The average return for new entrants to the London stock market was -3.3% in 2025, when the firm’s debut prices were compared with year-end market closes. This marks a steep decline on the previous year’s 35.7% return and comes despite an increase in new listings from 14 to 20. Dan Coatsworth, head of markets at AJ Bell, described the year as “patchy,” noting that new firms underperformed compared to the FTSE 100’s 22% return. He noted that “uncertainty around tariffs and politics at home and abroad, mixed consumer and business sentiment, and lacklustre economic growth were the prime ingredients to dampen the appeal of undertaking an IPO.” Analysts suggest there is reason for optimism in 2026, however, following the introduction of the stamp duty holiday for new listings, alongside the easing of interest rates and inflationary pressures.

UK investors withdrew £6.71bn from global stock markets in 2025, the highest annual outflow in 11 years, according to Calastone. This figure is more than double the previous record set in 2016, the year of the Brexit referendum. Edward Glyn, head of global markets at Calastone, attributed the sell-off to panic ahead of the Budget, exacerbated by speculation about tax increases. He said: “The sudden, dramatic slowdown in outflows between November and December is a clear indicator that months of pre-Budget speculation contributed to the record outflows.” A net £188m was withdrawn from stock market funds in December, while £812m was pulled in November.

Small businesses in London are confident about the year ahead, with 90% planning to invest in growth initiatives in 2026, according to a survey by Novuna Business Finance. Nationally, 84% of small businesses have similar plans, the highest in five years. Despite this optimism, many are cautious, with 36% looking to reduce fixed costs. Jo Morris, Head of Insight at Novuna, said: “Our data paints a picture of determination from small business owners.” The survey highlights a shift towards building financial reserves and robust contingency plans amid ongoing economic uncertainty.

HMRC has issued tax demands to over 300,000 workers and pensioners, with nearly half of these assessments requiring £300 or less. Data shows that 317,000 of these tax demands (24%) were for £100 or less, while 647,000 (49%) were for £300 or less. Steve Webb, a former Pensions Minister, said: “Far too many people are receiving demands for trivial amounts of money which in some cases probably cost more to collect and process than they raise in tax.” Mr Webb, who is now a partner at pension consultancy LCP, added: “Instead of allowing the system to evolve by stealth, it is time the Government took a step back and assessed whether all the bureaucracy involved in this entire process represents unnecessary hassle for taxpayers and a waste of official time and effort.” Ian Futcher, of wealth management firm Quilter, said: “The steady rise in HMRC asking people for trivial amounts of tax back via simple assessment is a direct result of fiscal drag.”

The practice of “phoenixism” is costing UK taxpayers approximately £800m annually, according to HMRC. This involves directors liquidating companies and then re-establishing them free of debts and unpaid taxes. Analysis of HMRC data suggests that phoenixism cost the taxpayer about £840m, accounting for 22% of the £3.8bn of tax losses reported in 2022/23. Louise Gracia, a professor at Warwick Business School, warns: “There is a danger that a business will repeat the cycle of phoenixism if they find it to be financially advantageous.”

A freeze on tax thresholds is set to increase the number of families paying the High Income Child Benefit Charge (HICBC). According to HMRC forecasts, 35,000 more families will be affected by 2028/29, rising from 324,000 to 359,000. Shaun Moore, a tax expert at Quilter, said: “Tens of thousands more families will be pulled into the HICBC… as frozen thresholds let inflation do the work of tax increases.”

Employers are preparing for layoffs as payroll costs rise, according to the Institute of Directors’ monthly business confidence survey. Headcount expectations fell from -17 in November to -21 in December, indicating a potential increase in unemployment. Anna Leach, chief economist at the IoD, commented: “Hiring freezes remain widespread, amidst concern over further cost increases.” Business confidence remains low, with a score of -66, reflecting ongoing economic challenges. Ms Leach noted that, when asked what would have the greatest impact on business confidence in 2026, “top of the list were a lower tax burden and scaling back the proposed changes to employment law.” She added: “More promisingly, improvements in regulation, trade deals with the EU, lower tax complexity and lower business costs were also high up the list – areas where the Government has stated ambitions and where tangible progress could begin to rebuild confidence.”

The UK’s services sector experienced slight growth at the end of 2025, according to the S&P Global UK services PMI survey, which recorded a score of 51.4 in December, up from 51.3 in November. It was also shown that the UK’s private sector economy grew for the eighth month in a row. The S&P Global composite PMI increased to 51.4 in December from 51.2 in November on a scale where a reading above 50 points to growth. Tim Moore, economics director at S&P Global Market Intelligence, noted that while there were signs of recovery in client confidence, challenges such as weak economic prospects and rising business costs persisted. Staff numbers continued to decline for the 15th consecutive month, reflecting ongoing wage pressures and squeezed margins.

The London Stock Exchange experienced a resurgence at the end of 2025, with 11 companies listing for the first time, raising £1.9bn in the final quarter. The nine listings on the main market and 12 on AIM in 2025 raised around £2.1bn, with this a 170% increase from the £777.7m recorded in 2024. Scott McCubbin, an IPO expert at EY-Parthenon UK, said: “The final quarter saw a notable acceleration in listings as companies moved ahead with postponed flotation plans, encouraged by stabilising market conditions and improving investor sentiment.”

With midday on Tuesday having marked the point where FTSE 100 chief executives had already earned the average annual salary of a full-time UK worker, data from the High Pay Centre shows that partners at the Big Four accountancy firms will overtake average worker earnings by January 20. Partners at Magic Circle law firms are estimated to surpass the UK worker’s average salary of £39,039 by January 8, while material risk takers at FTSE 100 banks will do so by January 16. Those in the top 1% of UK earners will reach the point on March 19.

Half of UK accountants and bookkeepers say that businesses have incurred financial losses due to errors from AI-generated advice. Research by Dext reveals that 31% of professionals encounter client mistakes weekly, often stemming from incorrect or misleading AI-generated financial or tax advice. Common errors include misinterpretation of expenses (46%), incorrect VAT claims (41%) and incorrect business tax planning advice (34%). Accountants warn that reliance on public AI tools without oversight could lead to increased insolvency risks and HMRC scrutiny.

The Resolution Foundation predicts that by 2026, deaths in the UK will outnumber births, signalling a significant demographic shift. The think-tank has warned that taxes are likely to rise as the number of people of working age decreases.