The UK Government has announced its long-awaited industrial strategy, marking a significant shift in economic policy. Sir Keir Starmer stated that the strategy “marks a turning point for Britain’s economy and a clear break from the short-termism and sticking plasters of the past.” The 160-page document focuses on eight high-growth sectors, which account for 32% of the economy, and aims to double business investment in advanced manufacturing from £21bn to £39bn by 2035. Key interventions include reducing electricity costs for energy-intensive industries and a £1bn clean energy supply chain fund. The strategy also targets increasing investment in creative industries and digital technologies, with a goal of establishing the UK’s first trillion-dollar tech business by 2035. Five of the eight sector plans have been published, with the remaining three to follow.

According to a report by MHA, technology, skills, and infrastructure should be the Government’s primary focus in its upcoming Industrial Strategy. The survey, which included 1,000 manufacturing business owners and executives, revealed that 35% of respondents identified recent tax increases as their biggest challenge. Despite this, there is optimism, with 55% of respondents expecting modest growth in the next year. The report highlights the need for investment in technology and R&D, with 45% of North West respondents planning to increase their R&D budget.

The UK services sector demonstrated unexpected growth in June, despite tax increases and a decline in employment across the economy. According to S&P Global’s latest flash purchasing managers’ index (PMI), business activity reached a three-month high, with the composite index rising to 50.7 from 50.3 in May. This indicates a slight recovery, as service providers reported an increase in clients for the first time since last November. However, the private sector continues to face challenges, with employment falling for the ninth consecutive month. Chris Williamson, an economist at S&P Global, described the growth data as “disappointingly lacklustre,” projecting a mere 0.1% rise in GDP for the second quarter. He noted that “business confidence also remains in the doldrums” amid concerns over government policies and global trade tensions.

The UK cement sector is experiencing a significant decline in production, with industry leaders warning that construction firms may increasingly rely on imports. Prime Minister Keir Starmer’s recent industrial strategy aims to reduce energy bills by 25% by 2027, yet UK firms currently face electricity costs four times higher than their US counterparts. Diana Casey, executive director of the Minerals Products Association, highlighted that “the UK is also quite committed to decarbonising,” pointing to the need for domestic production to maintain control over decarbonisation efforts. With imports nearly doubling over the past decade, the competitiveness of UK cement manufacturers has eroded due to foreign firms avoiding carbon taxes. The industrial strategy includes plans for a carbon border adjustment mechanism to level the playing field. However, rising oil prices could further impact energy costs, prompting manufacturers to reassess supply chains.

British workers now benefit from the second highest minimum wage in Europe, with an average monthly income of £1,984 before tax. The National Living Wage increased by 6.7% to £12.21 an hour this April, making the UK second only to Luxembourg, where workers earn £2,183. The rise is expected to provide over 3m workers with an additional £1,400 annually. However, business leaders warn that these increases, alongside rising national insurance contributions, could hinder hiring. Robert Colvile, director of the Centre for Policy Studies, said: “The changes to employer’s National Insurance and the increases in the minimum wage make it disproportionately more expensive to employ those at the lower end of the wage scale.” Despite the benefits for low-paid workers, the Resolution Foundation predicts that working-age households may be £400 worse off this tax year due to rising costs and tax impacts.

City AM picks up on news first reported in the Sunday Telegraph that the UK’s Big Four accountancy firms – Deloitte, EY, KPMG, and PwC – are significantly reducing graduate recruitment and cutting hundreds of jobs as artificial intelligence (AI) increasingly automates junior roles. Over the past two years, these firms have slashed early-career hiring by up to 29%, with KPMG making the most substantial cuts, reducing its 2023 graduate intake from 1,399 to 942. Despite these reductions, the firms are also expanding their AI assurance services to meet rising demand, with Deloitte’s audit partner Richard Tedder stating that AI assurance is “critical to adoption.” The shift towards AI comes amid a broader ambition to establish the UK as a global AI hub, with potential economic contributions of £200bn.

Reform UK leader Nigel Farage has defended his party’s proposed changes to non-dom tax rules, which he claims are “very attractive,” despite warnings from Dan Neidle, founder of Tax Policy Associates, that the policy could cost the UK £34bn. Farage dismissed concerns as “off-the-wall nonsense,” stating: “People are fleeing this country in droves,” pointing to the need to attract wealthy individuals to boost the economy. The proposed “Britannia Card” would allow non-doms to pay a one-off fee of £250,000 while avoiding inheritance tax, with funds redistributed to the poorest workers. Farage believes this initiative could bring “tens of thousands” of people to the UK, contributing significantly to the economy. Elsewhere, Matthew Lynn in the Telegraph complains that the scheme would rely on an inept HMRC to redistribute funds when it can “barely answer the phone” while increasing dependence on the state.

The Financial Conduct Authority (FCA) has reported a record number of whistleblowing disclosures, with 1,131 reports received in the last financial year, marking an 8% increase from five years ago. The FCA acted on 908 cases, resulting in regulatory action for over half of them. Steve Smart, joint executive director for enforcement and market oversight, commented: “We’re receiving more whistleblowing reports than ever, and they’re making a real impact.” The FCA has improved its response time, with 46% of reports reviewed and closed within a year, up from 19% the previous year. The annual “prescribed persons” report highlights the FCA’s commitment to addressing sensitive information and enhancing its regulatory effectiveness.

TSB, the British high street bank owned by Banco Sabadell, may be on the verge of another ownership change as speculation mounts over potential suitors. Following a series of consolidations in the UK banking sector, including Nationwide’s £2.9bn acquisition of Virgin Money UK, TSB’s modest market share of 2% in mortgages has drawn interest. RBC analyst Benjamin Toms suggested that NatWest could be the “most likely acquirer” of TSB, estimating its value at around £2.6bn. However, NatWest’s CEO Paul Thwaite indicated that a bid is unlikely, stating that “adding a couple of percentage points to market share is not an existential issue.” Other contenders include HSBC and Barclays, with Yorkshire Building Society also reportedly considering a bid.

The British Business Bank is committing an additional £6.6bn to support small businesses and foster innovation. This includes £4bn allocated to eight key sectors identified as growth drivers, such as advanced manufacturing, clean energy, and digital technologies. Furthermore, £2.6bn will be directed towards small enterprises across various regions. The bank is also investing £350m into new Nations and Regions Investment Funds and plans to enhance its Regional Angels Programme to assist early-stage equity access. Louis Taylor, chief executive of British Business Bank, commented: “Using our market expertise and reach, we have a critical role to play in supporting smaller businesses in the eight growth-driving sectors to grow and stay in the UK.” The initiative follows the UK Government’s Spending Review, which increased the bank’s total financial capacity to £25.6bn.

Goldman Sachs has announced the firmwide launch of its generative AI assistant, aimed at enhancing productivity across the bank. According to Chief Information Officer Marco Argenti, around 10,000 employees are already utilising the GS AI Assistant. The move aligns Goldman with other major banks, such as Citigroup and Morgan Stanley, which have also integrated AI tools into their operations. The GS AI Assistant is designed to assist employees in “summarising complex documents and drafting initial content to performing data analysis.”