HMRC has claimed £409m in late payment interest from taxpayers, with this triple the £131.9m it pulled in from interest charges in 2021. Chris Etherington of RSM said: “Late payment interest has become an increasingly important source of revenue for HMRC,” adding: “While a penalty is understandable, it risks pushing financially struggling taxpayers into a debt spiral.” Amid concern over the impact of frozen tax thresholds and shrinking tax-free allowances, Laura Suter of AJ Bell said: “We’ve seen a rise in taxpayers missing payments because they simply can’t afford it. More people will be forced into self-assessment, and these punishing penalties will hit them hard.” With taxpayers who pay their taxes via self-assessment set to pay more interest as HMRC cracks down on late payments, Andrew Park at Price Bailey warned: “It’s a blatant cash grab by the taxman and one which comes without any safeguards.”

Retirees may have to pay tax on the state pension as early as next year, according to Deutsche Bank analysis. The report suggests that annual state pension payments could increase by 5.5% to £12,631 in 2026. This would push payments above the £12,570 tax-free personal allowance and see recipients forced to pay the basic 20% rate of tax on income above £12,570. Office for Budget Responsibility analysis had suggested that state pension payments would not breach the personal allowance until April 2027.

Rachel Reeves has urged financial services firms to work with development institutions and within emerging markets. The Chancellor met with firms including Aviva, HSBC and Schroders to call on the industry to seize on growth opportunities and boost London’s position as a leader in development finance. At a roundtable co-hosted with Odile Renaud-Basso, president of the European Bank for Reconstruction and Development, Ms Reeves launched the London Coalition on Sustainable Sovereign Debt, which will be co-chaired by City Minister Emma Reynolds. The coalition will look to bring the Government and private sector stakeholders together to boost sustainable sovereign debt financing. Ms Reeves said: “Business and government must work together to seize opportunities in emerging markets and kickstart economic growth,” adding: “The UK’s world-leading financial centre can help countries unlock new opportunities for our brightest and best British companies to create wealth and drive growth.”

The global jobs market is experiencing its longest downturn since the early 2000s, according to Dirk Hahn, chief executive of Hays, Britain’s largest recruitment firm. He said: “I have been in the business for 27 years and this is by far the longest downturn I have ever seen.” Demand for contract workers remains low, and the market for permanent hires has not improved since a pre-Christmas slump. Despite these challenges, the UK labour market has shown resilience, with companies retaining staff but hesitant to hire. James Hilton, Hays’s chief financial officer, noted that businesses are maintaining their workforce but are not looking to expand, leading to a “slight stalemate situation.”

The National Infrastructure Commission has warned regulator Ofgem that focusing on short-term costs in electricity regulation may hinder necessary long-term investments for decarbonisation and economic growth.

Analysis by the Recruitment and Employment Confederation (REC) shows that companies increased hiring in January. The report shows that there were 1,516,535 job postings in January, with this marking an increase of 7.2% on the previous month and the first rise in job postings since June 2024. The number of new job postings came in at 738,040. This was up 34.4% on December and exceeds the 27.9% increase recorded in January 2024. REC deputy chief executive, Kate Shoesmith, said that while there were “tough conversations going on in boardrooms across the country” over the extra costs from inflation and higher taxes, the latest data “suggests it is too soon for gloom about the UK economy’s prospects overall for 2025.” She added: “The increase in job postings is a clear sign that employers will hire when they need to. A 34.4% increase in new jobs signals a solid rebound in demand, showing that businesses remain resilient, despite both domestic and international headwinds.”

Banks in the UK are more likely to focus AI strategy on improving customer experience than their US rivals, according to NTT Data’s Intelligent Banking in the Age of AI report. While 52% of UK banks are using AI to enhance customer services rather than cut jobs, 59% of US banks have prioritised their AI usage on cutting costs. The analysis also saw 37% of European banks say regulation is the biggest obstacle when it comes to adopting AI. Roberto Freddi, European lead of financial services at Kearney, said: “Regulation is emerging as the biggest roadblock to AI adoption for European banks, reinforcing the need for clear frameworks that drive innovation while ensuring compliance.” It was also found that while a quarter of UK banks are looking to switch to a fully automated model, a third of US firms are aiming for full automation.

Pensions Minister Torsten Bell says reforming Britain’s public services is a pro-growth and pro-business policy, arguing that it is not possible to have a “failing state and a growing economy.”

A German court has ruled that Birkenstock sandals do not qualify as works of art. The company had argued its footwear could be classified as art and so was protected by copyright laws in a case it put forward to stop rivals selling copycat versions. But a judge dismissed the claim, saying the shoes were practical design items.