Business confidence in the UK has significantly declined, with 65% of bosses expressing pessimism about the economy, according to the Institute of Directors (IoD). Concerns over rising taxes and policy uncertainty are having an impact, with more than 70% of bosses saying they plan to freeze or reduce investment over the next year. The IoD’s confidence index fell to minus 54 in September from minus 49 in August. The IoD said businesses are looking to the Budget for greater certainty, lower energy costs and measures to encourage investment. Anna Leach, the IoD’s chief economist, said: “Cost pressures remain high, squeezing margins and leaving some firms having to run to stand still.”

Andrew Bailey, Governor of the Bank of England, has urged governments to enhance testing of frontier AI models before public release, saying this is “essential if we are to understand the behaviour of increasingly complex systems.” He highlighted the risks posed by advanced AI to banking, financial markets and payment systems, saying that the “closed loop” nature of these technologies limits oversight. The Bank’s Financial Policy Committee has warned that rapidly growing AI-related debt, complex financing arrangements and links between technology firms could amplify losses and increase financial stability risks if expectations about AI’s economic benefits weaken.

The Office for National Statistics (ONS) has revised second-quarter GDP growth to 0.5%, up from an initial estimate of 0.4% and following growth of 0.6% in the first quarter. Annual growth for 2025 was downgraded to 1.2%. The Organisation for Economic Co-operation and Development expects UK growth of 1% in 2027, while the Resolution Foundation has warned that fiscal headroom could fall to around £5bn, increasing pressure on the Government to raise taxes or reduce spending. Meanwhile, ONS data shows that the average disposable income for UK households rose by 1% in Q2, reaching £6,577. This increase was primarily driven by a £5.3bn rise in social benefits, surpassing the £2.8bn growth in wages. The rise logged in Q2 followed a 0.8% decline in the previous three months.

Household energy bills could rise by £276, or 16%, to £1,999 a year in January, according to Cornwall Insight, marking the biggest increase in four years. The forecast follows a 4% rise in Ofgem’s October price cap, which takes the typical annual bill to £1,723. Cornwall Insight said the potential January increase reflects disrupted gas supplies linked to the Middle East conflict and low European gas storage levels. Ofgem will confirm the January cap in late November.

Prime Minister Andy Burnham has said Labour could offer a second Brexit referendum or pledge to rejoin the EU at the next general election. Burnham said he was not advocating an immediate referendum but would consider one if public opinion moved towards rejoining, while declining to rule out making EU membership a manifesto commitment. He has abandoned Labour’s previous opposition to rejoining the single market or customs union and restoring freedom of movement. Burnham said closer EU ties were preferable amid global challenges and plans to outline options around a UK-EU summit expected in November.

Retail and hospitality face the highest tax burden among major UK business sectors, according to new analysis by the British Retail Consortium (BRC) and UK Hospitality (UKH). The industries paid £62bn in taxes in 2025/26 through business rates, VAT, employer National Insurance, corporation tax and other levies. Taxes were equivalent to 82p for every pound of hospitality profit and 72p for retail, compared with a 50p average across the 11 sectors examined. The two industries support almost five million jobs but have lost 93,000 and 122,000 roles respectively.

Economist David Starkie, a former associate of the Institute for Fiscal Studies, has voiced concern over the proposed high value council tax surcharge on English homes worth more than £2m. He says the £400m expected annual tax revenue is small compared with implementation costs and warns that uncertainty over future valuations and tax bills could deter investment, reducing wider tax revenues such as VAT. Mr Starkie also questions whether the surcharge is an appropriate way to make wealthy homeowners contribute more, arguing that council tax is intended to fund local services rather than redistribute wealth.

Andy Burnham has ruled out tax rises to fund his proposed national care service, saying he could delay its introduction and phase it in to ensure it is affordable. The Prime Minister’s plan relies partly on reforming the pension triple lock, but the Institute for Fiscal Studies has warned that the savings are highly uncertain and could range from little or nothing to £15bn a year or more depending on wage and inflation growth. Economists said the Government may therefore need to find alternative funding if savings fall short, while the Resolution Foundation estimates the reform could save up to £5bn annually by 2035 and £15bn by 2040.

The Financial Conduct Authority has dropped plans to make listed companies publish mandatory climate-risk disclosures, following concerns from businesses over implementation costs and international competitiveness. Instead, companies will retain a “comply or explain” approach to the UK’s climate reporting standard, UK SRS S2. The decision follows the European Union watering down its climate disclosure rules and the United States abandoning similar plans. The FCA said 92% of FTSE 350 companies complied with existing climate disclosure requirements in their 2025 annual reports.

Bank lending to households and businesses in the UK is projected to slow to a three-year low of 2.2% by 2027, according to EY’s UK Bank Lending Outlook report. The report indicates that economic pressures and heightened caution are diminishing borrowing demand. Mortgage lending is expected to remain relatively stable, with growth rising to 3.3% in 2026 before declining to 2.2% in 2027 and 2028. Corporate borrowing is also set to decline sharply, with growth halving to 2.1% this year.

British fintech Zilch is in discussions with investment banks over a potential stock market flotation, with London reportedly its preferred destination. The consumer payments company, founded in 2018, could list as early as next year, although it said “all strategic options remain open”. Zilch has nearly 6m customers and offers zero-interest loans, cashback debit cards and buy-now-pay-later products. Revenue rose 93% to £110.3m in the year to March 2025, while losses narrowed 79% to £10.5m. The Times says a London listing would provide a boost to the LSE following a prolonged decline in IPO activity.

British AI start-up ElevenLabs has more than doubled its valuation to $22bn following a $300m employee share sale. The voice-generation company, founded in 2022, was valued at $11bn in February. Its AI agents now handle more than 15m conversations a week, while enterprise customers generate 55% of revenue. New investors include Goldman Sachs, EQT and Singapore’s GIC.