Office for National Statistics (ONS) data shows that the economy grew in the first three months of the year, with GDP increasing by 0.7%. The increase marks a significant improvement on the 0.1% growth recorded in the closing quarter of 2024 and exceeds the 0.6% growth expected by economists polled by Reuters. The Q1 growth was driven by increased output in the production sector, where manufacturing increased by 1.1%, while the services industry saw growth of 0.7%. The ONS data also shows that GDP per capita rose 0.5% in Q1. Chancellor Rachel Reeves said the ONS shows that the economy “is beginning to turn a corner.” However, the Confederation of British Industry said that the strength of GDP over Q1 is “likely to prove a one-off,” with lead economist Ben Jones warning that businesses “remain cautious over hiring and investment plans” due to the “steep” rise in employment costs set out in October’s Budget.

Business leaders say further interest rate cuts by the Bank of England would drive an increase in spending and boost the economy. Ben Jones at the Confederation of British Industry has suggested that lower interest rates “should encourage consumers to save less and spend more,” while Anna Leach of the Institute of Directors noted that consumer spending “should continue to be supported by real earnings growth and further falls in interest rates.”

The National Audit Office (NAO) has raised concerns that wealthy individuals in Britain may be evading more tax than previously estimated, following a significant drop in penalties issued by HMRC. The report highlights that while HMRC’s compliance yield from wealthy taxpayers increased from £2.2bn in 2019/20 to £5.2bn in 2023/24, this rise was more than £1bn greater than the “wealthy tax gap” estimated by HMRC. The NAO noted that the number of penalties for wealthy taxpayers fell by over 75% from 2018/19 to 2023/24, indicating a potential increase in non-compliance. HMRC aims to close the tax gap and generate an additional £7.5bn for public services by 2029/30. The Government has faced calls to impose higher taxes on the wealthy as it prepares for the upcoming spending review.

The Commons Environment, Food and Rural Affairs Committee (Efra) has urged the Government to postpone reforms to farming inheritance tax until 2027, saying the levy could hurt the most vulnerable. From April 2026, a 20% inheritance tax rate will be levied on agricultural assets worth more than £1 million, which were previously exempt. This is half the usual rate of 40%. The Efra report criticises the Government for “poor communication and last-minute decision-making,” emphasising the need for better policy formulation to protect farmers. Efra chairman Alistair Carmichael said: “The way in which the Government has behaved over recent months has clearly negatively affected the confidence and wellbeing of farmers.”

Buy-to-let landlords are facing new tax challenges that may reduce rental supply, according to research by Blick Rothenberg. The Government’s Making Tax Digital (MTD) scheme, launching in April 2026, will impose additional costs on landlords and those with a gross rental income of £50,000 or more will be required to report their income and expenditure on quarterly tax filings. The scheme’s costs have escalated, with the National Audit Office warning that expenses have exceeded £1bn. Heather Powell, Blick Rothenberg’s head of property, has cautioned that these changes could drive private landlords out of the market, stating: “It is likely to be the final nail in the coffin for many.” This could lead to fewer rental homes, particularly in London and the South East.

The Government has introduced legislation for a market designed to allow trading for private companies. Pisces – the Private Intermittent Securities and Capital Exchange System – will allow private firms to trade shares at intervals similar to public markets and will offer investors an opportunity to sell off their stakes in unlisted companies. The legislation will ensure employees with share options are able to exercise them on Pisces and retain tax advantages. Chancellor Rachel Reeves announced that Pisces transactions would be exempt from stamp duty taxes on share trading in October’s Budget.

The post-pandemic shift to remote and hybrid work among highly skilled professionals has failed to level up Britain’s economy, according to academic research funded by the Ministry of Housing, Communities and Local Government and the Economic and Social Research Council. While hybrid working has surged, it is mostly available to older, high-skilled professionals based in major cities. While 52% of all UK workers never work from home, among highly skilled workers the rate is 29%. Dr David McCollum, one of the report’s co-authors, said there has not been a mass relocation of highly skilled workers to cheaper places, with people “still opting to live in places that offer the best wages and the best opportunities for their profession.”

The number of graduate schemes in Britain fell by a third last year, with figures from recruitment platform Adzuna showing that there were 794 entry-level programmes advertised in the 12 months to April. This was down from 1,224 a year earlier. The decline comes amid a hike in costs after the Chancellor increased employer National Insurance contributions. Kate Shoesmith, deputy chief executive of the Recruitment and Employment Confederation, said: “Slow economic growth and rising employment costs are making businesses hesitant to hire in some sectors.” Will Holt, of the ICAEW, said a “sluggish economy and increasing employer costs” were driving a decline in vacancies.

The Competition and Markets Authority (CMA) has received a “strategic steer” from the Government, emphasising a pro-growth agenda. The Treasury’s directive, which mentions ‘growth’ 17 times, aims to realign the CMA’s priorities towards fostering investment and innovation. The CMA is also urged to expedite its investigations. Business Secretary Jonathan Reynolds said: “This government believes in promoting and protecting competition – that is fundamental to our growth mission,” insisting: “Our economic regulators are crucial to creating the conditions for increased growth and investment.” Meanwhile, Chancellor Rachel Reeves has highlighted the importance of competitive markets for attracting investment and driving economic growth. CMA chief executive Sarah Cardell said: “The steer provides helpful clarity on how the CMA should prioritise and go about our work, promoting competition and protecting consumers with a sharp focus on supporting higher levels of investment and economic growth.”

Research by Novuna Business Finance reveals that 51% of Scottish small businesses may abandon growth plans if they cannot secure funding, marking an eight-year high in reliance on finance. The study indicates that 34% of firms may delay launching new products, the highest in the UK, while 31% would postpone hiring new staff. The need for funding is particularly acute among established businesses, with 66% of those earning £1-10m requiring finance compared to 55% of start-ups. This situation poses a direct threat to job creation and economic growth in Scotland. Joanna Morris, Head of Insight at Novuna, said: “Our research makes clear the immediate and tangible impact of Scottish small businesses not securing funding.”

Research indicates that nearly a third of British office workers are unaware of their company’s AI policy, highlighting a significant digital divide in the workplace. A survey conducted with 2,500 full-time employees revealed that women, older workers, and those outside London are particularly uninformed. While 71% of companies reported having a formal AI policy, many employees, especially women, struggle to understand its contents. Ben Richardson, Director at Acuity Training, stated: “These figures should be a wake-up call for employers,” emphasising the urgency for HR teams and business leaders to enhance transparency and training. The study also noted regional disparities, with London workers showing the highest awareness at 46%, compared to just 29% in Scotland.

According to the Financial Conduct Authority (FCA), one in ten Brits lack any cash savings, raising concerns about their ability to manage emergency expenses. The FCA’s executive director of consumers and competition, Sarah Pritchard, said that “finances are stretched” for many, with a fifth of the population having less than £1,000 in savings. The report highlights that one in four individuals have missed payments or struggle with financial commitments. However, one in five Britons hold savings of £25,000 or more, and around one in 10 have savings exceeding £50,000.