Official figures due later this week are expected to show that the UK economy contracted in Q4, shrinking by 0.1% in the three months to December. Warning that there are “few signs of a turnaround” so far in 2025, analysts at Capital Economics said: “The risk of a recession, albeit a mild one, is real.” While he expects the data to reveal a decline in GDP, Rob Wood, chief UK economist at Pantheon Macroeconomics, notes that a “small upward revision to November’s GDP would be enough to avoid GDP falling in Q4 as a whole.” He added that economists “remain optimistic that growth will rebound,” with wages rising strongly and consumers “scaling back their saving, supporting consumption.”

An independent review has found that the Office for Budget Responsibility (OBR) is “vulnerable to bias” due to its reliance on optimistic government assumptions. Laura van Geest, who led the review, highlighted that the OBR’s economic forecasts are “open to gaming” because they must accept government policy announcements at face value. Ms Van Geest warned that the current forecasting process could lead to higher taxes or deeper spending cuts if it continues to rely on Treasury assumptions.

The UK is facing a shortage of skilled professionals in the tech sector, according to a report from HR platform Deel. The analysis shows that IT, tech and AI positions are currently the hardest to recruit for, with 43% of business leaders considering hiring talent from overseas. The shortfall could hurt the Government’s drive to create over 13,000 jobs in the tech sector through its AI Opportunities Action Plan. Matt Monette of Deel warns: “Without the right talent the country’s ambitions could be at risk, potentially stalling the UK tech sector’s growth and competitiveness.”

Standard Life chief executive Andy Curran has warned that Britain is facing a pensions crisis, with the minimum savings level of 8% through the auto-enrolment scheme “simply not enough for most to achieve an adequate retirement income.” With the industry concerned by the Government’s decision to indefinitely delay a review of auto-enrolment, Mr Curran said: “The UK is sleepwalking towards a pensions crisis hidden in plain sight and is less than two decades from reaching boiling point.” Research from Phoenix Insights – part of Standard Life’s parent company Phoenix – suggests that as many as 17m adults are not saving enough.

After a two-year hiatus, American investors are re-entering London’s commercial property market, particularly in the West End, seeking “bottom of the market” prices. According to  the property analytics group CoStar, US buyers accounted for 12% of all London office sales by value in 2024, a significant increase from 4% in 2023.

Retailers have told Chancellor Rachel Reeves that the sector faces a “perfect storm of additional costs” due to measures set out in the Budget, with 300,000 jobs set to go by 2028. The Retail Jobs Alliance (RJA) – which includes Marks & Spencer, Tesco, Sainsbury’s, B&Q-owner Kingfisher, Morrisons, Primark and Asda – says firms will be hit by tax hikes and has called for shops to be protected from higher business rates. This, the RJA argues, “would provide much-needed relief for at-risk stores.”

More than 1.1m taxpayers are facing penalties for late self-assessment tax returns, according to research from Blick Rothenberg. Robert Salter, a director at the firm, said the situation is a “major concern” for the Treasury, as late filings nearly doubled compared to the previous year. The self-assessment process encompasses income tax, National Insurance, and capital gains tax, contributing to a significant portion of the UK’s £39.8bn tax gap. Taxpayers who miss the deadline will incur an initial £100 penalty, with additional charges accruing over time, potentially leading to penalties of up to £1,500.

Analysis of HMRC data indicates that some savers could incur tax bills exceeding £2,000 if cash ISAs are abolished. City firms have urged Chancellor Rachel Reeves to eliminate cash ISAs, with it suggested that funds could yield better returns if invested in stocks and shares. However, experts warn that this could disadvantage those needing short-term savings. The potential tax burden for higher-rate taxpayers could reach £1,017 over five years if cash ISAs are removed. Cash ISAs, which allow tax-free interest earnings, are held by approximately 18m individuals in the UK.

US hedge fund Saba Capital has targeted four additional UK investment trusts, having failed to take over six others. Saba, led by Boaz Weinstein, plans to call meetings to vote on whether to change the structure at CQS Natural Resources Growth and Income, European Smaller Companies Trust, Middlefield Canadian Income and Schroder UK Mid Cap Fund. Saba recently proposed ousting the boards of seven London-listed trusts. While six have already decisively rejected the proposals, Edinburgh Worldwide will put the matter to a vote on Friday.