The volume of private equity and venture capital investment flowing into UK businesses was up 44% in 2024, according to analysis by the British Private Equity and Venture Capital Association (BVCA). Private capital firms invested £29.4bn into UK businesses last year, compared to £20.4bn in 2023. The data shows that more than nine in ten of the businesses which received private capital investment in 2024 were SMEs. The report also shows that 2.5m jobs are supported by private capital, up from 2.2m in 2023. BVCA chief executive Michael Moore said it is “important that the Government ensures that the UK remains an internationally attractive destination for private capital investment at a time of increasing geopolitical uncertainty.”

The UK and India have agreed a trade deal that will make it easier for UK firms to export products to India and cut taxes on India’s exports. While trade between the UK and India totalled £42.6bn in 2024, the Government says the deal will boost that trade by an additional £25.5bn a year by 2040. It is also expected to increase UK GDP by £4.8bn and wages by £2bn a year in the long term. The deal includes provisions on the services sector and procurement, allowing British firms to compete for more contracts. Prime Minister Sir Keir Starmer said the deal would boost the economy and “deliver for British people and business,” while Business Secretary Jonathan Reynolds said the benefits for UK businesses and consumers would be “massive.”

The UK’s services sector shrank in April, marking the first contraction since October 2023. S&P Global’s UK services PMI came in at 49 in April, down from 52.5 in March on an index where a reading above 50 points to growth. Firms say confidence has been hit by new US tariffs which have made businesses more reluctant to invest. Tim Moore, economics director at S&P Global Market Intelligence, said “heightened business uncertainty weighed on order books during April,” adding that export conditions were “particularly weak, with new business from abroad falling to the greatest extent since February 2021.” He noted that business expectations for the year ahead “fell sharply,” with firms “braced for an extended period of global economic turbulence and heightened recession risks.” The research saw 22% of firms predict a decline in business activity over the next 12 months.

Research from the Federation of Small Businesses (FSB) suggests that small businesses have already taken steps to reduce trading with the US amid uncertainty over tariffs. The analysis found that 38% of small exporters have seen demand among US clients drop, while more than one in ten have had to cut sales. It was also found that one in three small businesses would reduce trade activity if UK ministers responded with retaliatory tariffs. FSB policy chair Tina McKenzie said tariffs “raise costs, squeeze margins, and make our goods less competitive,” adding: “For small businesses already navigating tough climates, it’s one blow too many.”

According to research by the British Chambers of Commerce and Royal Mail, 35% of businesses expect growth this year, driven mainly by domestic demand and online sales. While 41% plan to maintain current operations, 22% anticipate downsizing, and 2% may cease trading. Urban businesses are more optimistic about growth than rural ones, and SMEs are beginning to adopt AI, with 18% seeing new technologies as growth drivers. Online sales are expected to rise significantly, especially among consumer-facing businesses, where digital sales could grow from 31% to 38% over the next three years.

While the Institute for Fiscal Studies has suggested that the Chancellor could increase income tax to boost Treasury finances, the Telegraph‘s Brian Monteith says this “would only make delivering economic growth even harder to achieve.” He says ministers should instead “consider radical action to cut taxes so that economic activity is rebooted.” Mr Monteith says higher taxes on employers’ National Insurance contributions “are leading to businesses closing or cutting back,” while higher stamp duty on property, capital gains tax and stamp duty on shares mean people “hold on to their assets and choose not to move house.” He suggests that abolishing – or significantly cutting – transaction taxes will see a “sudden release of economic activity” that will deliver an increase in VAT, income tax and National Insurance receipts.

Fund manager Terry Smith, who runs the £20bn Fundsmith Equity fund, has urged Chancellor Rachel Reeves to cancel tax hikes set out in the Budget to make the UK more attractive to investors. Suggesting that ministers should “reverse a lot of the policies that are in place with regard to taxation and regulation,” Mr Smith said these would be his “starting parameters” for attracting investment. Mr Smith also said that capital markets in the UK need “better companies” for investors to buy, saying that there are “large swathes” of the UK market that are not of the required quality. On how officials could improve the situation, he suggested: “You make it easier for people to do business and you don’t tax them quite as much when they do it.”

IWG, a provider of serviced office spaces under brands including Regus and Spaces, reported record sales in March, driven by the growing trend of hybrid working. Revenue rose 2% to $1.05bn in the first quarter, prompting the company to double its share buyback program to $100m. The number of open office “rooms” increased to 202,000, with an additional 192,000 signed but not yet operational.

Experts expect the Bank of England to reduce interest rates this week, with Thomas Pugh from RSM UK saying it is a “sure bet” that the Bank’s Monetary Policy Committee (MPC) will cut rates to 4.25% and Sanjay Raja, chief UK economist at Deutsche Bank Research saying this “seems like a certainty.” Analysts also expect the MPC to cut rates further later in the year, predicting that that base rate could be at 3.75% by the start of 2026.