Analysis by EY shows that one in five UK companies issued profit warnings in 2024, with 274 warnings issued in total. This came as firms prepared for increased costs due to the rise in employer National Insurance contributions set out in the Budget. According to the report, the increased NI contributions pose “a significant new challenge to company earnings” in 2025. Jo Robinson, UK restructuring strategy leader at EY, said: “We’re starting to see increased costs continuing and we’re seeing that coming through in profit warnings.” Additionally, job vacancies fell by 9.1% year-on-year in December, as employers reduced staff numbers following the tax-raising Budget, despite wage growth reaching an average of £40,000 for the first time.

Analysis by S&P Global shows that the average prices charged by private employers climbed at the fastest pace since July 2023 in January. This came as costs increased across the service and manufacturing sectors, with wages, energy bills, and the price of imported raw materials all climbing. Despite this, business activity increased and S&P Global’s flash UK PMI composite output index hit a three-month high of 50.9 in January, from 50.4 the previous month on a scale where a number above 50 indicates expansion. S&P Global also found that employment levels fell for the fourth month in a row, with this attributed in part to an upcoming hike in employers’ National Insurance contributions and a post-Budget slump in business confidence. Thomas Pugh, an economist at RSM UK, said the analysis suggests that confidence is “slowly starting to return after the twin shocks of the Budget and threat of US tariffs”.

Chancellor Rachel Reeves’ October Budget has led to a significant increase in demand for robots, as rising employment costs make human workers less viable. With employers’ National Insurance contributions set to rise from 13.8% to 15% and the minimum wage increasing to £12.21 an hour, companies are reconsidering their investment strategies and Automate UK, the industry body for industrial robots, says more than half of its members have seen a jump in inquiries since the Budget. Mark Gray from Universal Robots highlighted that businesses are now more motivated to invest in automation, saying: “That increase in NI is starting to make an impact.”

Sir James Dyson has accused Chancellor Rachel Reeves of “vindictiveness” over changes to inheritance tax rules, claiming they will “destroy” family businesses that employ 14m people. In a letter to The Times, Sir James says that the new measures would not raise revenue but instead cost the exchequer billions in other taxes. From April, family businesses will lose their inheritance tax exemption, with a cap of £1m on business property relief. Mr Dyson, whose net worth is £20.8bn, highlighted that 60 of the top 100 UK taxpayers are family business owners, contributing £3bn annually in taxes. He warned that the tax reform set out in October’s Budget will hit these businesses and the vital public services they support, declaring that the Chancellor “is killing the geese that lay the golden eggs.” Ms Reeves has defended the tax rises, arguing they were necessary for public finances, noting that 40% of agricultural property relief benefits only 7% of estates. She told the BBC: “Thirty-seven estates got more than £100m of tax relief. That is not affordable and it is not fair.”

The Government has initiated an independent review into the controversial loan charge, which was designed to close a tax loophole and recover backdated taxes. However, campaigners have dismissed the review as a “sham,” arguing it fails to address the core issues surrounding the charge. While the review will examine barriers preventing resolution with HMRC and suggest ways to encourage compliance, it will not reassess the fairness of the loan charge itself. Critics have called for a far broader review. MP Greg Smith, co-chair of the Loan Charge All Party Parliamentary Group, said the announcement of the review was “a farce,” adding that it “is not the review that was promised nor the review that is so desperately needed.” The review will be conducted by Ray McCann, a former President of the Chartered Institute of Taxation.

Donald Trump’s withdrawal from the OECD global tax deal has raised concerns about a potential tax war, with experts warning over retaliatory measures against countries that increase taxes on US multinationals. The OECD deal, which aims to establish a minimum global corporation tax rate of 15%, has already seen implementation by around sixty countries. Ross Robertson, international tax partner at BDO, said that if Mr Trump looks to retaliate, it could spark a tax war, with businesses “caught in the middle of political disagreements.”

HMRC is set to recruit 5,000 additional tax inspectors to recover £6.5bn in unpaid taxes from small businesses and “normal income earners.” Price Bailey notes that the tax office’s recruitment drive will provide one inspector for every 1,000 small businesses. According to HMRC’s Customer Service & Accounts report, the number of compliance staff has increased by 26% over the past three years. MPs have urged HMRC to improve its service and pursue older debts more aggressively, as £5bn in debts were written off last year. This comes amid criticism from the Public Accounts Committee regarding HMRC’s customer service, particularly after 44,000 customers were cut off after lengthy wait times. Jim Harra, chief executive of HMRC, has defended the authority, saying: “In reality, we’ve made huge improvements to our service standards.”

