UK finance salaries fell by 3% last year, according to finance association CFO Connect and spending platform Spendesk. The average salary in the sector in the UK is now £102,300, with this lower than the US average but higher than that typical finance salary across the EU. The analysis, which polled 600 financial professionals, shows that 49% of those in the UK may seek new roles in a bid to boost salaries. Nine in ten of the finance workers polled said tech skills would be crucial for advancing their careers and protecting pay levels. Rodolphe Ardant, founder of Spendesk, said: “Professionals are embracing technology not just as a productivity tool, but as a career differentiator.”

Nearly three-quarters of British firms are struggling to find talented workers, according to a Barclays poll of 1,000 business leaders. One in eight firms said that a lack of skilled labour is having a “major impact” on growth prospects, while 72% said it is damaging their chances of boosting productivity. A third of firms said they plan to upskill employees through training, while a fifth said they would look to hire more proficient workers if funds became available. Meanwhile, a separate poll shows that nearly half of medium-sized firms plan to introduce better training and development for staff. The American Express Business Barometer also found that 28% of firms hope to hire over the next twelve months.

The Financial Ombudsman Service (FOS) is set to cut the interest firms have to pay on compensation pay outs. Currently, firms must pay interest of 8% on compensation awards. However, the FOS is launching a consultation to review the amount of interest firms pay, with it suggested that the rate could change to the Bank of England base rate plus 1%. At the current base rate, this would see firms pay 5.25%. This comes after the Financial Conduct Authority sought views on how to update the dispute resolution system, with the Ombudsman saying feedback suggests the proposed interest rate “could be better aligned with, and reflect, market conditions.” James Dipple-Johnstone, interim chief ombudsman at the FOS, said: “We think reform of the dispute resolution system is crucial to make it fit for the future.” It is noted that the FOS has been experiencing increased demand, resolving over 200,000 complaints last year.

Analysis by S&P Global indicates a surge in optimism among UK business leaders, particularly in the services sector, which accounts for approximately 75% of the country’s economic activity. The S&P Global PMI rose from a 27-month low of 49.0 to 50.9 on an index where a reading above 50 represents growth. Despite challenges posed by US import tariffs, which have affected global consumer confidence, the survey suggests that UK businesses are more resilient than anticipated. The report shows that there was an expansion in output in May, while confidence among service providers hit a seven-month high. Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “UK growth has passed the worst,” reflecting a steady, albeit modest, expansion in the domestic economy. However, ongoing challenges remain, with firms still facing pressure on margins and employment levels.

The British Chamber of Commerce (BCC) says business investment could increase by 4.8% this year, with this far higher than the 0.6% increase previously forecast. The BCC says firms in ICT, manufacturing and financial services look set to invest. David Bharier, the BCC’s head of research, said that while the updated forecast was “promising,” most SMEs are not experiencing growth as they “grapple with a range of cost pressures,” such as the hike in National Insurance contributions. He also said a belief that there may only be one further interest rate cut this year is “weighing on business confidence and borrowing appetite,” with this potentially hindering investment. The BCC predicts that GDP will increase by 1.1% in 2025, up from a previous forecast of 0.9%. It also expects UK exports to grow by 2% this year, marking a steep revision from a forecast that pointed to a 0.5% contraction. Imports are expected to grow 3% in 2025.

The UK could see higher than expected growth due to trade deals agreed with the US and the European Union, according to KPMG. Yael Selfin, an economist at the firm, says the UK’s economic growth could reach 1.2% this year, an upgrade from the previous forecast of 0.8%. Ms Selfin noted that the trade deal with the US has placed the UK in a “unique position in Europe,” alleviating concerns over tariffs. KPMG says investment levels are projected to rise by 3%, while the unemployment rate is expected to be 4.4%. Inflation is anticipated to ease to 2% by mid-next year, and KPMG analysts predict two interest rate cuts by the end of 2026.

Chancellor Rachel Reeves says the £40bn in tax increases seen in last year’s Budget will not be repeated, insisting that a hike of this scale was a “one-off.” She said the tax rises set out last October had been necessary to repair the public finances but that they were now on a “firm footing.” However, economists predict that an additional £10bn in tax increases may be necessary to adhere to the Treasury’s stringent fiscal rules. Ms Reeves has reaffirmed her commitment to Labour’s manifesto pledge not to raise taxes to fund its spending plans, saying Labour’s spending plans are “fully costed and fully funded.” The Chancellor reiterated a vow that she would not need to raise income tax, VAT or employee National Insurance contributions. However, she did not clarify her stance on unfreezing income tax thresholds from 2028, which could push 1.9m workers into higher tax brackets by 2030.

Julia Simpson, chief executive of the World Travel and Tourism Council, says tourists are opting against visiting the UK due to its tax policies, voicing concern over air passenger duty, visa fees and VAT for overseas shoppers. Ms Simpson warned that the UK “is absolutely taking travel and tourism for granted,” adding that the Treasury is “imposing layer upon layer of taxes on a sector that is bringing money into the UK and is not at all a burden.” Ms Simpson has called for the reintroduction of tax-free shopping for visitors, emphasising that “tax-free shopping is a big, big draw” for tourists, especially from China. The Treasury argues that reintroducing a tax exemption for overseas shoppers would cost £2bn.

HMRC has confirmed that 100,000 taxpayers are being contacted following a breach that resulted in a loss of £47m. John-Paul Marks, the chief executive of HMRC, assured that those affected will suffer “no financial loss” and told the Treasury Committee that the incident was not a cyber attack but instead involved multiple phishing attacks “designed to extract money” from the tax office. Angela MacDonald, HMRC’s deputy chief executive, said the agency has successfully protected £1.9bn from similar attacks in the past year. The affected accounts have been locked down after an attempt to fake PAYE claims, while incorrect information has been removed from tax records.

A majority of people lack knowledge of key financial and investment terms, according to a study from investment platform Hargreaves Lansdown. The poll of 2,000 people shows that just 37% could correctly identify an investment fund, with more men (48%) than women (28%) able to identify an accurate definition. The survey also saw 54% of respondents say they do not know what the word ‘compounding’ means in an investment context, while just 13% were aware that ‘equity’ and ‘share’ are used interchangeably in regard to stock market investments. Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Part of the solution lies in how the financial industry uses language, and an understanding that terms that are familiar to investors are alien to non-investors.”