The latest Business Confidence Survey by the Adam Smith Institute (ASI)  reveals that over 77% of business leaders in the UK have “low” or “very low” confidence in the current economic climate. Concerns are primarily centred around the Chancellor Rachel Reeves’s decision to increase the employers’ National Insurance, alongside high energy costs and inflation. Larger businesses are also worried about legal action, which has been compounded by the rapid growth of class-action cases in recent years. Andrew Griffith, Shadow Secretary of State for Business and Trade, said: “The results from this Adam Smith Institute survey may be shocking, but they’ll come as no surprise to anyone who actually understands how business works.” Writing in City AM, Sam Bidwell, director of research and education at the ASI, urges the Government to reconsider its tax policies and address the pressing issues faced by businesses to foster growth and stability.

Huw Pill, chief economist at the Bank of England, told MPs at the Treasury Select Committee on Wednesday that the central bank is unlikely to implement rapid interest rate cuts due to ongoing inflation concerns. Pill noted: “There is more work to do to squeeze those domestic underlying inflation out of the system.” Alan Taylor, a member of the Monetary Policy Committee, echoed this sentiment, highlighting the uncertainty stemming from external factors such as US tariffs and energy price hikes. Bank governor Andrew Bailey acknowledged the impact of National Insurance increases on inflation, stating: “We can see all of those… and when we ask firms, that’s exactly the answer we get.” While inflation is projected to peak at 3.7% in the third quarter, it remains significantly lower than the 11.1% seen in October 2022. The Bank of England is committed to maintaining a cautious monetary policy stance amid these challenges.

The UK services sector experienced its fastest job cuts since 2020 in February, driven by weak demand and rising costs. The S&P Global UK services PMI survey recorded a score of 51, indicating slight growth but below the expected 51.1. Tim Moore, economics director at S&P Global Market Intelligence, noted that there has been a “clear loss of growth momentum since last autumn.” He highlighted that concerns over the economic outlook and increasing payroll costs have led to a decline in business optimism, resulting in net job shedding for five consecutive months. This marks the longest period of employment decline since early 2011, excluding the pandemic.

John Hayes, managing partner at Constantine Law, warns that amendments to the Employment Rights Bill could severely harm the UK’s flexible labour market. He describes the changes as a “growth killer” rather than a growth maker, particularly highlighting the proposal to extend “guaranteed hours” to agency workers. This could lead to rigidity in a market known for its flexibility, raising questions about who will bear the costs of cancelled shifts and how pay will be managed across different periods. The Government claims these changes aim to enhance job security, but Hayes argues: “The promise to guarantee a fixed set of hours to agency workers is the most damaging and dangerous for the economy.”

Workers may face a £10bn stealth tax increase as Rachel Reeves risks breaching her borrowing rules, warns the Institute for Fiscal Studies (IFS). The Chancellor’s strategy to meet fiscal targets has left little room for manoeuvre, potentially forcing her to extend the freeze on income tax thresholds. Matthew Oulton from the IFS said: “Rachel Reeves has engineered a trap for herself, albeit in difficult circumstances.” The IFS suggests alternatives, such as reducing public sector budgets or reforming health-related benefits, to address the financial gap.

The Bank of England’s Prudential Regulation Authority (PRA) is considering increasing the retail deposits leverage ratio threshold by £20bn to £70bn. This adjustment aims to exempt smaller lenders from stringent leverage rules that currently apply to major banks. The existing threshold has remained unchanged since 2016, inadvertently pulling smaller firms into the regulatory framework as inflation and economic growth have progressed. BoE Deputy Governor for Prudential Regulation, Sam Woods, said: “Guarding against excessive leverage in our banking system is essential for economic stability, but we should achieve that in a proportionate way.” The PRA is not proposing changes to a £10bn non-UK asset threshold, which is functioning as intended.

The UK Government is preparing to launch a consultation aimed at reducing regulatory burdens in the alternative investment sector. Speaking at a British Private Equity & Venture Capital Association dinner, City minister Emma Reynolds stressed the sector’s role in driving UK growth, stating: “Freeing fund managers from costly and burdensome rules will enhance the attractiveness of the UK as an asset management hub.” The consultation will focus on simplifying regulations for fund managers who invest in assets beyond stocks and bonds, such as property and infrastructure. This initiative is part of a broader government strategy to modernise the UK’s financial services infrastructure, which includes a shift to a ‘T+1′ standard for settling securities trades by 2027.

The British Chambers of Commerce (BCC) has revised its economic growth forecast down to 0.9% for this year, a decrease from the previous 1.3%. This adjustment reflects “the severe pressures piling up on businesses right now,” according to David Bharier, head of research at the BCC. The forecast indicates that inflation will remain above the Bank of England’s 2% target until late 2027, with unemployment expected to rise to 4.6% by the end of 2025. The report suggests increased national insurance contributions and rising business costs are likely to stall investment and force companies to reconsider workforce plans.

Benedict Foster, a former senior solicitor at BNP Paribas, has been ordered to pay £31,000 to the Solicitors’ Regulation Authority after admitting to using “rude” nicknames for colleagues, including “Pol Pot” and “Jabba the Hutt”. The nicknames were uncovered during an internal inquiry by BNP Paribas in 2021.