The UK Government is reconsidering proposed reforms aimed at enhancing the accuracy of Companies House filings, following protests from small business owners. Business Secretary Jonathan Reynolds is reviewing changes that would require companies to use third-party software for annual accounts and mandate small firms to file profit and loss statements starting April 2027. These reforms arise from concerns over the misuse of UK companies by criminals and the register’s accuracy. Critics argue that the new requirements could impose significant costs and risks, potentially compromising small businesses’ competitive edge. A government spokesman stated it is “committed to avoiding undue burdens on businesses,” while Companies House has not commented on the matter.

Recent research indicates a “healthy pickup” in UK business activity, driven by consumer and business spending, despite concerns over rising taxes and energy costs. The Office for National Statistics reported a 0.3% contraction in the economy for April, but S&P Global’s purchasing managers’ index (PMI) for June revealed a rise to 52.8, signalling growth in the services sector. Tim Moore, director at S&P Global, noted that while new work increased, “shrinking export sales were a constraint on service sector growth.” Additionally, employment numbers fell for the ninth consecutive month, with redundancies contributing to the decline. Matt Swannell from EY Item Club highlighted a “healthy pickup” in services activity, suggesting GDP growth may align with survey findings. However, businesses remain cautious, with many expecting lower sales due to US tariffs and geopolitical tensions.

The UK’s financial and professional services industry is a cornerstone of economic strength, employing nearly 2.5m people and contributing £285bn to the economy, which is 12.6% of the UK’s total gross value added. A report from TheCityUK’s highlights that over the past decade, the sector has added more than 326,000 jobs, with significant growth outside London in cities like Manchester and Birmingham. Average annual earnings in the sector are £69,474, nearly double the UK average. However, the Big Four accountancy firms are reportedly cutting hundreds of jobs due to AI replacing junior roles. The report goes on to call for government action to stimulate local growth and develop talent pipelines.

June proved to be a challenging month for Britain’s high streets, with in-store sales growth lagging behind inflation for the sixth consecutive month. According to the latest High Street Sales Tracker from BDO, overall sales saw a modest year-on-year increase of 0.6%, while online sales surged by 4.3%, driven by changing consumer behaviours. Sophie Michael, head of retail and wholesale at BDO, remarked: “Consumer spending continues to be challenged, with little optimism for retailers.” The fashion sector particularly struggled, with online sales rising by 10% compared to a 0.2% decline on the high street.

Rachel Reeves has indicated that tax rises may be necessary in the upcoming Autumn Budget, following a £5bn cost from welfare concessions. The Chancellor said: “Of course there is a cost to the welfare changes that parliament voted through this week and that will be reflected in the budget.” Some economists suggest that Reeves might need to implement over £10bn in tax increases to balance the budget, covering lost welfare savings and rising interest rates. But city analysts have warned that the Government could raise taxes by as much as £20bn this year to restore fiscal headroom. Separately, Keir Starmer has declined to comment on how much tax the Government would have to raise later this year to fill costs left by Labour’s various U-turns.

Alex Baldock, chief executive of Currys, has urged the Government to avoid increasing taxes on retailers, warning that such a move would “further dampen investment and increase prices in an inflationary way.” His comments follow similar concerns raised by Sainsbury’s CEO Simon Roberts regarding the impact of rising national insurance costs on jobs. Baldock noted that while consumer confidence is improving, it remains lower than last year, and the company is cautious about hiring due to increased costs. He also highlighted concerns over cheap electrical goods being dumped online, calling for urgent government action on tax breaks for low-value goods.

Shadow business secretary Andrew Griffith has condemned the Financial Conduct Authority (FCA) for its expansion of rules on “non-financial misconduct,” which now encompass bullying, harassment, and violence across 37,000 additional financial firms. He labelled the new regulations as “grade A mission creep,” arguing that existing laws already address such misconduct. Griffith said: “At a time the FCA should be straining every sinew to help the UK’s flagging competitiveness… what on earth are they playing at?” The change follows a rise in misconduct incidents reported by the FCA after surveying 1,000 firms. The FCA aims to clarify when behaviours like bullying and harassment constitute a breach of conduct rules, with the new regulations set to take effect on September 1, 2026. Griffith’s comments reflect a broader concern about regulatory overreach potentially stifling growth in the financial sector.

Small and medium enterprises (SMEs) in the UK are increasingly concerned about the impact of trade tariffs, with a report revealing that 30% anticipate losses between £10,000 and £20,000 this year. Jonathan Andrew, chief executive at Bibby Financial Services, said: “Doing nothing isn’t an option – that’s the reality of tariffs which is dawning now.” The uncertainty surrounding exchange rates, particularly the weakening of the US dollar, is further complicating matters for exporters. Many SMEs are now looking to China as a new trade partner, shifting focus away from the US.

Sasha Mills, Executive Director of Financial Market Infrastructure at the Bank of England, stated that the central bank is “open minded” about the role of stablecoins in wholesale markets. Speaking at the City Week conference, Mills highlighted that while central bank money should remain the primary settlement asset, stablecoins could foster innovation. This marks a shift from the Bank’s previous cautious stance, as noted in a July 2024 discussion paper that identified “significant financial stability risks” associated with stablecoins. The Bank of England is set to consult on stablecoin requirements later this year.

UK government bond markets have rallied following Keir Starmer’s endorsement of Rachel Reeves as Chancellor. The yield on British government bonds, or gilts, fell by approximately 0.1 percentage points to around 4.5%, reversing a previous rise driven by speculation about Reeves’s future. Despite this, investors remain cautious due to a significant gap in public finances, exacerbated by recent government decisions. Neil Wilson, UK investor strategist at Saxo Bank, remarked: “The market is getting nervous about its ability to make the sums add up.” Reeves has committed to her “iron-clad” fiscal rules, which require day-to-day spending to match receipts within five years, but economists warn that without corrective measures, she may need to break these rules at the upcoming autumn budget.

With Rachel Reeves set to mark her first year as Chancellor, her performance has been rated a mere one out of ten by entrepreneur Luke Johnson. He said the mood among investors and business leaders is one of “close to despair” regarding the UK’s economic prospects. Johnson highlighted the negative impact of National Insurance increases and the net zero agenda on business confidence, stating: “It’s millions of pounds, and we have some terrible choices to make.”