Research by Allica Bank reveals a £90bn “lending gap” in bank finance for the UK’s small and medium-sized enterprises (SMEs), hindering investment and economic growth. The report highlights a “credit shortfall” in productive SME lending, which has fallen significantly below historic trends. Allica noted that lending to SMEs is £90bn lower than levels recorded between 1997 and 2004, with a substantial credit gap of up to £65bn remaining unfilled by non-bank finance. Richard Davies, chief executive of Allica Bank, said: “Record low levels of SMEs are seeking finance,” stressing the need for a reboot in the SME finance market to support the Government’s growth mission. The shift towards low-risk, collateral-backed lending has discouraged SMEs from borrowing, with only 5% of bank lending now in the form of overdrafts, down from 31% in 1998.

The number of businesses registering for insolvency increased by 9% year-on-year, reaching 1,992 in March, according to the Insolvency Service. The rise is attributed to higher labour costs and impending trade levies. Tim Cooper, president of R3, noted that the figures reflect “a business climate that is being shaped and buffeted by national and global political issues.” The data indicates that creditors’ voluntary liquidations rose by 8% to 1,543, while compulsory liquidations increased by 5% to 295. Additionally, administration filings surged by 30% to 137. The construction sector was notably affected, with 4,046 insolvencies reported. Furthermore, the number of individuals in England and Wales seeking debt relief rose to 8,033, marking a 4% increase from the previous year.

Larry Fink, chairman and CEO of BlackRock, has expressed frustration over the lack of available office space in London for his growing workforce of over 3,000 employees. He said: “I am so short of space here in London with all our acquisitions. I need an office tomorrow, but there is nothing here.” Experts say the shortage of prime office space is hindering London’s competitiveness against other financial hubs like New York and Paris. Despite a trend towards remote work, demand for modern, eco-friendly offices remains high, with “prime” rents in the City rising by 9.1% over the past year. CBRE reports that 46% of central London office space under development or refurbishment has already been leased, exacerbating the supply-demand imbalance. Fink noted that few buildings can accommodate BlackRock’s size, with only one building of 500,000 sq ft currently under construction and available in London.

BlackRock’s chairman has labelled British assets as “undervalued” and expressed optimism about increased investment in the UK economy. Larry Fink said: “I have more confidence in the UK economy today than I did a year ago,” highlighting the Labour government’s efforts to ease planning regulations and cut red tape. Fink noted that BlackRock could invest more of its $11.6trn assets in the UK, as he believes the market has been overly pessimistic.

According to a recent Ipsos MORI poll, confidence in the UK economy has reached an all-time low, with 75% of Britons anticipating a decline over the next year. This marks an 8% increase in pessimism since March, with only 7% expecting improvement. The net balance of minus 68 indicates the lowest optimism since Ipsos began tracking in 1978. Gideon Skinner, Ipsos’ senior director of UK Politics, noted: “Pessimism about the economy (was) already up 30pts compared with last June.” The current sentiment mirrors the economic downturns of the 1980 recession, the 2008 financial crisis, and the COVID-related cost-of-living crisis.

More than a quarter of workers are concerned that artificial intelligence (AI) may lead to job losses, according to a survey by Acas, which advises on workplace relations. The poll revealed that 26% of employees fear job cuts due to AI, while 17% worry about potential errors and 15% are anxious about weak regulation. Acas stressed the need for employers to establish clear policies regarding AI use and to engage in open discussions with staff. Neil Carberry, chief executive of the Recruitment and Employment Confederation, commented: “AI will transform the job market, but history shows technology creates new opportunities even as it disrupts existing roles.” He highlighted the importance of Skills England in addressing skills gaps as technology evolves.

Writing in City A.M. Joanna Jensen, chair of the Enterprise Investment Scheme Association, argues that the trend of working from home (WFH) is detrimental to the development of young people in the UK. With 2.8m individuals economically inactive due to long-term sickness, including a rise in mental health issues among youth, the need for office attendance is critical. Jensen comments: “Our reluctance to impose necessary boundaries is actively harming our children’s readiness for work.” She highlights that many young employees lack proper guidance when mentors are working from home (WFH), leading to a lack of essential skills. The National Institute for Health and Care Excellence reports that mental health issues contribute to one-third of the 6.3% university dropout rate. Jensen calls for businesses to encourage a return to the office to foster collaboration and productivity, warning that failure to do so may result in a cycle of weak skills and lost talent.

UK private equity executives are facing increased tax compliance risks due to HMRC’s tightened guidance on carried interest reporting, potentially leading to penalties for inaccuracies.

The Sunday Times’ Jill Treanor talks with Financial Conduct Authority chief Nikhil Rathi about how he is moving rapidly to cut red tape in the City. One of the latest changes planned is to exempt companies that are already trading on the stock exchange from being required to issue a lengthy prospectus in order to raise more money from investors. “We’re about to put through some very significant reforms to prospectuses to make it much easier for companies who already have securities on the market to raise further capital,” said Rathi. Changes to the prospectus rules could mean companies will be able to raise up to 75% of their value by issuing new shares without producing a prospectus. Previously they could only raise a maximum of 20% without a prospectus. Rathi also discussed crypto regulations indicating that new rules would be confirmed in the next 12 months, with an implementation period to follow.

The UK economy is projected to experience a significant slowdown over the next two years due to the global tariff war initiated by Donald Trump, according to a study by EY Item Club. The report indicates that UK GDP growth is expected to be just 0.8% this year, a reduction from the previously estimated 1%. EY Item Club has also cut its 2026 forecast from 1.6% to 0.9%. Matt Swannell, the chief economic adviser at EY Item Club, said: “Disruption to global trade has only increased the chances that we may see a larger fiscal policy rethink in this year’s spending review and autumn Budget.” A separate survey from BDO found mid-sized UK businesses are reacting to potential supply chain disruption from tariffs by targeting new export markets in Asia, Africa and Australia. Nearly 40% expect to increase exports over the next year, rising to over 50% of businesses in the retail, wholesale and tech sectors.

Former Bank of England Governor Mervyn King has expressed strong criticism of the forward-looking fiscal rules established by Chancellor Rachel Reeves. In a statement to the House of Lords, King argued that these rules impose an additional burden on public finances. He highlighted that the rules, which rely on forecasts from the Office for Budget Responsibility (OBR), allow for excessive public spending without generating sufficient income for the Government. King suggested that the Government should reconsider its approach to managing public debt, advocating for a fixed date for debt reduction rather than a rolling estimate. He also indicated that tax increases may be necessary to address rising defence spending and reduce the budget deficit.

A significant number of Britons say they spend time on property websites like Rightmove for entertainment or escapism rather than actual buying intent. Georgia Lewis, a London resident, admits to regularly scrolling through properties, daydreaming about homes she’ll never own, with many of her peers sharing this habit. The phenomenon, described by some as “property porn,” offers a sense of comfort and an escape from reality, with users exploring potential homes, sometimes years down the line. Experts suggest the addiction to browsing properties can offer a dopamine rush, akin to retail therapy, while fueling curiosity about the local area. However, this widespread fascination with browsing may have unintended effects on the property market, driving up traffic on platforms like Rightmove, influencing estate agent pricing strategies, and potentially slowing down the market due to inflated expectations.