Liam Byrne MP, chairman of the Commons business and trade committee, has launched an inquiry into the UK’s access to productive finance. The UK, despite being a financial and scientific superpower, struggles to connect entrepreneurs with necessary funding, he says in the Times. Traditional finance models are failing, with banks retreating from risk and public markets shrinking. Challenger banks now provide over 60% of new business loans, but the reliance on debt is under pressure. The inquiry seeks to explore how to better align finance with innovation and achieve the UK Government’s ambitious GDP growth targets.

Over 340 of the 1,193 businesses that received loans from the Future Fund have gone into insolvency, according to new figures. Launched in May 2020, the scheme aimed to support technology-oriented companies during the pandemic. However, it has faced criticism for backing firms that had no hope of surviving anyway. An official report by RSM found the scheme backed hundreds of companies unnecessarily. Some 667 of the loans have been converted into equity stakes while 94 investments have resulted in cash realisations, but it is not known if these produced a net return for the taxpayer. Louis Taylor, chief executive of the British Business Bank, stated: “We expect the fund’s performance to align with the wider market.”

The number of UK companies taken private has surged, reaching 45 in the first half of the year, the highest since 2010. This trend raises concerns about London’s competitiveness as a financial centre. The total value of these acquisitions was £50.6bn, with an average premium of 32% over undisturbed share prices. Simon French, chief economist at Panmure Liberum, noted that cheap valuations are driving this trend. Meanwhile, IPO activity remains low, with only two companies floating in London, leading to fears of a “subscale” market. Charles Hall from Peel Hunt remarked: “We are selling the family silver.”

The S&P Global UK manufacturing PMI survey reported a reading of 48.0 in July, indicating a slight easing in the sector’s downturn. This marks the strongest performance in six months, although it remains below the growth threshold of 50. Rob Dobson, director at S&P Global Market Intelligence, noted: “The UK manufacturing sector is starting to send some tentatively encouraging signals.” However, challenges persist, including weak domestic spending and declining export orders due to geopolitical tensions. Employment in the sector has also fallen for the ninth consecutive month.

Bob Lyddon, founder of Lyddon Consulting Services, warns that the Leeds Reforms proposed by Chancellor Rachel Reeves could undermine post-2008 financial safeguards. He argues these reforms risk repeating the mistakes that led to the 2008 crisis. Lyddon states: “The Leeds Reforms are a reinforcement of the denial that Labour Party policies… seeded the UK version of the 2007–8 financial crisis.” He points to concerns over relaxed loan-to-income ratios and weakened ring-fencing rules, which could increase risks for taxpayers. Reeves defends the reforms as necessary for economic growth, claiming they will create a more dynamic financial system.

The number of investors facing tax on dividends is projected to more than double within four years due to successive cuts in the tax-free allowance. According to an internal HMRC forecast, over 3.7m taxpayers are projected to pay dividend tax this year, up from 1.8m in 2021-2022. Former Tory chancellor Jeremy Hunt cut the tax-free limit on dividend income from £2,000 to £1,000 in 2023 then halved it again to £500 last year. If Chancellor Rachel Reeves scraps the allowance entirely in her upcoming autumn Budget it could raise as much as £300m. Dividends are taxed at 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers and 39.35% for additional rate taxpayers.

Rachel Reeves, the Chancellor, has defended the Government’s tax strategy, stating they have “got the balance right.” She highlighted recent tax increases on the wealthy, including levies on private jets and second homes. Her comments come in response to calls from some in Labour for a wealth tax. Government sources dismissed the idea, citing failures of wealth taxes in other countries. Former minister Anneliese Dodds had urged the Treasury to consider evidence from the Wealth Tax Commission, which proposed a 1% levy on wealth above £1m.

