A study by the Institute of Directors (IoD) has found that some 89% of business leaders expect costs to increase in the coming year, with just 2% anticipating a fall. This is a record high, while a net balance of 64% of business leaders expressing pessimism almost matches the high seen during the pandemic. “As businesses adjust to an evolving cocktail of costs and risks, around half are expecting to reduce employment in response to rising costs, with price increases also being considered,” said Anna Leach, the chief economist at the IoD. “Meanwhile, investment intentions have dipped further, as businesses expect tax increases to hit their bottom line more than previously.”

A survey by BDO has revealed that medium-sized companies are concerned about international expansion barriers and rising workforce costs, with nearly half seeking better government support for exporting. This includes broadening the access to UK Export Finance support to the mid-market, new free trade agreements and simpler customs rules to aid the export of products or services overseas. Some 25% of business leaders cited rising workforce costs, such as national insurance contributions (NICs) and the living wage, as a significant concern.

Recent findings from the Confederation of British Industry (CBI) indicate a significant decline in UK private sector activity, with the growth index plummeting to -27% in February from -23% in January. All sectors reported falling business volumes, and firms anticipate further declines in the coming months. Alpesh Paleja, CBI deputy chief economist, commented: “Growth expectations have become marginally less negative, driven by a predicted return to growth in the manufacturing sector.” However, consumer-facing sectors are particularly struggling.

The UK Government is set to abandon the right to “switch off” outside working hours, a key element of Labour leader Sir Keir Starmer’s manifesto. This decision, confirmed by Business Secretary Jonathan Reynolds and Chancellor Rachel Reeves, aims to alleviate burdens on businesses amid concerns over compliance costs. The move is likely to face backlash from Labour’s trade union supporters, who advocate for stronger protections for workers. Additionally, the Government plans to adopt a “lighter touch” approach to probation periods, extending them to nine months from the six demanded by union leaders. Despite these changes, protections against unfair dismissal and rights related to parental leave will remain intact. Zero-hours contracts will still be curtailed and workers given individual rights to guaranteed hours.

Scotland has been recognised as the best region in the UK for women in the workplace, according to PwC’s Women in Work Index, marking its second consecutive year at the top. The report highlights a significant narrowing of the gender pay gap, which decreased from 11.8% in 2022 to 8.3% in 2023. Gillian Alexander, partner at PwC Scotland, said: “Scotland’s sustained success in the Women in Work Index is a testament to a proactive approach in addressing gender workplace inequalities.” Despite Scotland’s progress, other UK regions have seen widening disparities, with the UK overall slipping in the OECD rankings. The report stresses the importance of continued efforts to enhance women’s participation in the workforce, which has contributed an additional £6.2bn to the UK economy annually. Employment minister Tom Arthur acknowledged the need for further action to ensure fair pay and secure work for women.

Experts are advocating for the abolition of inheritance tax (IHT) in the UK to boost overall tax revenue and prevent the departure of wealthy individuals. In 2023, IHT contributed over £7bn to public finances, but the Balearic Islands demonstrated that eliminating IHT can lead to increased tax revenue, with their figures rising to £3.7bn in 2024. Attorney John Beck said: “The UK could certainly follow a similar model by reducing or eliminating wealth taxes like inheritance tax while increasing overall tax revenue through higher economic activity.” However, experts like Benson Varghese warn that scrapping IHT could create a significant deficit, necessitating a major restructuring of the tax system to maintain fiscal stability.

A petition for raising the personal tax allowance from £12,570 to £45,000 has garnered over 43,000 signatures, reflecting widespread public discontent with the current tax system. Denver Johnson, the petitioner, argues that the allowance has been “kept unreasonably low for far too long,” disproportionately affecting the poorest in society. The Treasury’s response to the petition has been deemed inadequate by an influential committee of MPs, who have demanded a more satisfactory reply. The current income tax thresholds have been frozen since 2021, leading to ‘fiscal drag’ that pulls more low earners into the tax net. Experts estimate that this freeze will raise £1.2bn for the Treasury by 2028. The Government has stated that increasing the personal allowance to £45,000 would cost over £270bn annually, impacting essential public services.

Reports indicate that Chancellor Rachel Reeves’ spending headroom has been eliminated, raising concerns about potential tax adjustments in the upcoming Spring Statement. Sir Keir Starmer has suggested that Reeves may need to consider tax increases or public spending cuts to adhere to her borrowing rules. Although she has committed to avoiding drastic tax changes, the current economic climate, characterised by weaker growth and rising inflation, may necessitate fiscal adjustments, says Katie Elliott in the Express. Potential changes include extending the freeze on income tax thresholds, possibly until 2030, while reforms to individual savings accounts (ISAs) and National Insurance Contributions (NICs) are also under discussion.

Brookfield is making a significant entry into the UK pensions sector with the launch of Brookfield Wealth Solutions (BWS). This new insurance spin-off aims to compete in the bulk annuity pensions market, traditionally dominated by firms like Legal & General and Aviva. Chief executive Sachin Shah stated that BWS is targeting deals worth approximately $4bn annually in the UK, aligning with its activities in the US and Canada.

Ali Lyon reports in City AM that Rachel Reeves, the Chancellor, is being urged to utilise the £60bn surplus in public sector pensions to support the UK’s promising scale-up companies. Blick Rothenberg argues that many of these firms are considering listings abroad, particularly in the US and the Middle East. Simon Gleeson, a partner at the firm, said: “London’s market is increasingly appearing less attractive compared to its peers,” stressing the need for urgent financial support. The proposed use of pension capital could provide the necessary investment for these businesses to thrive and remain in the UK, Gleeson continues, especially as they require larger funds than those available through existing tax relief schemes like EIS and SEIS.

Dave Ramsden, the Bank of England’s deputy governor for markets and banking, has endorsed a “gradual and careful” approach to interest rate cuts, citing “increased uncertainty” in the economy. Speaking in South Africa, he highlighted the dual challenges of rising inflation and sluggish economic growth. Following a rate cut to 4.5% in February, the likelihood of further reductions has diminished due to unexpectedly high inflation figures, with the core rate rising to 3% in January. Ramsden said: “Given the increased uncertainty and risks to inflation on both sides…I am even more certain than I was that taking a gradual and careful approach to the withdrawal of monetary restraint is appropriate.”

UK house prices rose for the sixth consecutive month in February, increasing by 0.4% to an average of £270,493, according to Nationwide. This rise was attributed to buyers rushing to complete transactions before upcoming tax changes that will make stamp duty more expensive. Year-on-year, property prices are up 3.9%, with affordability improving due to rising wages and lower mortgage rates. However, the average house price remains high compared to historical levels. Robert Gardner, chief economist at Nationwide, anticipates “some volatility in transactions in the near term” as buyers act before the stamp duty changes take effect.

According to the Lost Boys study by the Centre for Social Justice, young men’s wages have fallen behind women’s for the first time, with women earning 9% more than men aged 16 to 24. The average young man earned £24,283 in 2022-23, compared to £26,476 for young women. “Boys and young men are in crisis,” the report says. “While the last hundred years have been marked by great leaps forward in outcomes and rights for women, in this generation it is boys who are left behind.” Some 550,000 men not in education, employment, or training, a rise of over 150,000 since the pandemic. The study also points to social issues affecting young men, including knife crime and family breakdown.