The UK jobs market is showing little sign of improvement, with payroll numbers falling by 49,000 in February and vacancies dipping to 721,000, according to the Office for National Statistics. Overall employment trends remain broadly flat, while the unemployment rate held at 5.2%. Businesses have blamed higher taxes and increased regulation for weaker hiring, and the Bank of England has warned that unemployment could peak at 5.3% this year. Meanwhile, analysts at RBC BlueBay have warned the market is in a “precarious” position, with joblessness possibly reaching 5.5% by the summer. Wage growth has also slowed, pulling back to 3.8% in the three months to January. Economists polled by Bloomberg had expected wage growth to ease to 4%. Yael Selfin, chief economist at KPMG UK, said: “Downside risks for the labour market have become more pronounced with the combination of a sluggish domestic economy and higher energy prices increasing costs.”

The number of retail jobs in Britain has fallen to a record low. The British Retail Consortium (BRC) reported an average of 2.81m retail jobs last year, down 68,000 from 2024. BRC chief executive Helen Dickinson noted that youth employment is “falling faster still,” and warned that the UK “faces the prospect of a jobless generation.” The report says the rise of AI in retail may further exacerbate job losses, as consumers increasingly rely on technology for shopping.

The Bank of England has decided to maintain interest rates at 3.75% due to the economic impact of the ongoing conflict in Iran. Prior to the war, analysts had anticipated a rate cut but rising oil prices and market uncertainty made this increasingly unlikely. The Bank’s governor, Andrew Bailey, said an increase in energy prices could lead to higher inflation and the Bank estimates that it may reach 3.5% in the coming months. The nine members of the Bank’s Monetary Policy Committee voted unanimously to keep the base rate at 3.75% and said they would wait to “assess how events unfold.”

A survey by the Entrepreneurs Network has found that 20% of British entrepreneurs plan to leave the UK within the next 12 months due to declining confidence in government policies. The survey of 272 founders highlighted that 86% feel the Government does not understand their needs. The poll also saw 75% of respondents report difficulties in raising investment, while two-thirds said they face hiring challenges amid a tightening job market. Philip Salter, founder of the Entrepreneurs Network, said: “When confidence drops to this extent, it’s worth paying attention.” He added: “Founders are telling us that the current climate is making it harder to invest, hire and innovate – and that has long-term implications for the economy.”

SME housebuilders are increasingly hesitant to invest in new projects due to challenging market conditions, according to the Home Builder’s Federation (HBF). The report reveals that 70% of SME builders feel discouraged from starting new sites, with a quarter planning to reduce land purchases. Neil Jefferson, the HBF’s chief executive, said SME housebuilders are “most impacted by the ongoing market conditions, lack of demand, and rising taxes.” The report highlights a significant decline in housebuilding in London, with only 4,550 homes expected to be built by 2028.

HSBC is considering cutting up to 20,000 jobs, representing about 10% of its 210,000 strong global workforce, as part of a shift towards automation and AI. The potential reductions would be focused on non-client facing roles. Chief Financial Officer Pam Kaur said the bank is focused on the “benefits we can get through AI.” Close Brothers has already announced plans to cut 600 jobs, one fifth of its workforce, noting that it is deploying AI “at pace.”

The Financial Conduct Authority (FCA) has urged the investment industry to reduce its dependence on regulatory guidance. Simon Walls, interim executive director of markets at the FCA, said that the industry is in a “codependent relationship” with the regulator, with firms often asking it to make decisions or prescribe detailed rules, rather than using their own judgement. Mr Walls has warned that over-regulation and industry caution are contributing to low levels of investment in the UK, adding that this is “bad for the individuals but it can also be bad for the economy.” He argues that a cultural shift is needed so investors accept that market downturns are normal and not a reason to retreat or seek regulatory intervention.

The Bank of England has rejected calls to speed up its inaugural stress test of the private credit industry, despite concerns about potential systemic risks. In a letter to the House of Lords’ Financial Services and Regulation Committee, Bank governor Andrew Bailey reaffirmed the original timeline, saying officials “want to be mindful of the constraints of participating firms.” He wrote: “We anticipated having largely completed the firm engagement and analysis for the exercise in 2026, with a final report to be published in early 2027.” The committee had urged the Bank to accelerate the process, having warned that there was insufficient data on the industry to establish the risks associated with it.

Richard Moriarty, chief executive of the Financial Reporting Council (FRC), says the rise of AI presents a pivotal challenge for the accountancy profession. He has emphasised the need for accountants to “reinvent or reimagine” their roles as the sector loses low-level tasks to automation, while insisting that humans must remain accountable for the “fine judgements” that define the profession. Mr Moriarty says AI cannot replace the “stock in trade of an auditor,” which he defined as professional scepticism, the challenge of management, and fine judgements. Mr Moriarty told City AM that he is “really keen to position the FRC as a pragmatic regulator that is concerned with the right outcomes rather than an ideological regulator.”