Some of the UK’s leading lenders have expressed their frustrations with UK banking regulation in a new report from the Association for Financial Markets in Europe (AFME). The report criticises current capital requirements, saying that they misalign with actual risk and hinder economic growth. The AFME, which represents over 150 global banks, said the UK’s leverage ratio is a “clear instance of gold-plating” that “penalises good risk management and creates incentives to invest in higher risk assets.” The association has urged the Bank of England to reconsider the leverage ratio, saying a review by the Bank’s Financial Policy Committee is “an important opportunity to improve the capital framework and enable the banking sector to further support the UK economy by removing excessive conservatism, while maintaining resilience.”

The Governor of the Bank of England has suggested that future interest rate hikes are not inevitable, saying that investors may be overestimating the need for increases. While analysts have suggested there may be several rate increases this year as the Bank looks to tackle rising inflation, Andrew Bailey said: “I think they’re getting ahead of themselves.” He said officials will “have to, obviously, act on monetary policy if we think it’s appropriate to do so. But it strikes me… that the most important thing to do is to tackle the source of the shock.” He added: “We have to do so in a way that… causes the least damage in terms of activity in the economy and in terms of jobs.” The Bank’s Monetary Policy Committee held interest rates at 3.75% last month.

The ICAEW’s latest UK Business Confidence Monitor has revealed a decline in business sentiment, with the conflict in Iran having a negative impact. Prior to the conflict, there were signs of economic improvement, including growth in domestic sales and easing inflation. However, the ICAEW survey of 1,000 members shows that confidence has fallen for the fifth consecutive quarter. The report noted: “Business sentiment was on course to move into positive territory, but the outbreak of the Iran war had a dramatic impact.” Rising labour costs and energy price volatility remain significant challenges for businesses.

Yvette Cooper, the Foreign Secretary, has accused Iran of attempting to “hold the global economy hostage” and warned that the country may face additional sanctions if it continues to block the Strait of Hormuz. This came as Ms Cooper took part in discussions with over 40 nations, with the meeting exploring diplomatic and economic measures, including potential sanctions, if the Strait remains closed. Saying that Iran “must not prevail,” Ms Cooper called for “the immediate and unconditional reopening of the Strait.”

Data from the Office for National Statistics has revealed a steep increase in concerns about disruption to supply chains, with 37% of companies citing this as a  worry. This is up from 10% at the end of last year. The poll saw 21% of respondents say they are worried about shipping disruption, three times as many as at the close of 2025.

High street sales have significantly declined, with a drop of nearly 8% compared to last year, according to BDO. Retailers are facing a challenging period due to rising costs from tax increases and minimum wage hikes, while the conflict in the Middle East has driven concerns over a rise in the cost of living. Warning of a “hugely painful period for retailers,” Sophie Michael, head of retail and wholesale at BDO, said: “They are navigating an already challenging trading environment, while facing further rises in national minimum wage and expanding employment rights, increasing labour costs, against a shrinking consumer purse and falling consumer confidence.”

City AM looks at how the Government is increasingly relying on inheritance tax (IHT) and capital gains tax (CGT) as revenue sources. The Office for Budget Responsibility forecasts IHT receipts will rise from £8.7bn to £14bn by 2030, while CGT is expected to nearly double to over £25bn. Factors like frozen thresholds and rising asset values are drawing more individuals into these tax nets. Craig Rickman, personal finance expert at Interactive Investor, advises that with the tax year ending on April 5, individuals should utilise ISAs and pensions to mitigate tax liabilities.

Tax instability is driving many of the UK’s wealthiest individuals to contemplate leaving the country. According to research from BDO, two-thirds of the ultra-wealthy are considering relocation, with the “relentless cycle of policy change” cited as the biggest factor. Nearly 50% of respondents cited the need for certainty in tax policies as a primary reason for considering a move, nearly double the proportion who said they were looking abroad for minimal taxation.

New artificial intelligence companies are expanding in London, boosting demand for office space and contributing to one of the strongest leasing markets in years. While some analysts warn AI could disrupt London’s office market, the overall outlook is largely positive, with many expecting innovation to drive growth rather than decline. Prime offices in top locations are thriving, with very low vacancy rates and sharply rising rents as businesses compete for high-quality space. Industry leaders believe AI will create new jobs and industries, increasing productivity and expanding the economy over time.