The Shadow Business Secretary has expressed deep concern over the potential impact of the Employment Rights Bill on the UK economy, warning that British businesses risk “being sleepwalked into disaster.” The bill, currently progressing through parliament, has faced significant criticism from industry leaders who fear it could lead to “serious unintended consequences” and the loss of 50,000 jobs. Key reforms include shorter notice periods for strikes and the establishment of the Fair Work Agency, which Andrew Griffiths argues could lead to costly legal challenges for firms. In an open letter to company bosses, he urged businesses to “speak up” against these changes, which he believes could undermine years of consensus on workers’ rights that have benefited the economy. “This is not good for the economy,” he stated.

The Big Four accountancy firms – Deloitte, EY, KPMG, and PwC – are significantly reducing their graduate recruitment and cutting jobs as they increasingly rely on artificial intelligence (AI) for entry-level tasks. KPMG has made the most substantial cuts, reducing its recruitment scheme by 29% from 1,399 in 2023 to 942 last year. Deloitte and EY have also scaled back their graduate hiring by 18% and 11%, respectively. According to James O’Dowd of Patrick Morgan: “The Big Four are looking at AI very seriously as they consider ways to use AI tools to replicate the work of juniors in a more cost-effective manner.” The firms are adapting to a downturn in the consulting market while maintaining high partner payouts, leading to a reduction in their overall workforce.

Pessimism is escalating among UK boardroom leaders, with a recent survey by The Chartered Governance Institute UK & Ireland revealing that around 70% anticipate worsening global economic conditions in the coming year. This marks a significant shift from 2024, where only 22.2% expected a downturn. Concerns about UK competitiveness are rising, particularly due to US trade tariffs imposed by President Donald Trump, which include a 10% baseline tariff on most imports. The report highlights that “boardroom decision-making has rarely been more challenging,” with cybersecurity being the top concern for 71% of governance professionals. Peter Swabey, policy and research director at CGI UK & Ireland, noted that confidence in the UK’s economic outlook remains fragile, stressing the need for the Government’s industrial strategy to address these issues to foster long-term investment.

The number of individuals entering insolvency in England and Wales rose by 5% in May compared to the same month last year, totalling 10,014 cases. The Insolvency Service reported that debt relief orders (DROs) remained at record levels, with 3,783 cases recorded in May. The report highlighted that “DRO numbers have been at record high monthly numbers since the abolition of the upfront £90 fee in April 2024.” Additionally, 648 bankruptcies were noted, a 4% increase from May 2024, while company insolvencies surged by 15% to 2,238. The Debt Respite Scheme recorded 7,805 “breathing space” registrations, a 2% rise from the previous year, providing individuals with legal protections from creditors for up to 60 days. The report indicates that households are facing increased financial strain due to rising bills.

UK high streets have experienced a significant downturn in retail sales, with a 2.7% drop in May, marking the largest decline since December 2023. The Office for National Statistics reported that food store sales fell by 5%, the steepest drop across sectors, largely attributed to Chancellor Reeves’ tax increases. Kris Hamer, director of insight at the British Retail Consortium, noted that the decline in consumer demand comes at a “particularly bad time” as retailers face rising costs. Paul Dales, chief UK economist at Capital Economics, warned that the 2.7% drop indicates a troubling trend, stating: “The burst of economic growth in the first quarter is over.”

The number of pubs going bust rose to 67 in April, largely attributed to tax hikes introduced by Chancellor Rachel Reeves. According to Price Bailey, these increases in employer National Insurance contributions and the National Living Wage were “tipping some struggling pubs over the edge.” The report highlighted that over 20% of UK pubs, amounting to 8,156, are unable to meet their debt obligations, indicating a significant crisis within the industry.

Investors are pressing the UK Government to reconsider the 0.5% stamp duty on share purchases, which they argue is detrimental to the London Stock Exchange’s competitiveness. Rachel Reeves aims to enhance the UK’s retail investment culture, but industry leaders like Dan Coatsworth from AJ Bell warn that the tax disincentivises investment in British companies. Concerns have been raised that the tax is causing companies to seek listings elsewhere, with Jonathan Webster Smith from Bowmore Asset Management noting that it “saps liquidity” and harms the UK’s market standing. Calls for reform include suggestions to exempt ISAs from the tax, which could be achieved at a minimal cost to the Government.

