The UK economy is showing signs of recovery following a challenging April marked by rising energy costs and employment tax increases. According to S&P Global’s latest flash purchasing managers’ index (PMI), the services sector experienced moderate growth in May, although manufacturing activity is still contracting. Chris Williamson, chief business economist at S&P Global, noted that businesses reported a “milder May” after the “awful April” and that “price pressures have moderated after spiking higher.” However, uncertainty surrounding global economic policies continues to dampen confidence, leading to a decline in new work across the private sector.

British manufacturers are experiencing a significant decline in orders and output, according to the Confederation of British Industry (CBI). The CBI’s monthly balance for new manufacturing orders fell to -30 in May, the lowest since January. The downturn aligns with S&P Global’s survey, which indicated the fastest job cuts in the manufacturing sector since the COVID-19 pandemic began. Ben Jones, lead economist at the CBI, said: “Sentiment among UK manufacturers seems poor, reflecting a combination of rising domestic business costs and US tariff uncertainty.” Additionally, manufacturers are grappling with high energy and labour costs, alongside potential new regulations from the Government’s Employment Rights Bill. Despite a slight improvement in exports following a trade agreement with the US, the overall sentiment remains negative.

The Office for National Statistics has reported that public sector net borrowing reached £20.2bn in April, marking the fourth-highest figure for the month on record. Economists, including Ruth Gregory from Capital Economics, suggest that “further tax rises are starting to feel inevitable” due to increased spending pressures and a need to balance the budget. The Chancellor, Rachel Reeves, is under pressure to meet her fiscal rules while managing rising costs in public services and benefits. Public sector net debt is now estimated at 95.5% of UK GDP – 0.7 percentage points higher than a year earlier and now at levels last seen in the early 1960s. The rise in borrowing is attributed to higher public sector pay and inflation-linked benefits. Maxwell Marlow of the Adam Smith Institute points out that over 8% of public spending is spent on debt repayment.

Amid rising costs and trade uncertainties, many UK small businesses are increasingly turning to cryptocurrencies to support growth, with 25% already using them and adoption rising to 63% among those with 10-49 employees. Research by VistaPrint shows nearly half (49%) accept crypto payments, valuing faster transactions, especially for international business. Confidence in cryptocurrencies is notably high (70%) among larger small businesses, while smaller firms show more caution. Over a third have invested excess cash in crypto, often preferring it over traditional investments like stocks and bonds. Adoption is expected to grow significantly, with around 50% of small businesses projected to be crypto-enabled within two years, rising to nearly 70% in five years.

Paragon Bank has increased its automatic decision-making loan limit for SMEs from £100,000 to £150,000, enabling faster lending decisions for more applications. The change aims to help businesses access necessary funding with greater speed and certainty. The move is part of a broader digital transformation strategy, utilising automation, AI, and data analytics to enhance customer experience. In 2024, challenger and specialist banks accounted for a record 60% of gross lending to smaller businesses, highlighting a shift in the SME lending landscape.

The number of individuals at risk of incurring tax on their savings has surged fivefold over the past three years, with over 6m accounts now exceeding the Personal Savings Allowance (PSA). According to Sally Conway, savings expert at Shawbrook: “Without careful consideration, savers could face a shock tax bill on their nest eggs.” The PSA allows basic-rate taxpayers to earn £1,000 tax-free, while higher-rate taxpayers have a £500 limit. With interest rates rising and the PSA threshold remaining unchanged, many savers are unwittingly entering the tax net. Conway warns that there are currently over 5m more savings accounts at risk of tax than there were just over three years ago.

Simon Carter, chief executive of British Land, has announced that the return to the office is “in full swing,” with midweek occupancy across its office estate returning to pre-Covid levels. According to recent data, 28% of the UK workforce now engages in hybrid work, with 44% commuting daily. British Land noted an “acute lack” of high-end office space, leading to increased rents and anticipated higher earnings growth. The company also reported strong performance in its retail parks, with rents rising by 6% and valuations increasing by 7.1% in the year to March.

The highly anticipated Oasis reunion is projected to generate a £426.3m boost to London’s economy, with fans expected to spend over £1bn during the band’s seven-night residency at Wembley Stadium. According to Novuna Personal Finance, the event will attract more than 630,000 fans, each contributing an average of £766.22 across travel, hospitality, and retail. The tour is expected to accumulate £1.06bn in total spend across the UK, surpassing Taylor Swift’s recent tour. The experience economy is thriving, with 60% of Brits eager to invest in cultural events this summer.