London is facing a potential loss of fintech champions as companies look to switch their main listings. This shift could result in the City missing out on tens of billions in fintech initial public offerings. Richard Hunter at Interactive Investor notes that there are “any number of companies in the frame to leave London, especially in the tech sector,” adding: “One thing that can be said with some certainty is that until something changes – tax breaks for companies listing, abolition of stamp duty, lighter regulation and so on – there will be more.” While figures from Dealroom show the US leads the way for fintech investment, raising $18.6bn in 2023, compared with $3.2bn in the UK, KMPG analysis shows that British fintechs are attracting more start-up funding than those in France, Germany, China, India, Brazil and Canada combined.

Revised forecasts from the Office for Budget Responsibility (OBR) could create a £20bn shortfall in Rachel Reeves’ tax and spending plans, especially as the Chancellor has insisted that her fiscal rules are “non-negotiable.” Sources say that the OBR is “uncomfortable” that its current forecast for productivity growth is more positive than the consensus from other economic forecasters, with it suggested that the Treasury watchdog may want to “rein it in.” Oxford Economics estimates that moving the productivity forecast in line with the average independent projection would reduce the OBR’s GDP forecast by 1.4%. James Smith an economist at ING, said: “Further downgrades to trend productivity growth projections … mean the Chancellor is likely in the red, before even considering the mounting pressures on the public purse.” He added: “The overall shortfall may amount to at least £20bn, and that means tax rises are highly likely.”

Retail footfall fell by 1.7% year-on-year in May, according to new figures from the British Retail Consortium (BRC), with this following a 7.2% increase in April. Footfall in shopping centres and on the high street fell by 2.5%, while retail parks saw a 0.2% decline. While UK retail sales increased by 1% in May, this was the weakest monthly growth so far in 2025. Helen Dickinson, chief executive of the BRC, suggested that May’s slowdown stemmed from higher bills in April, which “depressed consumer sentiment and the appetite to visit retail stores.”

Chancellor Rachel Reeves is exploring significant tax increases, including a potential raid on dividends, as part of a strategy to generate tens of billions of pounds in revenue. Officials are considering abolishing the £500 tax-free allowance for dividends or raising the tax rate from 39%. This move could yield over £300m for the Treasury. However, the Conservatives argue this would unfairly burden taxpayers and businesses. Other tax changes supposedly drawn up by Treasury officials include a possible increase in the levy on bank profits from 3% to between 5% and 8%. Meanwhile, Treasury Chief Secretary Darren Jones has refused to rule out further tax increases this autumn, telling GB News that any hikes in the Budget “will be subject to the OBR forecasts.” Arguing that “it’s right that we take these types of decision in an orderly way,” he added: ” You’re going to have to wait.”

Major UK companies are urgently engaging with the Treasury regarding potential tax increases on their US operations. A proposed new law could nearly double the tax rate on UK firms’ US profits to 41%. Tim Sarson, head of tax policy for KPMG UK, warned that this could inflict more damage on the UK than previous tariffs imposed by the US. The Treasury is actively listening to these concerns and updating companies on trade negotiations with the US. Analysts at JPMorgan warn that the impact of Section 899 is more significant for US subsidiaries of foreign companies than for US firms themselves.

An analysis of company filings reveals a significant rise in business leaders departing the UK, driven by concerns over changes to the non-domiciled tax regime. Over the past year, more than 4,400 directors have left, with a 75% increase in departures noted in April compared to the previous year. The recent abolition of the non-dom tax regime, which previously allowed wealthy foreigners to shelter their assets for a fee, has led to fears of a talent exodus. A survey by Oxford Economics indicated that 60% of tax advisers expect over 40% of their non-dom clients to leave within two years.

HMRC data shows that there was a 109,000 fall in payrolled staff in May. Outside of the early months of the pandemic lockdowns, this marks the steepest monthly decline since the tax office started collecting the data ten years ago. Analysis shows that the number of people on official payrolls has fallen by 276,000 since higher taxes on employers were announced in October. Firms have had to contend with a rise in National Insurance contributions, a lower threshold at which the tax is paid, and a 6.7% rise in the minimum wage for over-21s. It is also noted that vacancies have fallen more sharply than in America, Germany and France, according to data from recruitment agency Indeed, while the number of people looking for work is at the highest level since December 2020.

