UK business activity fell for the first time in over a year in May, according to the S&P Global Flash UK PMI composite output index. The survey, which provides a measure of activity in the private manufacturing and services sector, fell to a 13-month low of 48.5 in May from 52.6 in April. The chief business economist at S&P Global Market Intelligence, Chris Williamson, said: “The UK economy is facing a perfect storm, as rising political uncertainty adds to the growing impact from the war in the Middle East. Businesses are reporting falling output, surging inflation, supply shortages and job cuts.” Paul Dales, economist at Capital Economics, said the figures were the third dataset in three days that suggested “the Bank of England does not need to rush to raise interest rates.”

Consumer confidence increased this month, defying expectations, with the GfK index rising to minus 23, despite economic concerns affecting lower-income households’ purchasing intentions.

Wes Streeting, former health secretary, has proposed a wealth tax if elected Labour leader. He aims to align capital gains tax with income tax, potentially raising £12bn annually. Currently, higher rate taxpayers face a 24% capital gains tax, which Streeting wants to increase to 40% and 45% for higher and additional rate taxpayers, respectively. He said: “The kite that I am flying in this leadership contest will be to equalise those rates, with allowances for genuine entrepreneurialism, investment, reinvestment, so that we can be both pro-worker, pro-entrepreneurialism, pro-fairness, and in the course of that, generate up to £12bn worth of revenues.” However, the Telegraph talks to tech entrepreneurs who say they are alarmed by the plans, warning the change could deter investment in the UK. Herman Narula, founder of Improbable, said: “Introducing a wealth tax would kill the AI boom in its tracks.” The Institute for Fiscal Studies added that the policy might lead to a loss of revenue for the Treasury as investors seek to avoid the higher charges.

One of London’s largest developers has warned that an under-resourced and increasingly complex planning system is contributing to a shortage of prime office space in the capital and pushing rents sharply higher. Great Portland Estates (GPE), which owns around £3bn of central London offices, said demand for high-quality workspace remained strong, with rents in the West End rising by almost 70% since the pandemic. Chief executive Toby Courtauld said companies including BlackRock, Deloitte and Bank of America were seeking record amounts of office space, while limited new development was coming forward due to rising construction costs, financing pressures and lengthy planning delays. His comments come amid wider concerns within the property sector over the impact of planning constraints on investment and development across London.

British businesses are grappling with increasing compliance demands as governments respond to rising cyber threats and AI advancements. Cavan Fabris, partner and head of data and cyber at RPC, stated: “We cannot regulate cyber threats away. There’s a risk this becomes more about compliance than a genuine uplift in resilience.” He points to the challenges of overlapping UK, EU, and US regulations, which complicate compliance for global firms. Despite tightening rules, many companies remain unprepared for cyber incidents, often lacking a clear understanding of their data. Fabris stressed that resilience requires ongoing effort, not just compliance: “It’s a constant posture organisations need to have.”

UK businesses are grappling with the implications of the Employment Rights Act, which began rolling out in April 2025. Research from Employment Hero indicates that over half of firms find hiring more complex due to rising costs and new regulations. Kevin Fitzgerald, UK managing director at Employment Hero, said: “SMEs are the engine room of the UK economy, but too many are now being asked to grow with one hand tied behind their back.” The Employment Lawyers Association warns that the new law will exacerbate the backlog in Employment Tribunals, which has nearly doubled in five years. Separately, a survey by the Construction Plant-hire Association (CPA) revealed that 46% of members are “very concerned” about the impact of changes to the Employment Rights Act.

The Work and Pensions Committee has said a “hostile environment” for disabled employees in the workplace still exists. MPs propose a legal deadline for employers to respond to requests for reasonable adjustments within two weeks. Currently, 82% of such requests take over four months to implement. Committee chair Debbie Abrahams said: “Too many disabled workers are being let down by employers failing to act quickly enough.” The report also noted that the employment rate for disabled individuals is only 52.8%, compared to 82.5% for non-disabled workers.

Figures from the Office for National Statistics show net migration to the UK fell to 171,000 in 2025, with just over 800,000 people immigrating – down 20% on the year before – and an estimated 642,000 people leaving the UK to live in another country. Sarah Crofts, deputy director at the ONS, said: “The recent decrease is driven by fewer people arriving from outside the EU, particularly for work.” Higher salary thresholds and increased visa restrictions introduced by the Tories and expanded on by Labour are said to have been instrumental in bringing the figures down. But Ben Brindle at the Migration Observatory said “the composition of recent migration has probably become less favourable from an economic perspective.”

Allison Kirkby, the chief executive of BT, has warned that mobile phone prices are set to rise as handset manufacturers pass on the rising price of semiconductor chips to consumers. As the AI boom drives up the cost of memory chips, BT expects revenues to fall from £19.7bn last year to between £19bn and £19.5bn in the year ahead. The group also unveiled plans to ramp up its cost-cutting, targeting savings of between £3bn to £3.7bn in the period to 2030. The company posted a pre-tax profit of £1.4bn for the year to end March, a jump of 8% , while revenue fell 3% to £19.7bn.