Executives from major finance firms, including JPMorgan and Goldman Sachs, met with Chancellor Rachel Reeves on Wednesday to discuss ways of enhancing tax incentives for UK consumers to invest and to boost UK competitiveness. Key topics included altering the tax treatment of cash savings accounts (ISAs) to encourage investment in stocks and bonds, as well as reducing stamp duty on stock investments. James Carter, head of platform product policy at Fidelity International, suggested lowering the cash Isa tax-free limit to just £4,000 a year, down from £20,000. Reeves reiterated her commitment to cutting red tape, a source said. The Treasury also confirmed plans to reduce the time for settling securities trades from two days to one by October 2027.

New analysis indicates that retirees may face taxation on their state pension as early as next year. Deutsche Bank forecasts suggest that annual state pension payments could increase by 5.5% to £12,631 in April 2026, potentially pushing low-earning pensioners into the tax bracket. Currently, state pension payments are below the £12,570 tax-free personal allowance, but this could change due to the frozen thresholds. Rob Morgan, an analyst at Charles Stanley, said: “Something’s got to give. The state pension is a safety net so this seems wholly inappropriate.” Former pensions minister Sir Steve Webb noted that while HM Revenue & Customs may not pursue the tax initially, future years could see increased bills as thresholds remain frozen.

Consumer confidence in the UK economy has plummeted to an 11-month low, with the British Retail Consortium’s survey revealing a net balance of -37 in February, a decline of 40 points since last summer’s general election. The survey indicates that two-thirds of retailers anticipate price increases due to £7bn in additional costs, including higher employer national insurance contributions. Furthermore, nearly half of retailers are considering hiring freezes to manage these rising expenses.

A recent poll by the Federation of Small Businesses (FSB) indicates that 33% of small businesses plan to reduce their workforce due to rising staff costs and new employment rights. This figure has increased from 17% in the previous quarter. Additionally, a separate survey revealed that 67% of small firms intend to limit hiring in light of the forthcoming Employment Rights Bill, with 32% planning to cut jobs before the new regulations take effect. Tina McKenzie, FSB’s policy chair, said: “The figures speak for themselves – plans to allow employees to sue their employers on their first day on the job will wreak havoc on our already fragile economy.”

Annual house price growth in the UK accelerated to 4.6% in December, with the average price reaching £268,000, according to the Office for National Statistics (ONS). However, experts warn that a surprising increase in inflation, which rose to 3% in January from 2.5% in December, could dampen mortgage rates. Matt Smith, a mortgage expert at Rightmove, said: “This morning’s unexpectedly high inflation figure is likely to have a knock-on effect to some of the early momentum we were starting to see in mortgage rates coming down.”

Economist Matthew Kilcoyne highlights the detrimental impact of Labour’s planned National Insurance increase on the UK economy in City AM. The latest CIPD survey reveals that a third of British firms are considering job cuts or hiring freezes, with nearly half planning to raise prices. Kilcoyne says this is “a textbook demonstration of how tax policy destroys the very economic activity it seeks to tax. It’s the Laffer curve stepping out of theory and into reality, and it’s happening right before our eyes.” The rise in taxes is particularly affecting sectors like retail and hospitality, which operate on tight margins. The Federation of Small Business reports confidence at decade-lows, while the British Chambers of Commerce notes sentiment at two-year lows. Kilcoyne warns that the Laffer curve is not merely theoretical; it is a binding constraint on state action, and the current tax policies may lead to significant economic damage.

HSBC has postponed its climate targets from 2030 to 2050, citing challenges faced by clients in reducing their carbon footprints. The bank’s annual report stated: “Progress in reducing emissions in the…supply chain component is proving slower than we anticipated.” This shift comes alongside a revised long-term incentive plan for CEO Georges Elhedery, which could see his pay rise to £15m, with environmental targets in the plan reduced from 25% to 20%. The bank aims for a 40% emissions reduction across its operations by 2030 but now focuses on achieving net zero by 2050. Elhedery confirmed HSBC’s commitment to a wider net zero goal but acknowledged the need to reassess their progress. The bank is also implementing a cost-cutting strategy to save $1.5bn by 2026, which may involve job losses.

KPMG’s US arm has removed reports on its diversity, equity and inclusion initiatives from its website. The annual transparency reports detailed the representation of women and minorities across the organisation. The move comes after Deloitte told its US employees that it would “sunset” its diversity goals, an annual diversity, equity and inclusion report and the company’s DEI initiatives. In a memo, Paul Knopp, KPMG’s US chief executive, said: “The legal landscape surrounding diversity, equity and inclusion efforts has been shifting, via executive orders and in the courts.” He added: “We will continue to uphold the highest ethical standards and fully comply with all applicable laws and regulations, including adherence to the executive orders affecting us as a federal contractor.”

The use of digital wallets in the UK has seen a significant increase, with the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) reporting that the share of card transactions made via digital wallets has surged from 8% in 2019 to 29% in 2023. In 2023, approximately 20% of card users used a digital wallet for over 50% of their card transactions, while around 10% used one for over 75% of their transactions. While digital wallets offer enhanced security and convenience, concerns remain regarding competition among providers and the potential impact on the financial system’s resilience. The regulators are collaborating with the Competition and Markets Authority (CMA) and the Treasury to address these issues as part of a review of the Payment Services and Electronic Money Regulations.

UK inflation surged to 3% in January, up from 2.5% in December, marking the highest level since March last year. Contributing factors included rising plane fares, food costs, and a significant increase in private school fees, which rose by 12.7% year-on-year. Analysts had anticipated a lower rate of around 2.8%. Ruth Gregory, economist at Capital Economics, said: “We doubt this will prevent the Bank of England from cutting interest rates further, but it will mean it continues to cut rates only slowly.” The Bank of England is under pressure to manage inflation while considering interest rate cuts, with current rates at 4.5%. Treasury minister James Murray acknowledged that the path to the 2% inflation target would be “bumpy.” Inflation is expected to rise further, with predictions of a peak at 3.7% in late summer.

Hairdressers are warning that last year’s Budget could be the “final nail in the coffin” for their industry, as rising taxes threaten jobs. The Confederation of British Industry (CBI) reported a wave of insolvencies, with increased employer National Insurance contributions and minimum wage making it difficult for salons to employ staff. Toby Dicker, co-founder of the British Hair Consortium, said salons are resorting to self-employment to avoid tax hikes, leading to a significant loss in VAT receipts. The CBI predicts a 93% decline in jobs by 2030, disproportionately affecting female workers, who make up 84% of the industry.