According to analysis by EY, inward investment in the UK’s green energy and utility sector fell by 57% last year, resulting in the UK losing its position as the leading European destination for foreign direct investment in this area to France. Lee Downham, energy and resources lead at EY in Britain, commented: “The UK must continue to attract a strong pipeline of renewable investments if it’s to achieve its energy security ambitions.” The decline is concerning as the Government aims to enhance investment to meet decarbonisation goals and reduce reliance on volatile international gas markets. The EY UK Attractiveness Survey revealed that only 39 projects attracted foreign direct investment last year, creating 1,452 jobs, a significant drop from 93 projects and 4,819 jobs the previous year. Overall, Europe experienced a 21% decline in foreign direct investments in the sector year on year.

According to a recent Bank of England report, Rachel Reeves’ tax and wage policies are significantly impacting Britain’s middle classes. The report highlights that changes in the last Budget, including a £26bn payroll tax increase and a 6.7% rise in the National Living Wage, are driving up business costs and leading to reduced pay rises. “The most common response is to reduce pay awards for those above the National Living Wage by 1–2 percentage points,” the report states. This has resulted in a chilling effect on wages and investment, with over 250,000 redundancies reported since the Budget. David Owen, chief economist at Saltmarsh Economics, noted that the report contradicts the belief that minimum wage increases would positively affect income distribution.

Inheritance tax (IHT) receipts reached £1.5bn in the first two months of the current tax year, marking a £98m increase from the same period last year, according to HMRC. The trend continues a two-decade rise in IHT revenues, driven by factors such as increasing property values and frozen thresholds. The news comes amid rumours that the Chancellor is considering a U-turn on the decision to subject non-doms’ global assets to inheritance tax. The potential reversal comes amid concerns that wealthy non-domiciled individuals may leave the UK due to unfavourable tax conditions. The Office for Budget Responsibility (OBR) estimates that nearly 10% of estates could be subject to IHT by 2030 if current trends continue.

High earners in the UK are facing an increase in tax investigations as HMRC has doubled its revenue from inquiries into wealthy individuals, raising over £1.5bn in 2024. This surge has prompted HMRC to hire an additional 400 compliance officers over the next four years, aiming to generate at least £500m more in tax revenues by 2030. Ian Robotham from Pinsent Masons commented: “HMRC has been set some very hard targets for extra tax collection by the Chancellor,” indicating that a rise in investigations is inevitable. The total amount collected from high earners has increased from £4bn the previous year to £5.2bn, with HMRC believing the wealthiest Britons are avoiding £2.1bn in tax annually.

The Observer reports on how recent changes to the taxation of non-domiciled individuals in the UK have led to a significant exodus of wealthy residents, potentially forcing the Chancellor into a U-turn on the rules. A study by Bloomberg revealed that over 4,400 corporate directors have departed since Labour took office, with a 75% increase in departures in April alone. The difference between tweaks made by the Conservatives and more radical changes by Labour – including subjecting non-doms’ foreign assets to IHT – are said to be driving the exodus, with super-rich foreigners now fearing half their fortunes could be lost to the UK Government should they fall off their yacht.

HMRC has reported an additional £8.6bn collected from taxpayers over two months, primarily due to increased National Insurance contributions and frozen income tax thresholds. Tax receipts for April and May reached £142.8bn, a rise of over 6% compared to the previous year. Rachel Griffin from Quilter noted: “Despite no new headline tax rises, receipts continue to climb thanks to frozen thresholds and slashed allowances.” The increase in revenue is largely attributed to income tax and National Insurance, with £6.1bn coming from these measures alone. Sarah Coles from Hargreaves Lansdown warned that the freeze on thresholds until 2028 means “there’s yet more tax pain to come,” urging taxpayers to consider ISAs and pensions to alleviate their tax burdens.

