UK mergers and acquisitions (M&A) reached £124.2bn in the first half of the year, driven by a few major deals, according to PwC. Although the number of transactions fell by 13% to 1,301, the total value surged by 107%. Ten significant deals accounted for nearly two-thirds of this value, including McCormick’s £33bn acquisition of Unilever’s food division. Nicola Preedy, PwC UK’s head of deals, said: “While capital may be abundant, conviction is scarce. Investors are deploying larger amounts of capital into a smaller number of businesses they believe are best placed to benefit from structural change and long-term growth trends.”

British businesses are reducing their spending on consulting firms, opting instead for AI solutions, according to City AM‘s Business Spend Pulse. Median consulting fees fell by 1.9% in August, despite a 2.2% rise in overall corporate spending. The number of firms investing in AI has nearly doubled, with one in seven now engaging with companies like Anthropic and ElevenLabs. Damian Brychcy, CEO of Capital on Tap, noted: “Businesses are putting that money into the tools that make them more productive.” London leads in AI adoption, with 20% of firms investing in AI services.

Labour has been warned of a potential tax revenue shock after billionaire Chris Rokos revealed his plans to leave the UK. Rokos, who contributed £330m to the Treasury last year, is part of a growing trend of high-net-worth individuals relocating. Economists predict significant impacts on tax revenue following the next self-assessment returns. Simon French, from Panmure Liberum, said: “One of the challenges with analysing UK tax data is that these high-profile HNW departures don’t yet show up in the data…next February could be quite the shock for fiscal headroom if the big self-assessment returns [for January] come in much softer than forecast.” Shadow Chancellor Andrew Griffith argued that fewer wealth creators could lead to increased tax burdens for others, while James Lawson from the Adam Smith Institute said the number of millionaires in Britain has now reached its lowest level since 2008, warning: “As the reforms to the non-dom system take effect and taxes continue to rise that number may well fall further.”

The UK has reached its highest borrowing rate in over 25 years, with an interest rate of 5.82% on £4.25bn of 30-year debt. This is the highest since the Debt Management Office was established in 1998, raising concerns for Chancellor John Healey ahead of his Budget. Official forecasts predict spending on debt interest will exceed £100bn a year until at least the 2030s. Meanwhile, the Resolution Foundation has warned of a £19bn gap in public finances while Deutsche Bank said in a note to clients: “The headwinds to the public finances are real, with fiscal headroom likely to be nearly halved.”

Andrew Bailey, the Governor of the Bank of England, warned MPs on Tuesday about ongoing “upside” risks to inflation, suggesting it may exceed forecasts due to the ongoing conflict in the Middle East. Current UK interest rates are at 3.75%, with economists predicting at least one increase in the coming year. Additionally, Megan Greene, an MPC member, told MPs she was concerned over volatile energy prices and second order effects, which may not materialise until next year. The MPC will meet next week to decide on rates.

UK consumer spending reached a 13-month high in August, driven by a resurgence in entertainment and travel, according to Barclays. Overall card spending increased by 2.1% year-on-year, matching July’s growth. Fuel spending surged by 13.2%, influenced by rising petrol prices amid the US-Iran conflict. Entertainment spending rose by 7.2%, while travel increased 3.1%. Jack Meaning, chief UK economist at Barclays, commented: “Consumer spending and confidence remained resilient in August,” despite ongoing inflation pressures. However, economic confidence fell to 26% from 30%.

UK Finance has warned that Britain risks losing control of its financial infrastructure if it fails to keep pace with international rivals on digital assets. In a report with Oliver Wyman, the banking body urged policymakers to accelerate development of systems supporting tokenisation, which converts assets such as bonds and cash into digital tokens. It warned that if activity becomes concentrated in centres such as New York, Frankfurt or Singapore, the UK’s £290bn financial services industry could become reliant on infrastructure designed, governed and priced overseas.

According to research by the Institute of Student Employers, graduate vacancies are forecast to fall 7% in 2026, marking a fourth consecutive annual decline. Competition has intensified, with 140 applications per role compared with 38 two decades ago. Although evidence of AI replacing entry-level workers remains inconclusive, 35% of graduates fear AI threatens prospects and opportunities.

London mayor Sadiq Khan has accused Westminster Council of “breathtaking arrogance” over proposed restrictions on Soho nightlife, including limits on so called “vertical drinking” and new pub and bar licences. Some 81% of consultation respondents have opposed the council’s cumulative impact zone, which says applications for bars and pubs in the West End will be refused except in exceptional circumstances. Khan has ordered the policy to be scrapped, but Westminster is refusing, citing policing and public safety concerns.