Charlie Nunn, the chief executive of Lloyds Banking Group, has warned Chancellor Rachel Reeves that increasing taxes on banks would damage the UK’s competitiveness and undo the benefits of cutting red tape. He said: “It’s important when looking at the competitiveness of the City of London that we have a competitive tax regime,” going on to note that the City already has “the highest tax regime in the financial services sector of any major economy.” Mr Nunn also welcome Government plans to deregulate the finance industry, calling for an overhaul of ringfencing rules that force banks to separate their retail arms from their investment divisions. He said: “There is a real opportunity to align regulation increasingly with competitiveness and growth.” Mr Nunn also said he expects the Bank of England to cut interest rates twice more in 2025, with this likely bringing the base rate to 3.75%.

Chancellor Rachel Reeves is under pressure to dismiss a proposed wealth tax, which critics argue could harm business confidence and drive investors away. Some Labour MPs are calling for a 2% tax on wealth exceeding £10m, potentially raising £24bn annually. Shadow Chancellor Sir Mel Stride said: “I urge the Chancellor to rule out such a tax immediately,” noting that 10,000 to 15,000 high-net-worth individuals have already left the UK since Labour were elected, creating a “gaping hole” in the tax base. Daniel Herring from the Centre for Policy Studies cautions that additional taxation could stifle investment and growth, while Tom Clougherty from the Institute of Economic Affairs labelled a wealth tax a “disaster for Britain,” warning of potential capital flight.

Analysis for the Times reveals that nearly 150,000 homeowners could face increased taxes if a wealth tax on properties valued at £2m or more is introduced. Chancellor Rachel Reeves is under pressure to generate revenue amid economic challenges, with speculation surrounding a wealth tax on affluent taxpayers. Labour MPs, supported by Tax Justice UK, have previously proposed a 2% tax on assets exceeding £10m. However, a mansion tax on homes valued at £2m or more is reportedly being considered, which would require regular property reassessments. Savills’ research indicates that 142,500 properties fall into this category, predominantly in London and the South East.

The Government pulled in a record £34.2bn through employers’ National Insurance contributions in the first three months of the year, according to research by UHY Hacker Young, with this up from £29.3bn in Q1 2024. Phil Kinzett-Evans, a partner at UHY Hacker Young, said: “A record National Insurance bill for businesses has added very sharply to the costs of large and small employers alike.”

Office for National Statistics data shows that 6,365 agriculture, forestry and fishing businesses shut down in the past year – the highest number since 2017. Among these, a record number of farms closed. The closures are largely attributed to changes in tax policy, particularly the reduction in inheritance tax relief for family farms. Shadow Environment Secretary Victoria Atkins warns that these policies are “destroying generational businesses” and leading to job instability.

Confidence among British consumers has declined, with the GfK consumer confidence index dropping to -19 in July, with this below the long-run average of -10. This decline follows concerns over potential tax increases in the upcoming Budget. Neil Bellamy, consumer insights director at GfK, comments: “With speculation growing over possible tax rises… the news is worrying.” The savings index, however, rose to 34, the highest since November 2007, with Mr Bellamy saying this indicates that consumers are “building contingency funds.” Overall, expectations for the UK economy over the coming 12 months remain negative, standing at -29. This is 18 points lower than last July. Sentiment about the country’s general economic situation over the past year has slipped to -44 from -32 a year ago

Data from the Recruitment and Employment Confederation (REC) shows that there was a “small burst” in demand for jobs in June. The report shows that the number of vacancies hit 757,594 last month, with this driven by an 8.1% increase in job postings in London. Overall, jobs postings were down 2.6% year-on-year, with April’s increase in National Insurance having an impact. REC chief executive Neil Carberry said: “As businesses adjust to higher National Insurance and react to growing demand, even at an anaemic level, they are returning to hiring in a steady but unspectacular way.” Mr Carberry, who has called for a “no surprises Budget” that avoids tax hikes on jobs, said: “The key to the labour market now is the same as it is for the wider economy: confidence.”

Surveys indicate that the UK economy is facing significant challenges, with S&P Global’s preliminary UK Composite Purchasing Managers’ Index (PMI) falling to 51.0 in July from 52.0 in June on an index where a reading below 50 points to contraction. This decline suggests a slowdown in growth, with the gauge on hiring reaching its lowest point since February. Chris Williamson, chief business economist at S&P Global Market Intelligence, expressed concern, saying: “Particularly worrying is the sustained impact of the budget measures on employment.” Meanwhile, the Confederation of British Industry says that while the manufacturing sector has stabilised, the outlook remains fragile, with job cuts continuing. While the Bank of England is expected to reduce interest rates for the fifth time in 12 months in August, Matt Swannell, chief economic advisor to the EY Item Club, does not expect a wave of rate cuts to follow.

Prime Minister Sir Keir Starmer and his Indian counterpart, Narendra Modi, have signed a trade deal worth an estimated £6bn. The deal, which took three years to negotiate, will mean UK cars and whisky will be cheaper to export to India, while Indian textiles and jewellery will be cheaper to export to the UK. Sir Keir said the agreement was “the biggest and most economically significant” trade deal Britain had made since Brexit. Under the deal, British firms will not have to pay any payroll tax on Indian workers on temporary secondment. Some critics have voiced concern that this will mean workers from India could be preferred to UK staff due to the recent hike in National Insurance. However, Business Secretary Jonathan Reynolds said it was “completely wrong” to suggest the deal could undercut British workers.

Only a small portion of the £1.4bn spent on failed personal protective equipment (PPE) contracts during the pandemic has been recovered, with just £182m clawed back so far. The Government is still seeking to recover £468m from PPE contracts, but has conceded that at least £762m will never be reclaimed. The Covid Counter Fraud Commission, led by Tom Hayhoe, is also facing challenges in addressing the estimated £1.9bn in fraudulent Covid loans. Robert Salter, a director at Blick Rothenberg, has kept a tally of pandemic-related loans and says that that if 50% of Bounce Back Loans Scheme debt goes unpaid, it would cost the Government approximately £23bn.

Analysis by investment platform Interactive Investor shows that women are retiring with significantly less pension wealth than men and are at risk of running out of wealth just seven years into retirement. Women aged 55-59 have £81,000 in their pension on average, compared to £156,000 for men of the same age. Calculations based on withdrawals of £11,000 a year show that women with a pot worth £81,000 could run out of money after seven years, while men with £156,000 would see their pension last for 17 years.