The National Institute of Economic and Social Research (NIESR) has warned that Chancellor Rachel Reeves is facing a £50bn black hole in Government finances and may need to raise income tax, VAT, or National Insurance to address the deficit. NIESR estimates that the Chancellor will miss her borrowing targets by £41.2bn and needs a further £9.9bn to restore the Government’s fiscal headroom. Stephen Millard, the think-tank’s deputy director, said: “Can she fill that gap without breaking the manifesto commitment to raising taxes on working people? I think the quick answer to that is no.” He added that the Chancellor has been left with an “impossible trilemma” of trying to meet her fiscal rules while fulfilling spending commitments and adhering to a manifesto pledge not to raise taxes on working people. Economists at Deutsche Bank think Ms Reeves faces a £20bn gap but argue that this could be filled by extending the freeze on income tax thresholds, while Ruth Gregory, chief economist at Capital Economics, expects the Chancellor to miss her targets by up to £25bn.

S&P Global’s PMI for July shows that orders in the services sector fell at the fastest rate since late 2022. The PMI for the services sector dropped to 51.8 from June’s 52.8 on an index where a reading above 50 represents growth. The composite PMI for July came in at 51.5, marking a decline on June’s score of 52. New business fell to 47.7 from 51.3, with this the lowest since November 2022, while employment fell to 45.6 from 47.0, its lowest since February. However, the gauge of future activity rose to 65.9 from 64.4, the second-highest level since October. Matt Swannell, chief economic adviser to the EY Item Club, said the “more modest pace” of growth in the services sector showed that growth rate for the economy is “sluggish and is expected to remain that way.”

Almost 72% of voters lack confidence in the Government’s economic growth strategy, with 53% believing the UK economy will worsen in the next year. According to the City AM / Freshwater Strategy poll, 52% of voters feel they will be no better off than their parents financially. The poll also reveals that 2% of Brits, about 1m people, are planning to leave the country, primarily for a better cost of living. Less than a quarter of respondents (24%) agree with the statement “Britain’s best days lay ahead of it.” while 41% disagree. Reform UK came out on top when those polled were asked which party was best placed to understand how to support the needs of UK businesses.

A number of workers are opting to resign instead of returning to the office as companies enforce stricter in-person attendance. According to a survey of 583 businesses by the British Chambers of Commerce (BCC), 10% of firms said staff have left over policies mandating a return to the office. Over 40% of firms have increased office attendance requirements, with nearly half expecting full-time office work within a year. Jane Gratton, the BCC’s director of public policy, said: “With the cost of doing business continuing to escalate, firms are looking to boost productivity.”

Ministers have been urged to clarify whether the Government will introduce an exit tax, with it suggested that Chancellor Rachel Reeves could reform capital gains taxes to prevent UK taxpayers from taking gains abroad to get an exemption. Dan Neidle, founder of Tax Policy Associates, took to social media to warn that exit taxes “are dangerous things, because mere rumours of an exit tax can be damaging.” He suggested that if the Government was going to introduce an exit tax, “it should have done so immediately, outside the Budget cycle,” adding: “If it’s not, it would be a good idea to publicly rule it out.”

HMRC has announced an increase in the Self Assessment tax return threshold for trading income from £1,000 to £3,000. For income between £1,000 and £3,000, some tax may apply, but individuals can use a simplified online service for reporting. The trading allowance will remain unchanged. Earnings below £1,000 are exempt from tax and reporting.

Aman Parmar, head of marketing at BizSpace, says that UK firms could benefit from the current trade environment, suggesting that British businesses may attract European companies seeking stability. With the US having imposed a 15% tariff on EU exports, Parmar said this “could position the UK as a key indirect beneficiary.” He highlighted that UK SMEs might attract displaced EU businesses.

Visa is close to relocating its European HQ to Canary Wharf, potentially taking 170,000 sq ft at One Canada Square, signalling renewed confidence in the Docklands financial district.

OpenAI has announced that ChatGPT will no longer offer definitive advice on personal issues such as whether someone should break up with their partner, following concerns over the chatbot giving overly direct responses. The company acknowledged its technology has fallen short in detecting emotional dependency and instead aims for the tool to guide users through reflection by weighing pros and cons.