Confidence falls among business leaders
City AM
Analysis from the Institute of Directors’ (IoD) shows a sharp decline in confidence among business leaders, with the latest Economic Confidence Index dropping to -53 in June 2025 from -35 in May. This fall reflects growing concerns over recent tax hikes, particularly the increase in employer National Insurance. The index saw investment intentions drop significantly from 0 in May to -10 in June, while headcount expectations also declined, from -1 to -10. IoD chief economist Anna Leach said: “Business leaders are finding economic conditions increasingly challenging,” adding that “the message coming through is that the tax increases unleashed on business have already undermined the industrial strategy’s ambition to make the UK the best country to invest.” |
More high-growth businesses are selling up
Over the past decade, nearly 8,000 high-growth businesses have opted to sell, with acquisitions dominating the exit landscape, according to analysis by investment management firm Charles Stanley. The last two and a half years have seen almost 40% of exit activity, while the peak occurred post-pandemic, with 1,110 acquisitions. Cliadhna Law, head of direct and professional sales at Charles Stanley, said acquisitions “remain the dominant form of exit.” |
Bailey: Investment delays are hitting growth
City AM
Bank of England Governor Andrew Bailey has warned that firms are delaying investment plans due to global uncertainty, with this hindering the UK’s economic growth prospects. In an interview with CNBC, Mr Bailey said: “That increase in uncertainty and unpredictability is definitely coming through in terms of activity and growth.” This comes as the Office for National Statistics (ONS) revealed that UK business investment increased by 3.9% in Q1, with this revised down from a previous estimate of 5.9%. The ONS report also shows that whole economy investment, which includes public sector data, increased by 2% in the first quarter. |
Tax raid would undermine the UK economy – IoD
The Institute of Directors (IoD) has warned Chancellor Rachel Reeves that a new tax raid to finance a U-turn on welfare reform could “undermine the UK economy.” This comes after analysis by the IoD found that a rise in employer National Insurance has raised concerns among businesses, leading to a significant drop in confidence levels. Shadow Chancellor Mel Stride argues that Labour’s policies are “hitting business confidence hard,” saying: “Instead of fostering growth, the Chancellor’s costly jobs tax and reckless regulatory overreach are driving uncertainty and squeezing investment.” Meanwhile, James Smith, an economist at ING, has warned that the Government “has probably gone as far as it can politically on the spending side, which means tax rises are more likely.” He added: “It’s going to be hard to avoid looking at the major taxes. I can imagine employer National Insurance going up again.” With Labour pledging that it will not hike income tax, National Insurance and VAT, Eir Nolsøe in the Telegraph says that businesses “are likely to be targeted again” in the autumn Budget. |
Some workers’ rights reforms pushed back
BBC News City AM Daily Mail
The Government has set a new timeline for the Employment Rights Bill, pushing back several reforms by a year. Day-one protection against unfair dismissal, which was due to come into force next year, has been delayed until 2027, as has guaranteed flexible working and a ban on “exploitative” zero-hours contracts. Ministers say the roadmap will give businesses the “clarity and certainty they need to plan, invest and grow.” Other measures set out in the Bill include removing the current limits on statutory sick pay, day-one paternity leave and unpaid parental leave rights, with these expected to come into force in early 2026. New whistleblowing protections are also due early next year, while October 2026 will see a ban on fire and rehire practices alongside rules to ensure that tips are allocated more fairly. Tina McKenzie, policy chair at the Federation of Small Businesses, said the timetable “sets out when waves of disruptive changes will now hit small employers,” warning that “without listening to proposals from business to improve these reforms, the changes simply add complexity and risk to new hiring and existing employment.” TUC general secretary Paul Nowak said the changes were “long overdue,” adding that the new rights needed to be put in place “as soon as possible.” |
Regulation reform will boost fintech
City AM
The Government has pledged an overhaul of regulation that will strip away the red tape blocking fintech innovation. Technology Secretary Peter Kyle said the new Regulatory Innovation Office (RIO) will develop new smart tools that will make regulatory procedures “faster, clearer and more accessible.” Reforms will see AI used to streamline regulation processes and simplify the delivery of new products. The RIO will work alongside the Digital Regulation Cooperation Forum, a unit established by regulators that will see them coordinate their approaches to regulating digital services and technologies. |
FCA ‘concerned’ over takeover leaks
Financial Times City AM
The Financial Conduct Authority (FCA) says it is concerned over leaks involving takeovers, with figures showing that almost two in five deals were reported in the press before being formally announced. Data shows that 42 of the 110 mergers and acquisitions involving London-listed firms were reported in the media prior to any official statement between April 2024 and May 2025. The FCA said that it is “concerned” by strategic leaks, noting that they can “cause significant movement in share prices and trigger the improper dissemination of information, damaging the smooth operation and integrity of markets.” The City watchdog has opened 33 investigations into potential market abuse since the start of 2020. |
Reeves under pressure as forecasts falter
The Times
The Office for Budget Responsibility (OBR) overestimated economic growth by an average of 0.3% over two-year periods and 0.7% over five years. The OBR’s revised projections suggest a potential downgrade, which could compel Chancellor Rachel Reeves to raise taxes to balance the budget. Currently, she has £9.9bn of fiscal headroom, but recent policy reversals threaten to eliminate over £6bn of this. Experts estimate that a 0.2% reduction in output could cost the Treasury up to £12bn. |
House prices fall 0.8% in June
BBC News Daily Mail
UK house prices fell by 0.8% in June, according to Nationwide, with this the steepest monthly decline since February 2023. Year-on-year, prices rose by 2.1%, marking the slowest annual growth rate for nearly a year. Matt Swannell, chief economic adviser to the EY Item Club, said that monthly house price changes “can be quite volatile and this has been exaggerated by April’s change in stamp duty thresholds,” while Rosie Hooper, chartered financial planner at Quilter Cheviot, said the housing market is “still digesting” the stamp duty reforms in April. |
More Brits converting to air-con
With Britain faces increasingly frequent and intense heatwaves, more households are turning to air conditioning in a bid for a good night’s sleep. Usage has surged from just 3% of homes in 2011 to 20% in 2022, with sales of portable units soaring during spells of 30C heat. But the cooling boom poses a mounting challenge to Britain’s ageing electricity infrastructure, which was designed around winter demand and now risks being overwhelmed in summer months. Experts warn that by 2050, air conditioning could drive a 45% rise in power use, particularly in urban “heat island” areas. |
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