A report from the Resolution Foundation suggests Labour’s increase in employer NICs had driven up unemployment, with young workers being hit the hardest. The unemployment rate is expected to increase to 5.1% for October, up from 5% in September to hit a five-year high. Principal economist Nye Cominetti commented: “Young people again find themselves at the heart of this downturn.” Separately, the Recruitment and Employment Confederation has reported a 14.4% decline in new job postings from October to November. Retail and hospitality sectors saw significant drops of 14.1% and 10.4%, respectively. Finally, a survey by recruiter Hays found only 37% of workers feel positive about their career prospects, down from 43% last year.

Business leaders are urging parliament to pass the Employment Rights Bill after a compromise on unfair dismissal rights was reached. Six industry groups, including the British Chambers of Commerce and the Confederation of British Industry, expressed their support in a letter to Business Secretary Peter Kyle. However, concerns remain about the removal of the £118,223 compensation cap for unfair dismissal claims. Kyle acknowledged the industry’s willingness to compromise, saying: “The strategic compromises… demonstrate that, with a spirit of consensus, we can build a brand-new framework for industrial relations.”

Only 5% of the £2bn in tax breaks aimed at encouraging patent filings went to SMEs, according to Mathys & Squire. The law firm points out that high compliance costs and uncertainty deter smaller businesses from claiming these benefits. Andrea McShane, a partner at Mathys & Squire, said: “For many SMEs, the costs and uncertainties of getting into the patent box regime simply outweigh the benefits.” She urged the Government to simplify the process and provide more support to help SMEs engage in R&D and patent their innovations, as the UK’s R&D spending lags behind other countries.

Rishi Sunak, the former Tory Prime Minister, testified at the Covid Inquiry that lockdown measures necessitated tax increases. He stated he “obviously didn’t love” raising taxes to support jobs and businesses. The Government implemented a £70bn furlough scheme and the £840m Eat Out to Help Out initiative, costing over £350bn in total fiscal interventions. Sunak noted concerns about unemployment when the furlough scheme ended but felt the Government’s approach to tapering support was correct. He remarked: “I had to stand up and make all these difficult decisions about raising taxes to pay for pandemic support.”

Thousands of village pubs in the UK will face business rates for the first time, sparking outrage among publicans. Chancellor Rachel Reeves’ Budget promised lower tax rates for hospitality, but many landlords are now facing sharp increases. Analysis by Colliers revealed that 3,157 smaller pubs, previously exempt from business rates, will now incur full liabilities. Admiral Taverns reported that 400 of its smallest pubs will be affected, with one facing a £13,000 bill.

Household financial concerns in the UK have reached a two-year high, according to a recent survey by S&P Global. Confidence has declined for three consecutive months, with the consumer sentiment index dropping to 44.7 in December. Maryam Balunch, an economist at S&P Global, said: “Sentiment towards the financial outlook over the coming 12 months has soured to the gloomiest in two years.” The survey also highlighted a decline in job security, particularly in IT, construction, and financial services, as households face increased financial pressures and reduced spending intentions.

House prices in the UK are projected to rise by low single digits in 2026, according to forecasts from Halifax and Nationwide. Halifax anticipates a growth of 1% to 3%, while Nationwide predicts a 2% to 4% increase. The forecasts follow expectations of a rate cut from the Bank of England, which may enhance homebuyers’ purchasing power. London continues to lag behind, with annual growth at 1.3%, compared to a national average of around 3%.

Inflation in the UK is projected to remain high, with a year-on-year rate of 3.5% for November, according to Trading Economics. Core inflation is expected at 3.4%, while services inflation may rise to 4.6%. The Bank of England will decide on interest rates soon, with Governor Andrew Bailey indicating a cautious approach. James Smith, UK economist at ING, noted that the divided committee could lead to significant shifts in rate decisions. Economists at Pantheon Macroeconomics warned that persistent inflation could hinder rate cuts, especially amid declining job growth.

The Financial Conduct Authority (FCA) has proposed reforms to simplify mortgage rules, aiming to assist first-time buyers, the self-employed, and older borrowers. The FCA plans to review interest-only mortgage requirements and promote the use of technology to enhance mortgage advice. David Geale, executive director at the FCA, stated: “Widening access to affordable mortgages meets the needs of consumers today.” The FCA will consult the public on these changes early next year, with the goal of implementing them later in 2026.

The UK and South Korea have finalised a trade deal expected to create thousands of jobs and inject billions into the British economy. The agreement maintains tariff-free trade on 98% of goods, mirroring the EU’s terms with South Korea. Trade minister Chris Bryant announced the deal, which protects £2bn of UK exports from increased tariffs. Prime Minister Keir Starmer called it “a huge win for British business.” Despite recent declines in trade between the two nations, South Korea’s trade minister Yeo Han-koo emphasised the complementary nature of both economies.

London business leaders are forming a Growth Commission to propose measures for enhancing the UK economy. The initiative follows criticism of Chancellor Rachel Reeves for not effectively promoting growth in her recent Budget. The commission, led by Helen Gordon of Grainger, includes representatives from major firms like Deloitte and Vodafone. John Dickie, CEO of BusinessLDN, said: “The UK risks experiencing another lost decade if action is not taken now.” The commission aims to identify barriers to growth and develop actionable recommendations by February.