A report commissioned by Microsoft and consultancy WPI Strategy suggests that SMEs could unlock up to £78bn for the economy over the next decade through greater adoption of generative AI. Analysis by the Federation of Small Businesses shows that 55% of SMEs believe the use of AI could add a huge benefit to their operations. However, 46% said they lack understanding of the technology. Naomi Weir of the Confederation of British Industry, says the UK “has a huge opportunity to lead, but only if we act now to make AI accessible for all businesses – not just a few.”

Paris has overtaken London as Europe’s leading tech hub, having been named the only non-US city in the top five on Dealroom’s 2025 global tech ecosystem index. While London’s tech firms raised more venture capital than Paris Between 2017 and 2024, they saw a smaller gain in enterprise value. The total enterprise value of Paris tech firms increased fivefold, compared to the 4.2 times increase for London firms. The report also shows that London continues to lead Europe in AI investment, with start-ups raising $3.5bn last year, ahead of Paris’s $2.4bn, and Munich’s $763m.

Data from the Office for National Statistics shows that inflation rose to 3.5% in April. This was up from the 2.6% recorded in March and exceeds the 3.3% increase that had been forecast by economists. The Bank of England, which has an inflation target of 2%, has previously said it expects inflation to peak at 3.7% between July and September. The rise came amid increases in energy costs, while higher employer National Insurance contributions and a boost to the national minimum wage have put pressure on companies to raise prices. Monica George Michail, an economist at the National Institute of Economic and Social Research, said inflation could remain high for several months, meaning the Bank of England is likely to only cut interest rates one more time this year. The British Chambers of Commerce said that while April’s increase was expected, “the scale … is concerning.” Suren Thiru, economics director at the ICAEW, said April’s increase “highlights the brutal hit to household and business finances from April’s multitude of eye-watering bill rises and tax hikes.” Chancellor Rachel Reeves said she was “disappointed” with the figures.

Rupert Soames, president of the Confederation of British Industry (CBI), has warned that the Government’s efforts to reduce regulatory barriers will fail without consulting the businesses affected. Mr Soames has described the Government’s deregulatory push as a “golden opportunity” to enhance international competitiveness and foster innovation but argued that efforts to cut needless red tape will “not be enough without consulting those who live and breathe these regulations themselves: that’s business.” This comes with the Government having initiated a reform agenda, with Prime Minister Keir Starmer and Chancellor Rachel Reeves urging regulators to propose ways to stimulate economic growth.

Job vacancies in the UK labour market increased by 729,000, or 0.4%, in April, reaching a total of 1.47m. The increase occurred despite concerns that higher employer National Insurance contributions and the national living wage would negatively impact employment. Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), said that the jobs market is showing signs of “resilience” and reflects “underlying demand” from workers.

Rachel Reeves has been warned that increasing tax on banks could hit economic growth. This comes after Deputy Prime Minister Angela Rayner suggested that the sector could be targeted in a tax raid in a memo to the Chancellor. David Postings, chief executive of UK Finance, argues that the sector already makes a “significant contribution” to the UK’s tax base, with analysis suggesting that its total tax contribution hit £44.8bn in the 2023/24 financial year. This marked a 4.7% increase on the year before. He noted that UK-based lenders “already pay a significantly higher rate of tax than those in New York and are expected to pay notably higher rates of tax than in other European capitals.” Ms Rayner has called for the surcharge tax on banks to be raised from 3% to 5%, with this coming on top of the 25% corporation tax.

During Prime Minister’s Questions, Keir Starmer faced scrutiny from Conservative leader Kemi Badenoch regarding potential tax increases. Ms Badenoch accused Mr Starmer of evading the question about further tax rises, and argued: “People out there are struggling, businesses are struggling … we cannot have more tax rises.” This came after reports revealed that Deputy Prime Minister Angela Rayner has pushed for a £4bn tax hike that would include an end to inheritance tax relief for AIM shares, higher taxes on dividends and the reinstatement of the pensions lifetime allowance.

An “unbelievable shortage” of new office spaces in London has driven rents for prime workspaces to record levels, with landlords anticipating further increases. Great Portland Estates (GPE) reported an almost 8% rise in rents over the past year, expecting an additional 10% increase in the next 12 months. Toby Courtauld, GPE’s chief executive, highlighted the “significant drought of high-quality space” as a key factor behind the rental growth. Rising construction costs and planning challenges, compounded by a reluctance to invest in new projects post-Covid, are to blame for the shortage.

Analysis shows that activity across the UK’s software M&A market has hit a record high, with £13.2bn deployed across 420 deals over the past year. This marks a 27% year-on-year increase.

A new type of “super ATM” is being tested, allowing customers to deposit cash and cheques, check balances, and change PINs, regardless of their bank. This innovation aims to support small businesses that rely on cash transactions. Currently, there are 85 of these machines available for customers of major banks, including Barclays, Bank of Scotland, Danske Bank, Halifax, HSBC, Lloyds, NatWest, Royal Bank of Scotland, Santander, TSB, Ulster Bank, and Virgin Money. Martin McTague, national chair of the Federation of Small Businesses, said “the opportunity to deposit in a super ATM that works for multiple banks is an important innovation and could make a real difference.” The super ATMs are designed to address the decline of bank branches and provide essential services to small business owners.