Concerns about a recession are escalating as business leaders warn of impending job cuts due to tax changes set out in the Budget in October. A survey by the Confederation of British Industry (CBI) revealed that firms across various sectors anticipate a “significant fall” in activity over the next three months, having already reported a decline during the previous quarter. The CBI said its data supported the “view that the economy was pretty flat in the final months of 2024.” Looking ahead, the services sector is expecting a 20% decline in business volumes and manufacturing output is forecast to drop by 19%. Alpesh Paleja, an economist at the CBI, commented: “There is an urgent need to get momentum back into the economy,” adding: “The Government can help shift the UK’s economic narrative with more determined focus on measures that could drive growth.”

Rachel Reeves is set to announce plans to free surplus money from corporate pension schemes as ministers look to drive economic growth. Government sources said so-called surplus release could unlock more than £60bn of pension surpluses held in defined benefit (DB) schemes, while other estimates suggest that up to £100bn could be unlocked and reinvested. Insiders have revealed that Treasury officials, members of the Number 10 Policy Unit and representatives of FTSE-100 finance chiefs recently met with Varun Chandra, the Prime Minister’s top business adviser, to discuss the surplus release plan in detail. The pensions industry has been pushing for surplus release to be adopted in Britain, with the Pensions and Lifetime Savings Association having endorsed the move before last year’s election.

Five years post-pandemic, remote work remains prevalent, with two in five employees working from home at least once a week, according to the Office for National Statistics. However, office occupancy has surged to 60% of pre-pandemic levels, indicating a shift back toward more traditional working practices. While companies like WPP and Laing O’Rourke are mandating more in-office days, citing productivity concerns, Andy Jassy, CEO of Amazon, argues that being in the office fosters better collaboration and innovation. Rachel Harris, founder of StriveX, supports less traditional options, saying: “Remote work isn’t just a perk any more; it’s a necessity for building a modern, inclusive workforce.” As office attendance rises, many employees still prefer hybrid models, with studies suggesting a balance of two to three days in the office is favoured.

Oliver Shah in the Sunday Times looks at the Government’s call for regulators to deliver pro-growth strategies. He notes that while the Competition and Markets Authority’s response to a letter from Prime Minister Sir Keir Starmer was “mildly recalcitrant,” emphasising that an effective competition regime was essential to growth and innovation, Nikhil Rathi, chief executive of the Financial Conduct Authority, has warned that loosening regulations could lead to increased loan defaults and fraud. Mr Shah suggests that it is “not obvious that regulators are the best source of growth initiatives,” saying those who run the most prominent watchdogs “are programmed to worry about avoiding embarrassment at the hands of select committees, not about adding a few basis points to GDP.” Mr Shah goes on to argue that there is a “dissonance between Labour’s newfound zeal for deregulation and its dirigiste instincts,” highlighting that ministers want to create the Regulatory Innovation Office, which will be a regulator to oversee the other regulators.

Business Secretary Jonathan Reynolds says the UK should be excluded from the tariffs President Donald Trump is threatening to impose on exports to the US. Mr Reynolds said: “We’ve obviously got a services-based economy. The US does not have that deficit with us so if that’s the logic of that position, I think we’ve got an argument to engage with.”

Since last year’s election, consultants have secured nearly £1bn in public sector contracts, a significant increase despite Labour’s commitment to reduce spending on external corporate advice. Data from Tussell reveals that advisers from the Big Four of KPMG, PwC, EY, and Deloitte – along with US giants like McKinsey and Bain & Co – have signed deals worth £920m since July. Notably, £838m of these contracts were awarded in the latter half of 2024, compared to £620m in the same period of 2023. A Cabinet Office spokesperson said: “We are on track to halve the amount spent on consultancy services in coming years,” aiming for savings of £550m in 2024/25 and £680m in 2025/26.

The dress shirt has seen a decline in recent years, especially during the pandemic-driven shift to remote work, when formal attire gave way to casual comfort. However, a resurgence may be underway, spurred by fashion trends and evolving consumer preferences. Nick Paget, senior men’s wear strategist at WGSN, highlights the emergence of “office-core” or “corp-core,” a style trend that has revived interest in the dress shirt as a fashion statement rather than a daily work uniform. Jim Moore, GQ’s creative director at large, echoed Paget’s observations about how attitudes toward dress shirts were evolving and said he had recently noticed point-collar dress shirts coming back into fashion.