid taxes, stood at £39.8bn, with over £19bn deemed unrecoverable. Steven Porter from Pinsent Masons said: “The new government has made its aim clear: to close the tax gap by putting a real squeeze on tax evasion and tax avoidance.” To aid this effort, HMRC plans to invest £1.6bn over five years to recruit additional compliance and debt management staff, aiming to raise an estimated £4.7bn by 2029/30. The hiring initiative also seeks to enhance customer service, as many businesses reported poor experiences with HMRC.

Britain’s regulators will this week be told embrace risk and “strip back” overly cautious rules in a bid to drive economic growth. Chancellor Rachel Reeves is set to meet the heads of Britain’s largest regulators – including the Financial Conduct Authority and Competition and Markets Authority – and ask them to put forward their plans to stimulate growth in the sectors they oversee. They will be urged to reduce regulation and make it easier for new entrants to enter their markets. This comes after Ms Reeves contacted the country’s key watchdogs in December, telling them they have until this Thursday to set out plans to make their sectors “more pro-growth and pro-investment.” A senior Treasury source said the message that the Chancellor will be sending is that the regulators “need to go further and faster in stripping back unnecessary rules and creating an environment where companies can take risks.” The insider also noted that Ms Reeves will look to address concerns over regulatory red tape, with this the “single biggest” complaint ministers have received from business groups.

The recent increase in employers’ National Insurance contributions (NICs) has raised concerns about the fragility of the UK jobs market. Despite a historically low unemployment rate of about 4%, the Chancellor’s decision to raise NICs from 13.8% to 15% has led to immediate hiring freezes and layoffs across various sectors. The Office for Budget Responsibility estimates potential job losses of 50,000 over the next five years, with private sector economists predicting losses between 80,000 and 150,000. Praful Nargund from the Good Growth Foundation noted that businesses must adapt to offset rising costs through training and technology to enhance productivity.

New data shows that there has been a significant decline in job opportunities within the City, with financial services vacancies dropping to their lowest level since 2020. According to a survey by Morgan McKinley, only 3,664 job openings were posted between October and December 2024, down from 4,483 in the previous quarter. Mark Astbury from Morgan McKinley commented: “These stark figures paint a sobering picture of an industry grappling with mounting challenges.”

Analysis from the TaxPayers’ Alliance reveals that a 5% cut in public sector pensions could finance the construction of five new hospitals or resurface all of Britain’s motorways. Currently, the public sector pensions bill stands at approximately £2.6trn, surpassing the UK’s entire economy. Darwin Friend, head of research at the TaxPayers’ Alliance, commented: “The flabbergasting cost of public sector pensions is an enormous millstone around the neck of the state.” The Government is reportedly considering offering civil servants higher salaries in exchange for reduced pensions, a move that has divided unions.

The number of IPOs on AIM remained at a record low in 2024, with just 11 listings on London’s junior stock market. This matched the total seen in 2023 and comes in below the 13 seen in 2008, the height of the financial crisis. While the number of IPOs was the same as 2023, the amount of money raised from AIM listings was up, from £48m in 2023 to £119m in 2024. These totals both fall well short of the £6.6bn peak seen in 2006/7, when AIM IPOs raised £6.6bn. The total number of companies on AIM at the end of 2024 was the lowest in 23 years, with only 688 firms listed. This is down from nearly 1,700 in 2007. Colin Wright, chair of UHY Hacker Young, commented: “If AIM is to remain competitive with private equity and other junior markets, there needs to be a more open discussion on how we can reduce red tape for AIM companies.” He added: “Most commentators agree that an active stock market for smaller companies is an essential part of a growth economy.”

Matthew Beesley, chief executive of FTSE 250 fund manager Jupiter, has urged the Government to abolish the 0.5% stamp duty on the purchases of UK shares, arguing that doing so will help make the UK a more attractive place to invest. Mr Beesley argues that scrapping the tax “would level the playing field for UK versus non-UK equities,” adding that it would also help encourage investment from individuals and other overseas investors. He says the fact that the idea of scrapping the duty has been “repeatedly dismissed” despite being tabled “multiple times to multiple governments” is “mystifying.”

The International Monetary Fund (IMF) expects to see steady global growth and continuing disinflation according to its latest World Economic Outlook. IMF managing director Kristalina Georgieva highlighted that the US economy was doing “quite a bit better” than expected but noted that interest rates are expected to stay “somewhat higher for quite some time.” Ms Georgieva suggested that governments need to cut fiscal spending and adopt reforms to boost growth. She said: “Countries cannot borrow their way out. They can only grow out of this problem.” In October, the IMF raised its 2024 economic growth forecasts for the US, Brazil and Britain but cut them for China, Japan and the euro zone. It also left its forecast for 2024 global growth unchanged at the 3.2% projected in July. The IMF also lowered its global forecast for 3.2% growth in 2025 and warned that global medium-term growth would slip to 3.1% in five years.

Rachel Reeves has defended a controversial trip to China, saying that trade deals agreed in Beijing will be worth £600m to the UK over the next five years. She said her trip will “unlock tangible benefits for British businesses exporting and trading around the world to ensure we have greater access to the second-largest economy in the world.” The Chancellor met vice-premier He Lifeng to discuss trade and investment opportunities, with the Treasury saying the UK and China had agreed to deeper co-operation in trade, financial services, investment and on climate issues.

Analysts warn that Donald Trump’s proposed tariffs could cost British industry £2.5bn annually. Analysis by the Boston Consulting Group indicates that a 20% tax on imports into the US poses significant risks to the UK amid a potential trade war. While some economic impact may be mitigated by increased service sales, the looming tariffs highlight the challenges faced by UK manufacturers, who are already struggling with high energy costs. According to a report from PwC and trade body Make UK: “Industrial UK energy prices as a factor of production have long been higher than those of even our closest neighbours across the continent.”

New research from Foxtons has revealed the London tube lines with the highest monthly mortgage payments, with the Waterloo and City Line leading at an average of £5,632. This line, known as ‘The Drain’, connects just two stops—Waterloo and Bank—both situated in zone 1. The average property price in Waterloo is £925,714, significantly contributing to the high mortgage costs. The Elizabeth Line emerged as the most affordable, with average mortgages at £2,610.