UK business confidence has fallen to its lowest level in four years, according to the ICAEW Business Confidence Monitor, which reported a score of minus-14.6 for the second quarter. This marks six consecutive quarters of negative readings, the longest streak since the 2008 financial crisis. ICAEW chief Alan Vallance commented: “War in Iran has knocked confidence significantly and the economic consequences are proving hard to shake.” He urged the next Prime Minister to focus on creating conditions for business growth amid ongoing domestic uncertainty.

According to S&P Global, manufacturing output grew at its fastest pace in 21 months as firms stockpiled goods to hedge against Middle Eastern trade disruptions. The manufacturing PMI registered 52.5 in June, down from May’s four-year record high. Production levels increased despite slower growth in new orders, though researchers warn this expansionary momentum may fade later this year. Separately, Make UK boss Stephen Phipson is calling on the next Prime Minister to act quickly to restore competitiveness and unlock investment across UK industry.

Experts warn that the next UK Government will face difficult decisions regarding defence funding. The Defence Investment Plan (DIP) indicates that defence spending will only reach 2.7% of GDP by 2029, meaning whoever wins power in 2029 will need to significantly ramp up spending year on year to reach the NATO commitment of 3.5% of GDP by 2035. The Institute for Fiscal Studies estimates an additional £25bn in annual spending will be required, equivalent to a 3p rise in income tax. Meanwhile, the Government has yet to clarify how it will address a £4.7bn shortfall in funding for the DIP.

House prices remained unchanged in June, according to the Nationwide house price index, with the average home valued at £277,484. The ongoing conflict in the Middle East has raised mortgage rates, with the average two-year fixed rate at 5.53%. Economists predict house prices will likely flatline in the coming months due to these higher rates, although a potential recovery could occur later this year as rates fall back.

Bluecrest Capital Management has lost a court appeal regarding a £200m tax dispute with HMRC. The UK’s Supreme Court ruled that the hedge fund’s senior traders must be taxed as employees, not self-employed and were therefore liable to pay national insurance contributions. A spokesman for BlueCrest said: “This judgment confirms that HMRC’s published guidance on the salaried members rules was, and remains, wrong. The cost of those errors has been fully pushed on to the taxpayer.” The decision could have significant implications for the professional services sector.

One in six hospitality businesses in the UK may close within a year due to a heavy tax burden, new figures show. A recent survey by UKHospitality and other trade bodies revealed that 23% of these businesses are currently operating at a loss, up from 15% three months ago. Some 5% say their business is no longer viable at all. Campaigner and chef Tom Kerridge is calling for hospitality VAT to be cut to 10%, bringing the UK in line with the rest of Europe.

Andy Burnham is being advised to adopt an “economic populist” strategy to address the cost of living crisis if he becomes Prime Minister. A recent opinion poll indicates that radical policies, such as rent controls and increased taxes on wealth, could help Labour secure a majority in the next election. The Persuasion UK research suggests these measures could boost Labour’s vote share to 34% and win the party 358 seats. However, sticking with its current trajectory, Labour risks falling to just 95 seats, its lowest since 1918.

The GMB union warns that Labour’s new bottle tax could jeopardise 4,750 manufacturing jobs in the UK. The packaging levy, part of the Government’s extended producer responsibility regime, increases costs for glassmakers, making overseas production more appealing. The British Beer and Pub Association claims the tax adds £124m annually to the beer sector, threatening profits and investment. Labour MP Sarah Champion called the policy “wholly unworkable and ultimately counter-productive” in its current form.

Labour could facilitate a £7bn investment surge by reopening the North Sea to new drilling, according to Wood Mackenzie. The firm argued that a supportive political climate could attract significant investment and unlock millions of barrels of oil. By contrast, the consultancy warned that an uncompromising regulatory approach could lead to £11bn in lost investment.

Many British households have built financial buffers, with the average adult able to cover essential costs for seven months, according to the Barclays Financial Confidence Index. However, 59% of income still goes to essentials, limiting wealth-building opportunities. Vim Maru, chief executive of Barclays UK, noted that while resilience has improved, many are hesitant to make financial decisions, with nearly a quarter delaying actions due to economic uncertainty.