Rachel Reeves is considering a significant overhaul of pension tax relief, potentially affecting 6.1m higher and additional rate taxpayers. The proposed change would replace the current tiered system with a flat rate of 30%, reducing the tax advantage for high earners by up to £2,600 annually. In 2023-24, £54.2bn in pension tax relief was distributed, with 68% benefiting higher earners. Jason Hollands from Evelyn Partners stated: “Given the very substantial cost of pensions tax relief, it is not surprising that it is back in the spotlight.” The reforms could raise £2.7bn in net tax, primarily from the top 20% of earners.

Up to 7m company directors must verify their identities by an impending deadline, but only 300,000 have completed the process. Companies House plans to raise awareness, yet many directors report poor communication, mistaking emails for spam. The verification process, mandated by the Economic Crime and Corporate Transparency Act 2023, is cumbersome and requires registration via a new app. Elyse Waddy, a hotelier, expressed frustration over the lack of outreach, stating: “If you are going to implement something by a deadline, you need to make people aware of it.”

The Financial Conduct Authority (FCA) will lift its ban on cryptocurrency exchange-traded notes (ETNs) for retail investors starting in October. The change allows investors to trade Bitcoin and other cryptocurrencies through regulated ETNs, which are debt instruments tracking asset indices. David Geale, FCA’s executive director, stated: “Since we restricted retail access to ETNs, the market has evolved.” However, investors should note that ETNs will not be covered by the Financial Services Compensation Scheme (FSCS).

The Sunday Telegraph reports on a Finnish study on the erosion of skills as a result of automation, noting that a Finnish financial firm scrapped the use of software designed to help accountants because their knowledge of key processes atrophied as a result of its use. “Deskilling had got to be such a big problem it threatened the viability of the company,” the study lead was told. Andrew Orlowski says in the piece that the paper is one in a long line of studies showing how technology, and particularly artificial intelligence, is making people less intelligent. Orlowski observes that “the Finnish accountants realised there was something precious in the corporate ether – the company’s value was in its intangible knowledge capital. It could not be replicated by software, even if the daily tasks could be.”

Hiring in the UK fell by 6.7% in June, marking the steepest decline since the COVID-19 pandemic, according to LinkedIn. The drop follows a 3.9% increase in May and reflects a cautious approach from employers amid rising national insurance contributions and a higher minimum wage. Unemployment rose to 4.7% in the three months to May, the highest in four years. Economist Tamara Basic Vasiljev said the decline indicates a shift as the post-pandemic hiring surge wanes. Inflation also increased to 3.6% in June, complicating the economic landscape.

Over 125 business leaders, including figures from Toyota and JCB, have urged the Chancellor to support youth training initiatives. They warned that nearly 1m young people are currently NEET (not in employment, education, or training), risking their future. Christopher Nieper OBE stated: “The cost of the NEETs crisis to the economy is unsustainable.” The letter calls for a skills tax relief to help businesses invest in training, which could save the Treasury over £20bn in welfare costs. The Chancellor has acknowledged the crisis, stating that early unemployment leads to lower lifetime earnings.

Investors in the UK have been buying gold coins in record numbers this year as they look to mitigate increases in capital gains tax and profit from the metal’s soaring price.

The Bank of England is expected to reduce the base rate to 4% on August 8, with further cuts anticipated later in the year. Financial markets predict a quarter-point cut, supported by falling inflation and slowing economic growth. Sarah Coles, head of personal finance at Hargreaves Lansdown, stated: “All of this points to a cut next week, and more cuts in the months to come.” Economists from the EY Item Club also foresee a cut, although some policymakers may dissent. The market expects base rates to reach around 3.5% by early 2026.

Generation Z is facing significant financial challenges that hinder their retirement planning. A survey by Skipton Building Society revealed that 34% of Gen Z and millennials prioritise immediate financial needs over retirement savings. Brian Byrnes from Moneybox stated: “The economic and financial barriers facing Gen Z are significant and often beyond their control.” With average student debt at £53,000 and rising housing costs, many young adults struggle to save. The report highlights that 40% of adults are undersaving for retirement, with Gen Z expected to have less private pension income than previous generations.