Inflation in the UK has surged to an 18-month high of 3.6% in June, exceeding expectations of 3.4% to 3.5%. This rise is attributed to several factors, including the Chancellor’s increase in employers’ national insurance contributions and the National Minimum Wage, which retailers have passed on to consumers. Food inflation has reached 4.5%, with significant price hikes in essentials like beef and butter. Rachel Reeves acknowledged the struggles of working people and highlighted measures taken to alleviate the cost of living. Adam Deasy, economist at PwC, said: “While price growth remains far above target, the UK economy contracting for a second straight month in May means the Bank is likely to look through the volatility in this inflation reading and proceed with a rate cut in August.”

The Government is facing calls to reconsider its approach to taxing inherited pensions, with proposals from The Investing and Saving Alliance (Tisa) suggesting income tax on pensions over £90,000 instead of inheritance tax. Renny Biggins, head of retirement at Tisa, said: “The Government’s proposal to include unused pension funds within IHT risks creating unnecessary stress and delays for grieving families.” Tisa’s report, produced with Oxford Economics, outlines alternatives, including a flat tax charge on unspent pensions. The current inheritance tax, set at 40% for estates above a certain threshold, is set to include pensions starting in April 2027. Financial experts warn that the proposed changes could complicate the process for bereaved families, leading to confusion and delays in accessing funds.

The Labour party’s commitment to protect “modest” income earners from tax increases has been thrown into doubt after Sir Keir Starmer said his government was “fixing the country” for those who work hard but lack savings. This has led to speculation that Labour will raise taxes on those with savings in order to fill a black hole of as much as £40bn in the public finances. During Prime Minister’s Questions, Sir Keir also failed to rule out a raid on pension contributions and the self-employed after being questioned by Tory leader Kemi Badenoch.

Nikhil Rathi, Chief Executive of the Financial Conduct Authority (FCA), has raised concerns about rising sovereign debt and the potential for cyber-attacks on Britain’s financial infrastructure. He said: “The biggest one I would call your attention to is the scale of market risk out there in the context of complicated geopolitical circumstances.” Rathi highlighted the increasing influence of foreign hedge funds in the UK gilt market, noting that over a quarter of trades are now conducted by these entities. He emphasised the need for more real-time data on trading in fixed income markets to ensure market integrity, especially in light of recent geopolitical tensions, including the Iran-Israel conflict and Russia’s actions in Ukraine. The FCA’s call for enhanced data comes as the global sovereign debt market surpasses $100trn, raising alarms about potential forced selling by highly leveraged hedge funds.

Staff at the Financial Conduct Authority (FCA) are considering industrial action if required to increase their office attendance beyond the current 40% rule. Unite, the union representing FCA employees, revealed that 93% of members support action against longer office hours. The FCA has initiated consultations regarding remote work policies, which have raised concerns among staff representatives who feel “let down.” The FCA currently allows most employees to work from home 60% of the time, with senior staff required to be in the office for at least half of their working days. The union argues that the FCA should not mimic private sector trends, saying: “The FCA cannot match private sector pay,” which could hinder talent retention.

Sarah Cardell, the chief of the Competition and Markets Authority (CMA), has asserted that the Government’s initiative to encourage regulators to support economic growth poses no additional risk to consumers. During her address to the Business and Trade Committee, Cardell said: “If we think about our statutory mandate at the CMA, it’s about promoting competition and protecting consumers, and both of those things are foundational to driving economic growth.” The Government has urged regulators to enhance the UK’s appeal for international investment, leading to concerns about potential anti-competitive behaviour. However, Cardell stressed that consumer protection remains the CMA’s priority, stating: “We should do that with a growth-focused lens.”

The UK’s gender pay gap has reached its lowest point in a decade, decreasing from 11.8% to 11.2% in the past year, according to the latest data from PwC. The median hourly pay gap also fell by 0.5 percentage points to 8.6% in 2024, marking “one of the most significant year-on-year improvements to date.” This data is based on disclosures from over 10,000 companies with more than 250 employees. Andrew Curcio from PwC said: “The dial is finally shifting,” pointing to the importance of sustained efforts from employers to close the gap. The financial services sector reported the largest pay gaps, while sectors with higher female employment, such as hospitality and health, showed smaller disparities. Companies with 5,000 to 19,999 employees experienced the most significant average annual pay-gap decline of 1.1%.

UK house prices rose by 3.9% year-on-year in May to an average of £269,000, defying expectations of a slowdown following the end of stamp duty relief for first-time buyers. Prices increased 1.1% month-on-month, driven largely by growth in the North East and Northern Ireland, while London and the South East saw modest 2% rises. Regions like Manchester and Newcastle continue to catch up with London’s post-2008 price boom, aided by buyers moving out of the capital. Experts attribute the growth to lower borrowing costs and improved affordability, though transaction volumes remain subdued. Persistent inflation, now at 3.6%, could delay interest rate cuts, potentially impacting future buyer activity. Despite challenges, demand remains strong. Marc von Grundherr of Benham and Reeves noted: “The appetite of the nation’s homebuyers is yet to diminish… they remain motivated to push on with their plans to purchase despite the higher cost of stamp duty when doing so.”

Jannik Sinner and Iga Swiatek, the recent Wimbledon champions, are set to face a £1m tax bill from HMRC despite not being UK tax residents. Each player will be taxed at 45% on their £3m prize winnings. Robert Salter from Blick Rothenberg explained: “Although neither the Italian player, Jannik Sinner or Polish player, Iga Swiatek, are classed as UK tax resident, they will be taxed on their UK-related earnings.” The tax implications extend beyond prize money, as both players will also be liable for tax on a portion of their image rights earnings deemed UK-sourced. The UK’s tax system for sportspeople is considered punitive compared to other countries, leading some stars to avoid UK events due to tax concerns.