Family-owned businesses in the UK are struggling to hire due to rising employment costs, according to a Family Business UK (FBUK) report. Some 40% of family firms cite high wage expectations as the main barrier to recruitment. Neil Davy, chief executive of FBUK, called for a fairer tax system to alleviate pressures from national insurance contributions and minimum wage increases, which are hindering job creation. “Family firms remain eager to grow employment, but cost and uncertainty are forcing them to make unpalatable choices,” Davy said, adding: “If we are to reverse this situation and allow businesses to create the opportunities workers need there must be a renewed focus on reducing the burden of national insurance contributions along with careful management of the national minimum and living wages.”

The UK should extend the pilot phase for a new corporation tax return system, say tax professionals. A longer period would allow HMRC to assess initial submissions and enable software providers to make necessary adjustments, the Institute of Chartered Accountants in England and Wales said in a recent press release. HMRC aims to shift from a “free-format structure” to a standardised, tagged format for corporation tax computations, as outlined in a consultation document from March.

Britain is at risk of a “vicious circle” of rising borrowing costs if it fails to control debt, Andrew Bailey has warned. Higher costs on the Government’s near-£3tn debt could derail the Chancellor’s fiscal plans, weaken confidence, and push borrowing costs higher, the governor of the Bank of England said. Rates have climbed globally since the Iran war began, but Britain’s have risen more than any G7 nation, increasing pressure on public finances. Debt interest was already forecast to exceed £100bn annually. Bailey also said the Bank could continue to offload bonds for one to two years, despite calculations showing gilt sales are having a bigger effect on raising government borrowing costs than previously estimated. Meanwhile, Megan Greene, an external member of the Bank of England’s Monetary Policy Committee, warned that interest rates may need to rise as the conflict wears on.

Rachel Reeves has been warned of a significant increase in government borrowing due to the ongoing Iran war. In a review of its forecasting models, the Office for Budget Responsibility (OBR) acknowledged it had underestimated the impact of the last energy price shock, which had significantly increased government borrowing and debt due to rising debt interest costs and welfare benefits. Looking ahead, the OBR indicated that it could take a more pessimistic view on government borrowing, with oil prices jumping by 40% since the war began and wholesale gas prices doubling.

Barclays has released a report calling for a shake-up of how the UK attracts international capital. The bank’s chief executive, CS Venkatakrishnan, said the UK has “lost control of its international narrative, to the detriment of foreign investment.” The report reveals that the UK’s share of foreign capital fell to 7% in 2025, down from 8.6% a decade ago. Barclays calls for policy shifts to enhance investor confidence and broaden strategies beyond foreign direct investment.

Merger and acquisition (M&A) activity is expected to decline further this financial quarter due to ongoing US-Iran conflict, warns RSM UK. The Office for National Statistics reported a drop in domestic and cross-border M&A transactions to 352 in Q1 2026, down from 495 in the previous quarter. The value of domestic M&A fell by £0.4bn to £1.5bn, while foreign acquisitions of UK businesses dropped from £33bn to £14.2bn. Helen Brocklebank, partner at RSM UK, commented: “Unless there’s a resolution to the Middle East conflict soon…we may see deal activity severely hit in Q2.”

City leaders have launched Team UK, an initiative to counter negative perceptions about London as a financial hub. Spearheaded by Lady Mayor Dame Susan Langley, the campaign aims to promote the capital’s strengths in attracting global investment. “We must stand up and do the same and not allow inaccurate stories to colour how the world perceives us,” she said. The campaign, supported by over 200 advocates, aims to address misconceptions about crime and instability, while highlighting London’s status as a desirable place to live.

Grant Thornton UK is set to implement Anthropic’s generative AI service, Claude, across its workforce in June, backed by a £500m investment. The initiative aims to shift focus from routine tasks to higher-value advisory roles. Malcolm Gomersall, chief executive of Grant Thornton UK, commented: “Clients don’t pay for process; they pay for judgement.” The firm plans to provide training and governance frameworks for safe AI use. Additionally, Grant Thornton will be opening a ‘Digital Experience Centre’ in London later this year where clients will be able to learn how to use technology to improve business operations.

Gold has overtaken US government bonds as the world’s top reserve asset, accounting for 27% of all global central bank reserve assets compared with 22% for US Treasuries.