Business leaders have warned that Britain is heading into 2026 amid a deepening private-sector downturn. Ahead of the Budget, firms cut back on investment and hiring, and confidence has not recovered since. The Confederation of British Industry (CBI) reports private-sector output is set to fall in late 2025, with declining activity across all sectors and worsening forecasts into early 2026. The labour market is weakening sharply. Adzuna data shows UK job vacancies fell for a fifth consecutive month in November, down 6.4% month-on-month and 15% year-on-year, making 2025 one of the toughest years for jobseekers since the pandemic. Graduate and entry-level roles have been hit particularly hard, partly due to companies adopting AI to reduce staffing needs. Unemployment has risen to a four-year high of 5.1%. Despite these pressures, wages continue to grow faster than inflation. Average advertised pay rose 7.7% annually to £42,687, with especially strong growth in the public sector and IT. Businesses are urging the Government to address high energy costs, simplify the tax system, and work more closely with industry to revive growth. Alpesh Paleja, deputy chief economist at the CBI, said: “Our latest surveys round off a disappointing year for private sector growth. They mark a continuation of the headwinds that have plagued businesses over the past 12 months: tepid demand conditions with households cautious around spending, and strong cost pressures squeezing margins.”

Traders have increased their bets against the pound to the highest level in six years, with nearly £6bn wagered. This reflects a negative sentiment towards the currency, which is viewed as a barometer for the UK economy. The Commodity Futures Trading Commission reported over 93,000 net bets against sterling, indicating expectations of a decline. Jane Foley from Rabobank noted concerns about the UK’s fiscal position and slow growth. Unemployment is at a five-year high, and inflation remains above the Bank of England’s target, further complicating the economic landscape.

The UK job market is facing significant challenges, with redundancies rising to 156,000 in the three months to October, the highest since February 2021. The unemployment rate has increased to 5.1%, up from 4.3% last year, according to the Office for National Statistics (ONS). Andrew Wishart, a senior UK economist at Berenberg, warned that this could signal a more severe labour market downturn. He said: “I think we’re at that point where we’re tipping from a slowly declining labour market to potentially a more severe downturn.” Young workers are particularly affected, with youth unemployment reaching 16%.

Labour Together, a think tank linked to Sir Keir Starmer, is advocating for significant changes to the Employment Rights Bill. A leaked paper criticises the bill as a “safety blanket” that hinders economic progress. It proposes scrapping 80% of the bill and replacing it with higher taxes to fund unemployment insurance for laid-off workers. The paper argues that flexibility in the labour market is essential for economic growth, stating: “Easy firing means easy hiring, which benefits both firms and workers.” The proposals are likely to create divisions within the Labour Party.

Resilience training is becoming increasingly common in UK workplaces, the Sunday Times reports, with about 50% of employers offering such programmes. According to a report from Corndel, demand for mental health workshops has surged, with a 53% increase in resilience training over the past three years. Ann Francke, chief executive of the Chartered Management Institute, said: “Good employers have always done this,” with resilience tested informally through interviews and early-career sink-or-swim roles. Work-related stress now affects nearly 1m workers in Britain, with PwC’s chief people officer drawing a direct link between disruption caused by the pandemic and the preparedness of some graduates.

A House of Lords committee has said people in their 50s and 60s should be helped to stay in work to ease pressure on public finances and living standards. Policies previously used to address the impact of declining fertility and rising life expectancy in the UK, such as raising the state pension age or increasing immigration, were not adequate solutions on their own, a report by peers said. Getting more people in their 50s and 60s to stay in or return to work “is key” and the Government must prioritise incentives to do so.

UK government borrowing reached £11.7bn in November, exceeding the £10bn forecast. The Office for National Statistics reported a £1.9bn decrease from last year, marking the lowest November borrowing in four years due to higher tax receipts. However, borrowing for the financial year to date stands at £132.3bn, £10bn higher than last year and £16.8bn above the Office for Budget Responsibility’s forecast. Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, commented: “The data shows that Britain’s public finances remain weak.” Writing in City AM, Rachel Reeves, the Chancellor, claims she’s brought stability to the UK economy. She adds: “This government will fight to raise living standards and cut business costs – not with short-term fixes, but with a stable, long-term plan for business-led growth.”

The Chancellor’s recent tax changes have sparked outrage among small business owners. The increase of 2% on dividend tax rates, raising them to 10.75% and 35.75%, has left many feeling betrayed. Jason Hollands from Evelyn stated: “Dividends are paid out of profits that have already been subject to corporation tax. These hikes mean that in many cases the Treasury will be milking the same income stream twice.” The Office for Budget Responsibility estimates the move will generate £2.1bn for the Treasury by 2029-30. But business owners spoken to by the Telegraph are left questioning the viability of their operations amid rising costs and regulatory pressures.

UK-listed companies have lost approximately £80m on Bitcoin investments, having spent over £360m on nearly 4,300 Bitcoin at an average price of £85,076. Despite cryptocurrencies gaining traction, the market remains volatile and the price of Bitcoin has fallen by 12% this year. The number of Britons investing in Bitcoin has fallen from 12% in 2024 to 8% in 2025, according to the Financial Conduct Authority.

AI fraud losses in the UK surged by 559% over the past year, exceeding £4.5m. Reports to Action Fraud, the national centre for cyber crime, indicated losses of £690,000 in 2023, which skyrocketed to £4.55m in 2024. Junior security minister Dan Jarvis confirmed that £3.74m of this amount occurred in the first nine months of the year. He noted: “Action Fraud was replaced by the improved Report Fraud service on December 4.” The new service relies on self-reporting, making it difficult to verify AI’s involvement in scams.

Management consultants are facing significant challenges, with profit growth slowing. Accenture, the world’s biggest listed consultancy, has seen its share price drop by over 22% this year. The Big Four of Deloitte, EY, KPMG, and PwC have reported stagnant profits for the first time since before the pandemic, while McKinsey is also experiencing a slowdown, with plans to cut 4,000 jobs. James O’Dowd, CEO of consulting recruiter Patrick Morgan, said: “There’s clearly an issue.” It is noted that the industry is attempting to pivot towards AI technologies, but concerns have arisen about job cuts leading to decreased service quality.

Foreign buyers are increasingly acquiring UK companies, with a 74% year-on-year increase in 2025. Data shows that overseas bidders have agreed $142bn in takeovers of British companies this year.

Wes Streeting, the Health Secretary, has urged Prime Minister Sir Keir Starmer to take stronger action to reverse certain Brexit-related measures. He suggested the UK should consider rejoining the EU customs union, saying: “The reason why leaving the EU hit us so hard as a country is because of the enormous economic benefits that came with being in the single market and the customs union.” Mr Streeting added that the UK has “taken a massive economic hit leaving the European Union.” The Prime Minister has already agreed a fresh trade deal with the EU but Mr Streeting said that while the Government has made a “good start” with the revised deal, he would like to see things go further.

The Chancellor has been barred from the Marsh Inn in Leeds due to her tax policies harming the hospitality sector. Landlord Martin Knowles imposed the ban after facing a £2,500 increase in business rates. He said: “I thought I’d ban them all… they are not doing our industry any favours.” Rachel Reeves visited the pub following Labour’s victory in July last year. Pubs are struggling, with nearly three closing weekly, and further tax rises are anticipated.