The number of businesses relying on loans to cover tax bills has surged by over a third this year, according to Premium Credit. With rising costs, including increased employers’ national insurance contributions and higher business rates, small businesses are feeling the financial strain. Premium Credit reported a 37% increase in customers using its tax and VAT financing service in the first quarter of 2025 compared to the previous year, with a 109% rise over the past two years. Jennie Hill, chief commercial officer at Premium Credit, commented: “Around £3bn to £5bn of tax and VAT liabilities are financed each year,” indicating the growing reliance on credit to manage tax obligations. The average loan for VAT tax bills was approximately £108,000 in 2024.

The Office for National Statistics (ONS) reported that government borrowing surged to £17.7bn in May, marking the second highest figure for the month on record, only surpassed during the pandemic. The increase, £700m higher than last year, comes despite a boost from national insurance contributions after Chancellor Rachel Reeves increased employer contributions in April. Experts, including Thomas Pugh from RSM UK, predict potential tax increases between £10bn and £20bn may be necessary to address the rising borrowing and spending commitments. Pugh said: “The under-performance of the economy and higher borrowing costs mean the Chancellor may already have lost the £9.9bn of fiscal headroom that she clawed back in March.” Public sector net debt reached £2.87trn, approximately 96.4% of GDP, reflecting levels not seen since the early 1960s.

JP Morgan Asset Management has expressed optimism regarding Britain’s creditworthiness, stating that the cost of servicing UK debt, or gilts, is expected to decrease. The positive outlook comes as Chancellor Rachel Reeves implements strict fiscal rules, making gilts more appealing to lenders. However, Reeves faces significant challenges, including a potential £15bn gap in public finances due to increased health and defence spending. While she has ruled out raising income tax, VAT, and National Insurance rates, she may consider accessing pension funds and extending tax-free earnings limits. Hugh Gimber from JP Morgan noted: “The risk/reward trade-off for UK Government debt appears more attractive relative to many of our counterparts around the world.”

Britain has announced a new partnership with Bahrain, involving a £2bn investment aimed at enhancing financial services, clean energy, manufacturing, and technology sectors. Business Minister Jonathan Reynolds commented: “This £2bn commitment is yet another major vote of confidence in the UK economy,” highlighting its significance in the context of the upcoming modern Industrial Strategy.

Experts warn that the UK Government’s pension pooling and consolidation plans could impose significant costs on taxpayers, potentially amounting to billions. Jennifer Devine, head of Wiltshire pension fund, stated: “This is going to be a really costly process for us… You can’t move billions of pounds without spending millions of pounds.” The proposals, part of the Fit for Purpose consultation, aim to merge assets from the Local Government Pension Scheme, which serves 6.7m members. However, many funds face penalties for not meeting the criteria to become superfunds, leading to concerns about the financial burden on taxpayers, as costs will not be covered by the pension funds themselves.

Brexit has resulted in a £40bn tax shortfall in the UK, according to the Office for Budget Responsibility (OBR). John Springford, an associate fellow at the Centre for European Reform, noted that the OBR’s estimate of a 4% loss in long-run productivity has been confirmed by declining investment and trade volumes. This productivity loss translates to a significant tax deficit for the exchequer between 2019 and 2024, during which the Government raised taxes by £100bn. Springford stated: “A large chunk of [the tax rises] would not have been necessary if the UK had voted to remain in the EU.” The OBR’s projections suggest that the full impact of Brexit will unfold over 15 years, with a predicted 15% drop in trade volumes compared to remaining in the EU.

Sir Keir Starmer is set to unveil a decade-long industrial strategy aimed at revitalising the UK economy and reducing dependence on foreign workers. The plan includes a £275m investment in skills training for Britons in growth sectors such as defence, engineering, digital, and construction. “Our modern industrial strategy will be powered by investing in British people,” Business Secretary Jonathan Reynolds said. “It will help transform our skills system to end the overreliance on foreign labour, and ensure British workers can secure good, well-paid jobs in the industries of tomorrow and drive growth and investment right across the country.” The Government anticipates that the identified growth sectors will generate 1.1m new jobs by 2035.