The Confederation of British Industry (CBI) has upgraded its growth forecast for the UK from 1% to 1.3% for next year, citing Labour’s “spend now, tax later” fiscal policy. The forecast includes a projected GDP growth of 1.5% in 2027, but business investment growth for 2026 has been downgraded by 1.1 percentage points, from a previous projection of 1%. CBI chief economist Louise Hellem said the growth upgrade is grounded in “cautious optimism” rather than “cause for celebration,” warning that private sector growth is being held back by “underlying challenges” in regulation and taxation. Ms Hellem added: “If the Government is serious about restoring business confidence, it must urgently address some of the biggest barriers to competitiveness.”

Britain’s business rates overhaul is set to drive sharp tax rises for Christmas attractions, hotels and hospitality venues from April, prompting industry warnings of higher prices and closures. Analysis by tax firm Ryan shows seasonal sites such as Hyde Park’s Winter Wonderland, Lapland UK and Camden Lock Market facing steep increases, partly capped in the first year. Separately, Savills estimates business rates for four- and five-star London hotels will rise by a quarter in 2026-27, with some venues facing seven-figure hikes that may be passed on to guests. Hospitality groups say the reforms undermine pledges to support the high street, warning pubs, restaurants and hotels already under pressure from wage and cost rises could cut jobs, raise prices or close without further relief. Rural pubs also warn of severe impact, as revaluations risk stripping village venues of long-standing rate relief, potentially forcing thousands to pay business rates for the first time and threatening the survival of local community hubs.

The UK economy unexpectedly contracted by 0.1% in October, data from the Office for National Statistics (ONS) shows, matching the 0.1% decline recorded in September. Economists had anticipated growth of 0.1%. Quarter-on-quarter, the economy shrank by 0.1% in three months to October, primarily due to a decline in manufacturing and stalled services growth. Production output fell by 0.5% over three months, driven by a 17.7% decline in vehicle manufacturing. Scott Gardner of JPMorgan said speculation about the Budget “had a numbing effect on consumers and businesses,” while Barret Kupelian, chief economist at PwC, said that given the timing of the Budget, November’s figures are “likely to look similarly subdued before any post-budget effects start to show up.” Suren Thiru, economics director at the ICAEW, said the OBR data for October increases the likelihood of the Bank of England cutting interest rates, a sentiment echoed by Ruth Gregory, deputy chief UK economist at Capital Economics.

Analysts expect the Bank of England to reduce interest rates by 25 basis points to 3.75% when the Monetary Policy Committee meets this week, saying a rate cut is likely amid concerns about a slowing economy and weakening labour market. The decision on whether to cut rates could rely on data set to be published before Bank officials vote, with the Office for National Statistics set to publish new figures on unemployment and wage growth, as well as data on November’s rate of inflation. Matt Swannell, economics adviser at the EY Item Club, suggests that a “substantial upside surprise” in inflation data “could still knock a Christmas cut off course.”

Pension funds, insurers, and international investors are warning the government that its planned leasehold reforms could jeopardise billions in UK investment. Sir Keir Starmer intends to replace the current system with commonhold and cap ground rents at £250, potentially applying the limit retrospectively to existing leases, which threatens £15bn of stable income for investors. Financial bodies fear such changes would undermine contract certainty, deter investment in major projects, and damage the UK’s reputation as a safe place to invest.

Global banks and asset managers – alongside the London Stock Exchange – have agreed to fund a UK Government-backed campaign aimed at encouraging people to invest.

The Times looks at ongoing issues with HMRC’s service, including long wait times and delayed refunds, saying that despite claims of improved performance, taxpayers continue to face significant challenges, with many experiencing long waits for responses to queries. Analysis shows that taxpayers are still regularly waiting for an hour on hold to speak to an adviser; income tax refunds can take up to two years; accountants are being told not to chase HMRC over outstanding queries; and that people are being pursued for non-existent tax bills and penalties. So far in the 2025/26 tax year, 84% of calls to advisers were answered before the caller gave up or was cut off, falling short of an 85% target but improving on the 71.5% recorded in 2024/25. Of those who wrote to HMRC since April, 76% received a response within 15 working days – down from 77% last year and below the 80% target.

Sandy Begbie, the chief executive of Scottish Financial Enterprise, has urged SNP Finance Secretary Shona Robison to realign income tax thresholds with the rest of the UK. He argues that lowering tax rates for overseas workers could attract skills and investment. Currently, those earning just over £33,000 in Scotland pay more tax than their counterparts in the UK. Begbie said: “Both governments need to accept you cannot tax your way to growth.” He points to the need for the Scottish Government to prioritise economic growth in its upcoming budget on January 13.

Chancellor Rachel Reeves plans to reduce income tax relief on venture capital trusts from 30% to 20%, potentially halving investor inflows in a move that has raised concerns about returns.

The UK Treasury has announced new legislation requiring crypto firms to adhere to standards set by the Financial Conduct Authority (FCA) starting in 2027. The move aims to regulate cryptocurrencies like Bitcoin similarly to traditional financial products, enhancing consumer protection. Rachel Reeves, the Chancellor, said: “Bringing crypto into the regulatory perimeter is a crucial step in securing the UK’s position as a world-leading financial centre in the digital age.” The new rules will improve transparency and help detect suspicious activities within the crypto market. City minister Lucy Rigby added: “We want the UK to be at the top of the list for cryptoassets firms looking to grow and these new rules will give firms the clarity and consistency they need to plan for the long term.”

A report from the Centre for Social Justice (CSJ) argues that the UK is overly focused on university degrees, often to the detriment of students and the economy. It finds that around half of graduates would earn more if they had chosen a higher-level apprenticeship instead of going to university. Five years after qualifying, level-4 apprentices earn about £37,300 on average, roughly £5,000 more than the median graduate salary (£32,100), while avoiding the £53,000 average student debt carried by graduates. The lowest-earning quarter of graduates earn just £24,800, far below apprenticeship earnings. The report also highlights that the UK has far more graduates than vocationally trained workers compared with countries like Germany, and 37% of workers are overqualified.

PwC is introducing resilience and communication training for its graduate recruits to strengthen confidence and the human skills needed for management consulting. Chief people officer Phillippa O’Connor said that while graduates meet academic and cognitive standards, many lack resilience and the ability to handle pressure, feedback and challenging work situations – an issue she links partly to the post-pandemic education experience. The firm has expanded training in graduates’ first six months and launched debate clubs to build communication and confidence, particularly for those without prior exposure to such activities.

In 2025, five of the nine new FTSE 100 chief executives were previously chief financial officers (CFOs), according to Spencer Stuart’s annual UK Board Index. This trend reflects a “flight to experience” amid economic uncertainty, as companies prefer familiar faces over untested leaders. Rowen Bainbridge, from Spencer Stuart, noted that the CFO-to-CEO pathway is becoming more common, especially in financial services. While women now make up 44% of directors in the largest companies, only two have both a female chair and CEO, highlighting ongoing gender disparities in top roles.

Analysis by software company Sage shows that one-third of tradespeople still rely on “scraps of paper and pencils” for their accounts. Additionally, nearly 25% of sole traders spend over six hours completing their tax returns. Only one-third are aware of Making Tax Digital for Income Tax, which mandates online filing for those earning above £50,000 annually.