Tens of thousands of UK firms are nearing collapse as they come under pressure from high tax rates, rising employment costs and weak demand, according to a report by Begbies Traynor. The number of companies in ‘critical financial distress’ reached 67,369 in late 2025. Ric Traynor, executive chairman of Begbies Traynor, commented: “The continued rise in critical financial distress is clearly concerning for the UK economy.” Julie Palmer, a partner at the firm, warned: “While many of these organisations have struggled along for years, we see a new catalyst in 2026 that could push some over the edge, as HMRC starts to call in some of the £27bn in overdue corporation tax, PAYE and VAT following the pandemic.”

Investment minister Jason Stockwood has indicated that the UK is considering a universal basic income (UBI) to support workers affected by AI disruptions. He stated that society must prepare for significant changes, suggesting a need for “some sort of concessionary arrangement” for jobs that are lost. Stockwood noted: “People are definitely talking about it.” Recent research from Morgan Stanley highlights that the UK is losing more jobs than it creates due to AI, raising concerns about potential mass unemployment, particularly in London.

The number of vehicles built in Britain last year fell to the lowest level since 1952, prompting manufacturers to consider diversifying into the defence sector. Just 764,715 vehicles built in 2025, a 15.5% decrease from 2024, according to the Society of Motor Manufacturers and Traders (SMMT). Chief executive Mike Hawes described it as “the toughest year in a generation” and said although we should see a recovery this year, new EU rules on subsidies and rules of origin could harm future exports.

Lloyds CEO Charlie Nunn has warned against proposals from Nigel Farage, the leader of Reform UK, to curb interest payments on bank deposits with the Bank of England. “A strong economy needs strong banks,” he said as Lloyds unveiled increased annual profits. Nunn warned that could curb lending to households and firms.  Farage vowed to stop banks getting £20bn of “free money” a year on risk-free deposits.

Sir Keir Starmer is navigating complex relations with the EU as he seeks to reshape post-Brexit financial regulations, writes Simmons & Simmons partner Penny Miller. However, she warns that while the UK aims to foster growth and innovation, it must avoid compromising its competitive edge in financial services. The sector, employing 1.2m people and generating a £92bn trade surplus, is vital to the economy. Starmer has successfully lobbied for exemptions from EU rule alignment. Miller points to the need for the UK to maintain its independence while ensuring access to EU markets: “The Government must ensure it does not trade away the City’s competitive edge.”

An investigation by Tax Policy Associates has uncovered that nearly 45,000 properties, valued at £190bn, are concealed from public scrutiny, breaching anti-money laundering regulations. The Economic Crime Act mandates foreign owners to register their properties and disclose beneficial owners. However, 44% of these properties lack identifiable owners. Dan Neidle, founder of Tax Policy Associates, stated: “We think a significant proportion is likely to be intentional.” The Government plans to review the register’s effectiveness, as only 3% of penalties for non-compliance were collected last year.

Sir Keir Starmer’s recent visit to Beijing resulted in several agreements, though no significant investment figures were disclosed. The most notable outcome is the introduction of visa-free travel for Britons to China for stays under 30 days. Additionally, both nations agreed to explore a potential trade deal in the services sector, which currently sees £13bn in exports from the UK to China. Other agreements focused on intelligence sharing and cooperation on standards across various sectors. Melissa Geiger, the chair of KPMG UK, said: “The further opening up of this major new market will unlock significant bilateral trade and investment opportunities and create jobs across the UK.”

Labour’s £4m AI Skills Hub has been criticised for offering non-existent courses and outdated links. The hub, intended to train millions, instead directs users to irrelevant or inaccessible content. The Government paid PwC £4.1m to build the hub. Andrew Griffith, shadow business secretary, stated: “There’s little value wasting taxpayer’s money on a web page with a bunch of out of date links.” The Department for Science, Innovation and Technology defended the hub, claiming it offers over 600 reviewed courses.

Companies must develop AI strategies for tax governance, according to Sarah Osmond, HMRC’s audit and governance lead for large businesses. During a KPMG webinar, she highlighted the importance of addressing knowledge gaps in tax teams regarding AI usage. HMRC is increasingly focusing on how businesses manage tax risk through AI.

Mid-tier accounting firms in the UK have reported record profits, with average profit per equity partner reaching £565,000 in 2024.