Businesses are increasingly sceptical about the Government’s growth mission, with a survey by the London Chamber of Commerce and Industry showing that over 85% of 150 business leaders believe Labour will struggle to improve the UK’s stagnant economic growth. Nearly 75% anticipate lower growth in 2025, with many attributing this to a recent capital gains tax increase. Karim Fatehi, CEO of the industry group, has urged Rachel Reeves to “urgently change course” on tax hikes and employment regulations. While the Chancellor has pledged not to raise taxes in her upcoming Spring Statement, economists warn that pressures may mount in the coming months, particularly if trade tariffs from America impact consumer spending. The Growth Commission suggests a trade deal with the US could boost the economy by 0.9% of GDP.

London’s junior Alternative Investment Market (AIM) has reached its smallest size in nearly 25 years, according to UHY Hacker Young. As of early March, Aim had 669 companies listed, down from 685 a year prior and the lowest total since 2001. The number of AIM listed firms has fallen from 1,044 a decade ago and the market saw just 11 initial public offerings last year. The report highlights that 27 companies were acquired in a £7.8bn wave of takeovers. Private equity firms were responsible for seven of the acquisitions, accounting for £4.96bn of the total value.

Rachel Reeves has promised not to raise taxes in the Spring Statement, telling the Sun on Sunday: “This is not a Budget. We’re not going to be doing tax raising.” The Chancellor said that while the Government did “have to put up some taxes on businesses and the wealthiest in the country” in October’s Budget, this will not be the case in next week’s Spring Statement. Ms Reeves also insisted her “fiscal rules are non-negotiable,” meaning the Government will have to cut spending rather than resort to borrowing more to pay for public services. Ms Reeves said that ministers face “tough choices,” but added that “not making them would be a dereliction of duty.” Separately, the Chancellor told a BBC documentary, The Making of a Chancellor, that the Government “can’t tax and spend our way to higher living standards and better public services.”

Chancellor Rachel Reeves says the Government could overhaul the digital services tax (DST) to avert further tariffs from the US, saying: “We need to get the balance right.” Ms Reeves told BBC One’s Sunday with Laura Kuenssberg: “We want to make progress. We do not want to see British exporters subject to higher tariffs.” The Chancellor added: “It’s right that companies who operate in the UK pay their taxes in the UK, and the US Government and tech companies understand that as well.” Lord Mandelson, Britain’s ambassador to the US, said the tax itself “is under discussion,” suggesting there are several options available beyond scrapping it. Liberal Democrat leader Sir Ed Davey criticised talk of reducing the tax, saying: “Changing the UK’s tax policy to appease Donald Trump and Elon Musk is a dangerous path.” On the possibility of a cut to the DST, a Treasury spokesman said: “All taxes are kept under review and the 2025 review of the digital services tax has been planned since it was implemented in 2020 – so it would be wrong to imply any intention to repeal the tax from this.” The DST, a 2% levy which targets global tech giants like Meta, Google and Amazon, has raised around £800m a year since its introduction in 2020. The Liberal Democrats have called for the levy to be increased to 6%.

Venture capital trusts (VCTs) are reaching capacity as the end of the tax year approaches, with analysis by Wealth Club showing that of £848m in VCT capacity available this tax year, there is just £206m remaining. Capacity is 6% lower this year, with some larger VCTs opting not to raise money this tax year while others have reduced their capacity. VCTs have seen a surge in interest since capital gains tax was hiked in October’s Budget, as profit from these vehicles is exempt from the levy and investors can claim 30% income tax relief on the investments.

The House of Lords is being urged to thoroughly examine the Employment Rights Bill, which has faced significant opposition from business leaders. Firms are concerned that the proposed legislation will impose excessive regulatory burdens and hinder economic growth. Rain Newton-Smith, chief executive of the Confederation of British Industry, has described the bill as “damaging” for the jobs market, describing it as a “sledgehammer to crack a nut.” In a joint letter to the House of Lords, business groups warn that granting workers immediate rights to claim unfair dismissal could lead to an influx of tribunal claims, ultimately jeopardising job creation. The coalition of business organisations is calling for amendments to ensure the legislation is both pro-worker and pro-business, emphasising the need for a balanced approach to avoid “grave unintended consequences.”

Workers in the UK are spending two days a week on average in the office, according to a survey of 12,000 employees in 44 countries by property firm JLL. While staff are spending half as many days in the office than they were before the pandemic, the poll shows that UK workers only want to go into the office for an average of 1.5 days per week. While workers in the Philippines are only going into the office for 1.4 days per week, Kuwait has led the way on the post-pandemic return to the office, with staff working in offices for 4.2 days a week. Sue Asprey Price, JLL’s European head of work dynamics, said that while recent years have seen a “reasonable equilibrium in the workplace – a balance between employer expectations and employee flexibility,” stricter return-to-office policies “means this balance is now being re-examined by many employers.”

