Analysis by the Confederation of British Industry (CBI) shows that private sector activity declined in the three months to January, with all sub-sectors reporting a fall. The CBI’s January survey also indicates a “disappointing outlook” for the next three months, predicting downturns across services, retail, and manufacturing. CBI deputy chief economist Alpesh Paleja said the economy “has not experienced a strong start to 2026,” and warned of “persistently weak growth expectations.” He added that while “there are tentative signs of stabilisation and resilience in some specific areas… businesses remain cautious, households are downtrading and confidence is still fragile.” Conservative business spokesman Andrew Griffith said: “The CBI are not quick to criticise, so when they say business has had a bad start to the year, Labour should listen,” adding that the economy “has been crippled under the stifling weight of Labour’s jobs tax, business rates hike and the red tape ‘unemployment’ act.”

London’s financial sector must deliver regulatory reforms if it is to maintain its position as a global leader, according to a report by TheCityUK and PwC. The report highlights that the sector has lagged behind the UK economy over the past decade. It outlines five key areas for reform: financial technology, tax, international trade, capital allocation, and fostering a nation of investors. The report suggests that addressing these issues could generate £53bn in additional economic output by 2035. Anne Richards, a senior adviser to Fidelity and chair of TheCityUK’s leadership council, said: “The UK cannot afford to be complacent. History shows that globally leading financial positions, once lost, are difficult to recover.”

Marco Amitrano, senior partner at PwC UK, says interest in listing on the London stock market has increased “materially,” raising hopes of a City revival after years of weak IPO activity. He credits recent market rule reforms with making London more attractive to companies, noting more firms are considering UK listings than a year ago. Mr Amitrano said the UK must encourage more floats, saying “the UK has to be attractive, the UK has to be investable, investor money has to be here and be willing to invest, and be easy to invest.”

Demand for commercial real estate has remained strong despite Budget uncertainty, according to Rightmove’s latest property index. Office space investment rose by 4% year-on-year in Q4, while industrial demand surged by 12%. However, leisure space saw a 7% decline. Leasing demand for commercial real estate remained high, with industrial demand up 11%. The data shows that London experienced a significant drop in demand, particularly in office spaces, while Northern regions saw increased interest, especially in industrial properties.

The Business Secretary has faced criticism for his comments about the Government’s investment strategy, which he described as “picking winners.” In a social media post, Peter Kyle said: “I am betting big. And I am picking winners. It’s more activist,” adding: “And there will be things that don’t work out, sure. But to have a healthy economy, failure leads to success.” Investor Luke Johnson condemned Mr Kyle’s approach, labelling it as “arrogance” and suggesting it could lead to negative outcomes for taxpayers. He suggested that Mr Kyle is representing a “socialist government playing at venture capital.” Shadow Business Secretary Andrew Griffith has also questioned Mr Kyle’s comments.

The UK has made significant progress in narrowing the gender pay gap in financial services, according to EY. The gap has decreased by 11 percentage points to 29%. In contrast, other countries like France and Switzerland have seen increases in their pay gaps. Despite this progress, men in UK finance boardrooms still earn £75,000 more annually than their female counterparts. Martina Keane, EY’s UK financial services leader, said: “The pace must pick up. Faster progress to gender pay equality… will better ensure the best global talent is attracted.”

The UK job market faced significant challenges in 2025, with employment taxes rising by £20.7bn to £194bn, a 12% increase. The unemployment rate reached 5.1%, the highest in five years, while vacancies fell for six consecutive months, leaving 2.3 jobseekers per role. Robert Salter from Blick Rothenberg notes that high inflation and rising joblessness are consequences of increased business costs. Adzuna’s Andrew Hunter notes: “Last year was one of the toughest years for jobseekers since the pandemic,” highlighting a shift in power towards employers as remote job listings plummeted.

HMRC has reminded taxpayers that significant changes for self-employed individuals and property earners are coming into effect on April 6. Those with a turnover exceeding £50,000 must maintain digital records and submit quarterly updates using approved software. The Making Tax Digital for Income Tax initiative represents the most substantial shift in tax reporting since Self Assessment began over 30 years ago. The phased rollout will extend to those earning over £30,000 by April 6, 2027, and over £20,000 by April 6, 2028.

Rory Blundell, co-founder of Gravitee, plans to relocate to Denver, Colorado, saying that tax increases have been detrimental to the UK’s business environment. The entrepreneur said that the new tax rate of 18% on profits from business sales discourages success stories like those seen in the US. Mr Blundell noted that while the UK has strong engineering talent, many leave for better opportunities abroad. He remarked: “We haven’t nurtured the business environment to give founders success stories.” A recent survey revealed that only 16% of founders find it easy to grow their businesses in Britain.

The Bank of England says it underestimated GDP growth and post-2022 wage increases, leading to inaccurate forecasts on inflation. Officials attributed this to events that policymakers could not have foreseen. The analysis came as part of the first internal evaluation of the central bank’s forecasting performance. The Bank examined the accuracy of its economic forecasts between August 2021 and August 2025, concluding that over this period “inflation data have more systematically continued to overshoot two and three years-ahead projections,” with this in part due to the strength in wage growth.

British banks and finance firms are increasingly seeking behavioural science and psychology experts for ethical AI roles. Concerns over the misuse of AI technology are driving this demand. According to a survey by KPMG UK, 55% of firms in the sector plan to increase hiring this year and the focus will primarily be on technology positions.

A study by the Centre for Cities has found that 11 UK towns and cities, including Warrington, Barnsley, Wakefield, Brighton, Worthing, London, Preston, Doncaster, Milton Keynes, Chatham, and Bristol, saw residents’ disposable incomes rise twice as fast as the national urban average over the past decade. Brighton led the gains with an 8.1% increase, followed by Worthing at 7.8%, while Warrington recorded the highest total economic growth at 41%. The report attributes the success of these top performers to a focus on higher-skilled jobs, productive local businesses, and strategic economic planning.