Lord Forsyth of Drumlean, chair of the Financial Services Regulation Committee, has warned that “regulatory barriers” are “unnecessarily constraining firms,” highlighting issues including a “deeply entrenched culture of risk aversion” and the high cost of compliance. He added: “The lack of clarity under the consumer duty and the Financial Ombudsman Service’s evolution into a quasi-regulator, coupled with regulatory uncertainty, also gives the impression that there is a regulatory penalty on investment in UK businesses.” This came after the committee’s Growing pains: Clarity and culture change required report flagged that firms have been inundated by information requests from the Financial Conduct Authority and Prudential Regulation Authority. Nationwide Building Society said it received over 4,500 pieces of direct correspondence from regulators in 2024, while Santander UK has responded to over 300 regulatory requests and managed over 400 regular regulatory reports this year.

According to analysis from the High Pay Centre, the median pay for chief executives of FTSE 350 companies reached £2.5m last year. This is 52 times higher than that of a typical worker. The report highlights that the largest disparity was at Mitie, where CEO Phil Bentley earned £14.7m, 575 times more than a median employee. The report also noted that while the pay gap has narrowed slightly, it remains significant, particularly in the FTSE 100, where the median CEO pay is 78 times that of the average worker. Luke Hildyard, director of the High Pay Centre, suggested that implementing a maximum CEO-to-worker pay ratio could ensure fairer compensation for all employees. The report’s authors have called for all companies to disclose their pay gaps in annual reports, adding that this should include data on outsourced workers. While the report highlighted the scale of the pay gap, it also revealed that there had been growth in pay for the lowest earning workers.

P&O Ferries has appointed Just Audit & Assurance, a small four-person firm, to replace KPMG as its auditor, raising concerns about governance and financial health. The change follows KPMG’s resignation, citing an inability to complete the 2023 audit to the required standard. P&O’s 2022 accounts were nearly 11 months late, and the 2023 figures are already eight months overdue. P&O Ferries is expected to publish its 2023 accounts by the end of the month. It is noted that the new audit fee is set at £265,000, which constitutes about 8% of Just Audit’s revenues. Financial Reporting Council data shows that just one FTSE 100 firm used an accountancy firm outside of the Big Four of Deloitte, EY, KPMG and PwC to audit their accounts last year.

A House of Lords report has warned that an “entrenched culture of risk aversion” within the City’s key regulations has hindered efforts to meet a Government mandate that urges them to help drive economic growth. The Financial and Services Regulation Committee has called on Financial Conduct Authority and Prudential Regulation Authority officials to “drive cultural change throughout their organisations,” saying that the watchdogs “do not have a clear understanding of the cumulative burden of regulation.” This, the report argues, “prevents them from recognising and addressing the negative impact that their activities have on the growth and international competitiveness of the sector.” Committee chair Lord Forsyth said regulators “need to address barriers and do more to remove, or mitigate at the very least, anything that makes the UK a less attractive place to do business.”

Economists expect the Bank of England to hold interest rates at 4.25% this week. While the Monetary Policy Committee (MPC) has cut rates at every meeting since August 2024, bringing the rate down from 5.25%, analysts believe they will hold rates due to an increase in inflation, which rose from 2.6% in March to 3.5% in April. Ellie Henderson, an economist at Investec, said monetary policy “seems to be in a good position, allowing the Bank of England to wait and see how economic conditions and the international political backdrop evolve.” Thomas Pugh of RSM said it was a “sure bet” that the Bank will keep rates on hold at 4.25%, but added: “Looking ahead, the deterioration in the labour market, weaker economic growth along with inflation… should give the Bank all the cover it needs to cut rates again in August.”

HMRC is set to cease sending physical letters to taxpayers, with officials aiming to “modernise” operations and save £50m annually. The tax office plans to reduce outbound post by 75% by the 2028/29 tax year, focusing on digital interactions. Lindsay Scott from the Chartered Institute of Taxation cautioned that phasing out letters too quickly could harm customer service, especially for those lacking digital skills. Currently, 70% of taxpayer interactions are digital, but around 7m customers still require assistance. The Government has allocated an additional £500m over four years to support this digital transition, with a goal of raising £7.5bn in extra tax revenue by 2029/30.