Office for National Statistics (ONS) data shows that Government borrowing was higher than expected in February, with the difference between spending and income from taxes hitting £10.7bn. The Government’s independent forecaster, the Office for Budget Responsibility (OBR), had predicted that borrowing would come in at £6.5bn. While Dennis Tatarkov, senior economist at KPMG, said the latest borrowing figures increase the risk of the Chancellor missing her self-imposed borrowing rules, Isabel Stockton, senior researcher for the Institute for Fiscal Studies think-tank, said Rachel Reeves had “boxed herself in with promises to meet her fiscal targets, not to raise taxes further and not to return to austerity for public services.” At October’s Budget, the OBR indicated that Ms Reeves had £9.9bn available to spend against her borrowing rules. However, Alex Kerr, UK economist at Capital Economics, believes this has now been “wiped out.” Analysts at Pantheon Macroeconomics have warned that the UK’s “weak” public finances mean the Chancellor will set out spending cuts in the Spring Statement, adding that “taxes will rise in October.” Meanwhile, the OBR is expected to cut its economic growth forecast for 2025 from 2% to about 1%.

Analysts at Oxford Economics say a major power outage that forced Heathrow airport to close on Friday will cost the UK economy millions of pounds. Economist Stephen Rooney said: “In terms of what’s at stake, at the conservative end, we estimate a potential loss of tourism revenue amounting to £4.8m per day.” While factors such as travellers spending more money while stuck in the UK will mitigate the economic impact, there are issues outside tourism – such as insurance payouts – that will also need to be factored in.

Confederation of British Industry (CBI) analysis shows that manufacturing output volumes have fallen, dipping more in the three months to March than in the quarter to February. The CBI’s Industrial Trends Survey shows that all but three of the 17 manufacturing sub-sectors saw a fall in output. Ben Jones, the CBI’s lead economist, said the sector remains “subdued” due to concerns over the economic outlook, with manufacturers reporting that customers are “generally nervous about proceeding with capital investments.” He added that they are “conserving funds ahead of upcoming increases to National Insurance and minimum wages, leading orders to be cancelled or at least delayed until later in the year.” A recent survey from industry body Make UK suggests that output in the sector fell in the first quarter of the year, marking the first Q1 decline in ten years.

Jon Holt, group chief executive and UK senior partner at KPMG, says that the City of London and the UK’s financial services sector has a part to play in the Government’s drive to deliver growth, arguing that policymakers should “work not just to preserve the City and the financial services industry, but to make them greater still.” On regulation of the sector, he says: “Rather than restricting business and creating more administration costs, we need to regulate for growth.” Mr Holt adds: “This means less micro and overlapping regulation, with regulators more focused on the overall outcomes. We have to accept the risk of some failure.” He also says the City must “continue to be open and attractive to more people and businesses from more places and backgrounds.” Mr Holt cites a KPMG poll of financial services leaders which saw 23% say that efforts to attract talent are critical to growth, while just 11% said growth would come from a bigger listing market alone.

Nikhil Rathi, the chief executive of the Financial Conduct Authority (FCA), has told staff at the City regulator that embracing the Government’s pro-growth agenda will “require a shift in mindset” that may make them “feel uncomfortable and uncertain.” As he prepares to unveil a new five-year strategy, Mr Rathi faces pressure to align the FCA with the Chancellor’s growth objectives and says the watchdog must carefully evaluate what regulations are truly necessary. Having submitted 50 proposals to the Chancellor to stimulate growth, he has reassured staff that the FCA will not compromise consumer protection while pursuing growth, saying: “We’re not going to let that happen.” He added: “What we’re talking about is not a wide pendulum swing away from our core objectives, but it’s also a recognition that we’re not going to achieve those core objectives if we don’t shift towards supporting growth and improving productivity in our economy.”

New figures reveal that Brexit has cost UK businesses £37bn annually, with total trade with the EU down by 5% compared to pre-Brexit levels. The House of Commons library analysis highlights that the drop in trade is detrimental, particularly for SMEs, and calls for the Government to consider rejoining the Customs Union and Single Market. Tom Brufatto from Best for Britain says that deeper alignment with the EU could boost the UK economy by up to 2.2%. Reflecting on the report, Trade Minister Douglas Alexander said: “This is an appalling loss of trade at a time when business and the Exchequer can ill afford it.”