Private equity firms invested nearly £160bn in UK businesses last year, indicating a potential recovery in the mergers and acquisitions market after a challenging period. According to data from PitchBook and KPMG, there were 1,699 transactions valued at £158.9bn, marking a 12% increase from the previous year. Most activity occurred towards the end of the year, coinciding with falling interest rates and the conclusion of the general election. Alex Hartley, head of corporate finance at KPMG UK, commented: “There are encouraging signs from the 2024 data that deal activity may have bottomed out in the UK in 2023.”

Construction activity in Britain’s major cities has significantly declined, presenting a formidable challenge for Angela Rayner, the Deputy Prime Minister and Housing Secretary, as she aims to stimulate a building boom. According to Deloitte’s regional crane survey, new project starts fell by 27% in 2023, with the number of homes under construction dropping to 23,673. Despite a 57% increase in completed homes, the sector is hindered by political uncertainty, high interest rates, and stringent regulations. Zoe Davidson from Deloitte noted that the Government’s building safety regulations have “added complexity and lengthened timelines” for residential projects.

HMRC has revealed that over 1m people missed the deadline for filing their annual tax returns and now face a penalty of at least £100. More than 11.5m people did complete the self-assessment process, including more than 31,000 who finished it during the final hour before the deadline. The freezing of personal tax thresholds and recent high returns on savings have pushed many people into needing to file a return for the first time. Charlene Young, a pensions and savings expert at the investment company AJ Bell, said: “The numbers show that the perfect storm of rising interest rates, reduced allowances and frozen tax thresholds in 2023-24 continued to whisk people into the tax return trap.”

The Daily Telegraph reports on how the Labour Government is expected to put the UK’s digital services tax under review as experts expect US President Donald Trump to demand change. The tax raises about £700m a year from US tech giants. John Denton, secretary general at the International Chamber of Commerce, said: “I think there will be a lot of pressure put on the UK on this particular issue.” In addition to the digital services tax, it is understood that the Online Safety Act, which regulates online speech, is also a particular concern for the new US administration. The FT reports that ministers are prepared to retaliate in the event of Trump targeting UK exports, but the emphasis from Downing Street is for the continuation of a constructive relationship.

The UK’s Financial Reporting Council (FRC) has initiated a market study to assess the effectiveness of the audit market for small and medium-sized enterprises (SMEs). The study aims to explore ways to alleviate the reporting burden on these businesses. Miranda Craig, Director of Strategy and Change at the FRC, said: “SMEs are at the heart of job creation and innovation in our economy. The FRC is committed to supporting their aspirations to grow and scale by examining how the audit market is working for these businesses, given their ability to access capital is often dependent on having audited accounts. This market study will help the FRC identify challenges which SMEs are currently experiencing, including any reporting and audit burdens, and help inform our guidance to both audit practitioners and SMEs.”  Interested parties are invited to submit comments and evidence by April 25, with the study expected to conclude before the end of 2025.

The Future Fund, a taxpayer-backed initiative launched by Rishi Sunak during the pandemic, is currently facing a staggering loss of £263m, with its value dropping from £1.1bn to £799m. Designed to support struggling start-ups, the fund has seen hundreds of companies collapse, with 202 firms reported insolvent as of April 2024. The Department for Business and Trade (DBT) revealed that only £75m has been recouped through repayments or sales. The fund’s spokesperson stated: “As venture capital is a long-term investment, it is too early to give an indication of the overall Future Fund performance.” With the government holding stakes in 680 companies, the outlook for recouping investments appears bleak.

Gareth Davies, comptroller and auditor general of the National Audit Office, will present strategies to enhance government productivity in an upcoming speech. He will stress the importance of adopting new technologies, particularly AI, stating: “The question is not whether AI will make a difference to productivity but how to maximise the benefits whilst managing the risks.” Davies will outline four key points to improve productivity and resilience against long-term threats, including the need for effective accountability and system reform.

City experts anticipate that the Bank of England will implement a third interest rate cut this Thursday, reducing the benchmark Bank Rate to 4.50%. Sanjay Raja, chief UK economist at Deutsche Bank, said: “Gradualism, we think, will remain front and centre for the MPC given two-sided risks to the inflation outlook.” The Bank’s upcoming forecasts are expected to reveal weaker growth and higher unemployment, with growth estimates for 2025 likely revised down to around 1%. Despite anticipated weaker growth, inflation is projected to rise, potentially reaching 3.3% by spring, influenced by increased energy prices and a weaker pound.

US tariffs on Mexico have been paused for a month after US President Donald Trump accepted an offer from his Mexican counterpart Claudia Sheinbaum to send 10,000 troops to the border to combat drug trafficking. Regarding Canada, talks on Monday morning failed to resolve US concerns but later discussions resulted in Canada promising new border security to combat organised crime, fentanyl trafficking and money laundering. Tariffs will be paused for 30 days as a result. Canadian Prime Minister Justin Trudeau had earlier in the day pledged retaliatory tariffs on $150bn worth of US goods while Ontario ripped up its $100m deal with Elon Musk’s Starlink. The European Union can expect 10% tariffs, Trump said on Monday, while the UK is “out of line” but the situation “can be worked out”. A spokesman for the European Commission had said the EU will “respond firmly” to any unfair or arbitrary tariffs on its exports.

The headquarters of the US Agency for International Development has been shut down by the Trump administration after a rapid assessment by Elon Musk’s Department of Government Efficiency determined the body was a “criminal organisation” explaining that less than 10% of its spending goes to people in need. The department, which disperses more than $72bn in spending around the world, was accused by Secretary of State Marco Rubio of being a “completely uncooperative” agency which needs to be better aligned with US foreign-policy goals. Rubio will oversee USAID until a decision is made on its future.