The International Monetary Fund (IMF) has downgraded the UK’s growth forecast for 2026 by 0.5%, now predicting a rise of just 0.8%. This marks the largest downgrade among G7 nations, with the forecasted decline attributed to trade disruptions from the conflict in the Middle East. The IMF expects GDP growth for the UK to come in at 1.3% in 2027, with this a 0.2 percentage point downgrade on its previous forecast. Inflation in the UK is expected to reach 3.2% this year, the highest alongside the US, before easing to 2.4% in 2027. Chancellor Rachel Reeves commented: “The war in Iran is not our war, but it will come at a cost to the UK.” Shadow Chancellor Sir Mel Stride said Ms Reeves had “no one to blame but herself” for the downgrade, noting that she “hiked National Insurance in her first Budget, doubling inflation and sending unemployment soaring.”

HSBC’s chief executive, Georges Elhedery, has expressed concern over the impact the conflict in Iran is having on global economic confidence. He noted that uncertainties from the war could affect prices of goods, oil, and metals. Brendan Nelson, HSBC’s chair, has warned that prolonged disruptions would increase inflation and hinder growth. The conflict has already led to rising costs for businesses, with garment makers facing price hikes of 10% to 15%. Tom Beahon of Castore highlighted the volatility in prices, while Virgin Atlantic’s Corneel Koster noted jet fuel prices have more than doubled since the war began.

James Baxter-Derrington in the Telegraph says high earners in the UK are increasingly rejecting pay rises due to a punitive tax system. Noting that those earning over £100,000 face an effective tax rate of 71%, he suggests this discourages ambition and hard work. Many, he warns, are opting to earn less to avoid high taxes and childcare costs. Mr Baxter-Derrington highlights that once taxes and childcare expenses are accounted for, it pays more to earn £99,999 than it does to earn £144,500.

Many taxpayers are missing out on refunds from HMRC, with an average rebate of £800. Data shows that 178,180 cheques issued last year, totalling £144m, were never cashed. Robert Salter, a partner at Blick Rothenberg, suggested that it is “certainly a bit problematic that HMRC continues to use cheques to settle tax refunds in so many cases,” but an HMRC spokesperson said that most repayments are now made via bank transfer, which is the preferred method for speed and security. It is noted that the most common reason for overpayment is incorrect tax codes.

Polling by City AM and Freshwater Strategy shows that 52% of Britons are dissatisfied with the Government’s response to rising energy prices due to the conflict in Iran. Nearly 74% expect tax increases in the upcoming Budget, with 39% saying the hikes would be a result of the situation in the Middle East but 52% blaming Labour’s economic decisions. It was also found that 69% of voters believe a recession is likely within the next year.

Concerns are rising over private credit’s impact on the global financial system, particularly for major European banks. A report from Bloomberg Intelligence highlights that Deutsche Bank and Barclays are among the most exposed, with Barclays facing £20bn in private credit exposure. Bloomberg Intelligence analyst Philip Richard warned that losses could reach €12.6bn (£11bn), potentially reducing profits by 5% for some banks. He noted that limited disclosures from lenders could exacerbate the situation. Jamie Dimon, CEO of JPMorgan, has warned that private credit “does not tend to have great transparency” and voiced concern over collapses in the sector.

Hybrid working has overtaken salary as the key factor when it comes to attracting tech talent, according to research from International Workplace Group. The study found that 37% of businesses now prioritise hybrid work as part of their hiring strategy, while 35% say competitive pay is the focus. It was also shown that 78% of business leaders believe that offering hybrid work provides an advantage when recruiting staff. Hybrid working is also deemed important to retaining talent, with 68 % of respondents saying that salary alone is no longer enough to keep skilled staff. Separate figures from RSM show that applications from overseas tech workers fell 11% last year, exacerbating talent shortages in the sector.

Wall Street bankers have outperformed their City counterparts in bonus growth. The average US bonus reached $154,344 in 2025, marking a 5.85% increase, while bankers in the City saw bonuses increase by 3.5% to hit an average of $154,215, according to Efinancialcareers. The firm said bonus expectations had been “bullish,” with many bankers expecting their bonuses to rise by 50% in the fourth quarter of 2025. The report added that “the reality was far less impressive.” The analysis shows that bankers at Deutsche Bank saw total compensation rise by 31%. At Barclays, average bonuses were up 11%. While HSBC’s average change was 11%, it was identified as the lowest-paying bank in the survey.

PwC is set to overhaul its global consultancy services amid increasing pressures stemming from advancements in AI. The firm aims to standardise offerings and enhance shared technology platforms, with a focus on utilising staff from lower-cost locations like India. The Big Four’s consulting groups operate as networks of locally owned partnerships, with these serving under the broader international organisation. This, it is noted, can make serving multinational clients complicated. PwC’s UK arm has reportedly told staff that it will merge its risk and consulting divisions, bringing together two of its three advisory businesses alongside audit and tax. The firm said this is in response to growing client demand for “globally integrated advisory services.”

More than half of UK households are ending winter with credit in their energy accounts, according to a survey by Uswitch. Energy suppliers are holding £3bn of unused direct debit payments. The average household in credit has nearly £200 with their supplier. This year, credit is £179m higher than last year, likely due to a milder winter and slow adjustments to direct debits.