Business confidence in the UK has fallen to its lowest level in three years, primarily due to rising taxes and economic instability. The ICAEW’s confidence monitor index hit -4.2 for the second quarter. ICAEW chief executive Alan Vallance said: “A cocktail of costs, including the National Insurance rise and global instability, has made life especially difficult for businesses.” Over half of the 1,000 accountants surveyed expressed concerns about potential tax increases later this year, with predictions that Chancellor Rachel Reeves may need to raise £30bn. The report also highlighted a decline in employment expectations and export sales, while a British Chambers of Commerce poll found that 28% of SMEs have seen a decrease in export orders.

The UK’s position as a financial services leader is under threat, with a poll from the CRIF showing that almost half of senior financial professionals believe the UK’s dominance is declining and more than 40% would no longer consider the country a global leader in the industry. Over 30% of those polled said missed investment was driving the downturn. Analysis from KPMG shows that fintech investment fell by 27% to £7.9bn in 2024, from £10.1bn in 2023. Sara Costantini, regional director for the UK & Ireland at the CRIF, warned: “Without decisive action, new markets will continue to catch-up with and challenge London’s long-held crown as a leader in financial services.”

British banks have closed an average of eight branches a week since 2016, according to research from investment platform Lightyear. The analysis shows that almost 3,700 sites closed between 2016 and 2024. Barclays and NatWest led the way, shutting 1,236 and 950 branches respectively. Lloyds closed 855 in the same period, while HSBC shuttered 743 and Santander closed almost 500 sites. Over 370 closures are planned for the coming year, with Halifax set to shut 99 branches and Santander poised to axe 95.

Extending the income tax threshold freeze could lead to higher tax rates for a million Britons. The freeze, which has been in place since 2022, is set to end in 2028, but extending it to 2030 could generate an additional £10bn for the Treasury, according to the Institute for Fiscal Studies (IFS). By 2028, an estimated 3.5m more people will fall into the higher-rate tax band. IFS director Helen Miller has told BBC Radio 4’s Today programme that extending the freeze “absolutely would” be a tax on “working people,” highlighting a lack of transparency in such a measure. Rachel Reeves, the Chancellor, affirmed her commitment to not extending the freeze beyond 2028/29 during her Budget, saying that “it would take more money out of their payslips.” She added: “I am keeping every single promise on tax that I made in our manifesto. There will be no extension of the freeze in income tax and National Insurance thresholds beyond the decisions by the previous government.” With Sir Keir Starmer this week promising to adhere to manifesto commitments and the Government’s fiscal rules, a Conservative spokesman said that while the Prime Minister “emphatically ruled out any rises in income tax, NI or VAT … he wouldn’t repeat the promise his Chancellor made in the autumn to lift the freeze on income tax thresholds.”

New financial services jobs vacancies rose 3% quarter-on-quarter in Q2, according to Morgan McKinley’s London Employment Monitor, with fintech and demand for risk professionals driving the increase. Financial services vacancies in London were up 14% year-on-year, hitting 4,800. The report also suggests that fintech hiring in London is set to jump by 72% in 2025. Morgan McKinley’s analysis found hiring sentiment remained “cautious” as global volatility, trade uncertainty and tax hikes having an impact. Mark Astbury, director at Morgan McKinley, said: “Many firms remain cautious on headcount due to ongoing cost-cutting and economic uncertainty and the Government’s decision to raise employer National Insurance contributions have tempered business confidence and impacted hiring.”

The challenge of securing work experience is hindering many young people from entering the workforce, with the Institute for Public Policy Research revealing that two in five 18 to 24-year-olds have never completed any work experience. Increased regulation, including mandatory pay and insurance requirements, has made internships particularly difficult to obtain, especially in smaller firms. Analysis shows that traditional internships are too expensive for many to undertake, with a study from the Association of Accounting Technicians showing that 41% of students have less than £8 a day to spend on work and related costs such as travel and food. Lizzie Crowley, skills adviser at the Chartered Institute of Personnel and Development, says that while traditional internships “remain out of reach for many young people,” micro-internships “can offer a route in.” These shorter, flexible opportunities allow students to gain valuable experience while balancing their studies.

The City of London Corporation has called for the creation of an investment hub for financial services, saying that this could streamline investor engagement and unlock as much as £10bn in capital for growth. In a report produced in collaboration with the Treasury, the Corporation said the hub would serve as a “strategic one-stop shop” for international investors and deliver “joined-up, tailored support.” This, it adds, would help attract and retain financial services investment. It would also offer regulatory guidance. Chris Hayward, policy chairman at City of London Corporation, said: “This is a now or never moment for UK financial services. If we don’t act decisively, we risk losing our global position and the economic prosperity, jobs and innovation that come with it.”

The Financial Conduct Authority (FCA) suspended or banned over 1,600 websites for promoting financial services without the necessary permissions last year.  In 2024, the regulator intervened to ensure almost 20,000 non-compliant financial promotions were amended or withdrawn by authorised firms, compared with under 600 in 2021. The City watchdog also worked with technology platforms to remove 50 apps from Google Play and the App Store. FCA chief executive Nikhil Rathi said: “We have embraced data to crack down on harm.”