The UK economy grew by 0.3% in November, marking the fastest growth since the 0.4% recorded in April. Analysts had been expecting monthly GDP growth of just 0.1%. The growth was driven by a return to production at Jaguar Land Rover and strong performance in the tech sector. The Office for National Statistics data shows that the dominant services sector was up by 0.3%, and production, which includes manufacturing, was 1.1% higher. Construction, however, fell by 1.3%. While November’s growth exceeded forecasts, the three-month growth rate remains low at 0.1%. Despite the growth, concerns about consumer spending and tax burdens persist. Suren Thiru, economics director at the ICEAW, said the figures “confirm an unexpectedly upbeat November for the economy,” adding that “November’s uptick means it’s inevitable that the UK economy grew modestly across the final quarter of 2025.” Thomas Pugh, chief economist at RSM UK, said he expects the economy “did little more than stagnate” in Q4. Yael Selfin, chief economist at KPMG UK, noted that the figures show that economic activity accelerated despite pre-Budget uncertainty.

The Scottish Government’s draft Budget has drawn criticism for proposed income tax rises affecting middle and high earners. Scottish Conservative leader Russell Findlay highlighted that the tax cut for low earners amounts to just 61p a week, stating it “wouldn’t even buy you a bag of peanuts.” He added that the Budget “might even have broken a world record” after a Scottish Government tax adviser said that it “may be the smallest tax cut in history.” First Minister John Swinney defended the Budget, claiming it aligns with the needs of the Scottish people and emphasising that many public sector workers would benefit from the proposed changes.

The UK financial services sector achieved a record trade surplus of $127bn (£95bn) in 2024, marking a 15% increase from 2023. This positions the UK as the world’s largest net exporter of financial services, surpassing the US and other leading nations. Including related professional services, the surplus rises to $152.5bn (£119.1bn), according to TheCityUK. Anjalika Bardalai, chief economist at TheCityUK, said: “UK-based financial and related professional services exports remain resilient.” London remains a dominant hub, accounting for significant global financial activity, including 38% of foreign-exchange turnover.

New data reveals that rising property prices are pulling more households into paying inheritance tax (IHT). In London, housing wealth constitutes 47% of the total wealth in estates subject to IHT, according to a Freedom of Information request by retirement specialists Just Group. The average property wealth in these estates is £862,222, with only 37% comprised of cash and investments. David Cooper from Just Group said: “It is evident that housing wealth in regions like London, the east and the south east makes up a larger proportion of the estates compared to other regions. ” He added: “The average value of property in London estates paying IHT is nearly double that of most other regions across the UK.” As property values continue to rise, more families will face IHT liabilities, especially with upcoming changes in 2027 that will include unspent pensions in estate calculations.

The Chancellor is considering expanding Government support for the hospitality sector beyond pubs. Initially, the Treasury limited business rates aid to pubs due to market concerns. However, Rachel Reeves has told the BBC: “We need to make sure that we do that in a balanced way that particularly supports our pubs and the hospitality sector.” The current £4.3bn relief fund aims to assist pubs transitioning to higher business rates. However, Ros Morgan, chief executive of the Heart of London Business Alliance, has warned that the proposed relief package does not adequately address the broader issues faced by the sector, pointing to severe rate increases, with hotels facing a 115% rise and pharmacies a 140% increase. Ms Morgan has called for a 2% levy on online sales and a comprehensive overhaul of the business rates system to support high streets and local economies.

Patricia Ferguson, chair of the Scottish Affairs Committee, has expressed concerns over the UK Government’s energy profits levy. The Government confirmed the windfall tax, currently at 38%, will end by March 2030. Ms Ferguson welcomed the commitment to reform but said the UK Government “could’ve gone further.” She highlighted the risk of job losses in the oil and gas sector due to the levy and noted the need for more clean energy jobs.

From April 2026, millions of remote workers in the UK will lose the ability to claim tax relief for additional household costs, such as energy and broadband. Currently, HMRC allows a flat rate of £6 per week for those whose employers do not provide an office. Chancellor Rachel Reeves announced the change in the Budget, noting that tax relief will be eliminated for all workers. However, employers can still assist with home working costs without tax implications.

Mastercard, Visa and Revolut have lost a High Court challenge against the UK payments regulator’s plan to cap fees on international card transactions. The Payments Systems Regulator (PSR) said the firms had set cross-border interchange fees at “unduly high” levels and announced in December 2024 it would consult on imposing price caps. The companies argued the PSR had no legal authority to do so, but the court ruled that the regulator does have the power to impose such caps. The exact level of the caps and when they will take effect have not yet been decided. The PSR welcomed the ruling, saying it will help ensure fairer costs for UK businesses and consumers, while Visa has warned that price caps could reduce the value of card payments.

City AM‘s Samuel Norman says that while it has been suggested that banks are likely to benefit from an increased use of AI, 2026 will be a crucial year for proving that promise to investors. He says that as banks begin reporting results, shareholders want to see not just profits but a credible financial story about how AI spending will cut costs, improve efficiency, and reshape staffing. Big lenders like Barclays, NatWest, Lloyds and HSBC are modernising IT systems using cloud platforms and AI, with the banks all ranking highly on global AI-readiness benchmarks. However, the shift comes with risks, with research suggesting that up to 27,000 UK banking jobs – around 10% of the workforce – could be displaced by automation. Investors, meanwhile, are increasingly wary of a potential AI bubble, especially as banks form high-profile partnerships with tech firms.

London mayor Sir Sadiq Khan has warned that without proper control, AI could lead to mass unemployment and increased inequality. Mr Khan said there is a need for urgent action to harness AI’s benefits while preventing job losses, particularly in sectors like finance and creative industries. He plans to establish a taskforce to assess the situation and support Londoners, alongside offering free AI training. “We have a moral, social and economic duty to act,” he said, highlighting the rapid changes expected in job skills by 2030. A City Hall survey in November found that 56% of London workers expect AI to affect their job within the next year.