The first slate of reforms under the Employment Rights Act have come into force, enhancing trade union powers for employees. Key changes include the repeal of most provisions of the Trade Union Act 2016 and new protections against dismissal for participating in industrial action. Miriam Bruce, a partner at Mayer Brown said this “is a game-changer” that would put an even greater onus on employers to prove cause. Additional measures, including whistleblowing protections, will take effect on 6 April, while employers are planning redundancies ahead of unfair dismissal reforms coming into force next January. A cap on compensation for unfair dismissal will also be lifted which could become a significant issue for those employing high earners, says Stefan Martin, partner at Hogan Lovells.

The UK Government is considering delaying the equalisation of the national minimum wage for younger workers due to rising youth unemployment. Currently, workers aged 18 to 20 earn £10 per hour, while those over 21 earn £12.21. Youth unemployment among 18- to 24-year-olds has reached a five-year high. Alan Milburn, chair of the young people and work review, warned the rise in youth unemployment posed an “existential” risk for the UK and could put “a generation on the scrapheap”. Elsewhere, Kate Shoesmith, director of policy at the British Chambers of Commerce, said: “Businesses want to see a delay in plans to lower the threshold for the national living wage.” Tina McKenzie, chair of the Federation of Small Businesses, adds: “If [the Government] think that small employers can handle [increased costs], as well as the increase in the minimum wage, then good luck.”

Wage growth for small and medium-sized enterprises (SMEs) in Britain fell by 1% in January, marking the first decline in a year, according to Employment Hero. This drop coincides with a rise in the unemployment rate to 5.2%, the highest in five years. Kevin Fitzgerald, UK Managing Director at Employment Hero, commented: “January’s wage dip is an early warning sign.” SMEs are struggling with rising costs and taxes, leading to cautious financial strategies. Despite the decline, year-on-year wage growth remains at 5.6%, indicating some recovery from previous lows.

UK inflation fell to 3% in January, down from 3.4% in December, primarily due to lower food, fuel, and airfare prices. The Office for National Statistics (ONS) noted this is the lowest inflation rate since March 2025. ONS chief economist Grant Fitzner stated: “Inflation fell markedly in January…driven partly by a decrease in petrol prices.” Chancellor Rachel Reeves welcomed the decline, stressing her commitment to reducing living costs. Economists predict further drops in inflation, with expectations of interest rate cuts by the Bank of England in March.

The British Retail Consortium (BRC) reports that rising employment costs are severely impacting jobs and investment on the High Street. A survey revealed that 84% of finance chiefs now list employment costs among their top three concerns, up from 21% last July. Consequently, 61% plan to reduce staff hours, while 55% intend to cut head office jobs. Helen Dickinson, chief executive of the consortium, said its findings were a “clear warning sign for the jobs market”, adding: “Retailers are facing a perfect storm of higher costs…which are already reshaping hiring decisions.” The BRC also warned that Labour’s Employment Rights Act will further increase costs and reduce hiring.

Nikhil Rathi, CEO of the Financial Conduct Authority (FCA), announced a shift away from introducing new regulations in response to market failures. Speaking on the Fairer Finance podcast, he stated that the FCA will rely on existing rules and an outcomes-based approach, rather than creating more red tape. Rathi noted that the Consumer Duty framework will help address issues without the need for additional regulations. He also said the FCA had implemented an AI ‘sandbox’ for firms to innovate responsibly, while recent actions have reportedly saved consumers £157m annually without new rules.

Rachel Reeves is hoping to deliver a Spring Statement with no new tax burdens or spending commitments, aiming to restore market confidence. A Treasury source said: “We want this to be a complete non-event. The goal is to be as boring as possible.” Recent trends show a decline in borrowing costs, providing Reeves with £11bn of additional headroom. However, the Treasury opposes significant tax and spending changes, fearing it could undermine market confidence.

Sir Sadiq Khan has announced new regulations targeting unruly rickshaw drivers in central London, aiming to curb “rip-off fares” and antisocial behaviour near tourist hotspots like Buckingham Palace. Under the crackdown – to take effect from October – pedicab operators will need licences for themselves and their vehicles, pass safety and English language tests, and face police background checks. A ban on blasting music from rickshaws will be enforced, and new fare caps will limit short trips to a base rate of £5 plus £1 per minute, with extra charges for additional passengers.