The British Chambers of Commerce (BCC) has raised alarms about the UK jobs market, indicating that “warning lights” are flashing due to rising unemployment and falling vacancies. Recent data shows a 4.4% unemployment rate for the three months leading to November, up from 4.3%, alongside a significant drop of 47,000 payrolled workers in December, marking the largest decline since November 2020. Despite a notable wage growth of 5.6% in regular pay, the BCC warns that businesses face increasing employment costs, particularly with Labour’s plans to raise national insurance contributions and the minimum wage in April. Analysts predict that the Bank of England may lower interest rates in February, as concerns about the faltering jobs market grow. Matt Swannell from the EY Item Club said the Bank of England is becoming more concerned about the weakness of employment and he expects the MPC to cuts rates by 25 basis points in February.

Figures from the Office for National Statistics (ONS) show wage growth in the UK has increased, with annual regular pay growth averaging 5.6% in the three months to November, up from 5.2% previously. Private sector pay growth drove the increase in average weekly earnings, with a jump from 5.4% to 5.8%, while public sector pay growth eased from 4.2% to 4.1%. Meanwhile, unemployment rose to 4.4%, up from 4.3% previously, in line with expectations.

The Insolvency Service has reported a significant rise in compulsory liquidations, reaching 3,320 in 2024, marking a 14% increase from the previous year and the highest level since 2014. Tim Cooper, president of R3, commented: “Compulsory liquidation levels have increased compared to last year as creditors pursue the debts they are owed.” While overall insolvencies decreased by 5% from the previous year’s peak, analysts remain cautious about future trends. Jeremy Whiteson from Fladgate cautioned that the current figures might represent a “temporary relaxation” as concerns grow around the impact of rising minimum wage and national insurance costs, particularly in the retail sector, which saw a 30% month-on-month increase in insolvencies. David Kelly from PwC UK anticipates further insolvency filings in early 2024 as businesses reassess their financial positions. Meanwhile, the number of personal insolvencies also rose by 14%, climbing from 103,434 to 117,947, as consumers grappled with escalating debt due to higher interest rates.

Investors in London and the surrounding Home Counties are set to face significant increases in capital gains tax (CGT) from April, with an estimated £430m additional tax burden for Londoners alone. UHY Hacker Young highlighted that the changes, introduced by Chancellor Rachel Reeves, will see the basic CGT rate rise from 10% to 18% for those earning up to £50,270, while higher earners will see their rate increase from 20% to 24%. Phil Kinzett-Evans from UHY Hacker Young warned that these hikes could stifle investment in UK growth companies, stating: “One of the problems with increasing capital gains tax is that it discourages investors from investing in UK growth companies.” He urged taxpayers to consider moving assets into tax-efficient vehicles like SIPPs and ISAs to mitigate the impact of the tax increase. Kensington and Chelsea residents are expected to be the hardest hit, facing an additional £108m in CGT this year.

MPs have expressed serious concerns regarding HMRC’s handling of unpaid taxes and customer service. The Public Accounts Committee highlighted that HMRC wrote off £5bn in unpaid tax last year, while also cutting off 44,000 customers who were waiting for assistance. Sir Geoffrey Clifton-Brown, committee chair, said: “HMRC is an organisation in defensive mode, and needs bold and ambitious leadership to begin to chart its recovery.” The committee, which suggested HMRC had deliberately run down its service to force taxpayers online, recommended that HMRC reinstate call waiting time targets and improve access for the 7m customers unable to use digital services. Despite receiving £51m in additional funding, there are fears that service levels may decline again as demand increases. Jim Harra, First Permanent Secretary and Chief Executive of HMRC, defended the authority, claiming improvements have been made, with call wait times reduced by 17 minutes since last year.

The chair of the UK Competition and Markets Authority has been forced out by the Business Secretary, Jonathan Reynolds, for not being sufficiently focussed on growth. Marcus Bokkerink was appointed in 2022 and could have served a five-year term. The former Amazon UK boss Doug Gurr is expected to take over as CMA chair in the interim with eyes now on whether CMA chief executive Sarah Cardell adjusts her approach. Tom Smith, competition lawyer at Geradin Partners and former CMA legal director, said the move came as a surprise. “Government seems to be sending a strong signal, especially about merger control,” he added. “It is tempting to say that now would be a good time to file a merger at the CMA.”

Ana Botín, executive chair of Santander, has affirmed the bank’s commitment to the UK amid speculation about the bank’s potential exit from the UK after 20 years of operation. Speaking at the World Economic Forum in Davos, Botín said: “We love the UK, it is a core market, and will remain a core market for Santander for the future. Punto [full stop].”

The British Business Bank has provided support to 209,000 small businesses since its inception in 2014, the bank has said, resulting in £43bn in additional economic output and the creation of 250,000 jobs.

President Donald Trump has announced investments worth up to $500bn for an AI infrastructure project called Stargate, formed by a new partnership between OpenAI, Oracle and SoftBank. Microsoft was also involved in the project as a technology partner. Stargate will initially build a data centre project in Texas before expanding into other states with the aims of boosting capacity to train and run new AI models. Trump said the project would create 100,000 American jobs “almost immediately”.

The number of British companies among the top 2,000 global R&D spenders has nearly halved over the past decade, dropping from 118 in 2013 to just 63 in 2023.

The billionaire founder of hedge fund firm Bridgewater Associates has warned of a “debt death spiral” for the UK. Ray Dalio told the FT the UK needs to cut its budget deficit through either tax rises or spending cuts before the cost of borrowing becomes insurmountable. “When you get to the point that you have to borrow money to service the debt and interest rates are rising, so that debt service payments rise, so you need to borrow more money to pay them, you’re in what the markets call a death spiral,” he said. “As those risks increase, everybody looks at that need to borrow more money at higher interest, which creates [a] self-reinforcing debt deterioration cycle.”

US President Donald Trump has instructed the Secretary of the Treasury to investigate whether any foreign company, or individual, should face higher taxes because American corporations or its citizens is being unfairly taxed overseas. Under Section 891 of the US tax code the president has the power to double the rate of tax on foreign nationals and corporations if they judge that the countries they hail from are unfairly taxing American interests overseas. Trump also withdrew support for last year’s OECD global tax pact, which allows other countries to levy top-up taxes on US multinationals. Grant Wardell-Johnson, global head of tax policy at KPMG, said: “Ultimately we are seeing international taxation moving from a multilateral domain to a bilateral one based on strong unilateral assertions. It is a new taxation world.”