UK employers cut jobs at an annual rate of 0.5% in the three months to August, according to a Bank of England survey of chief financial officers. This marks the fastest pace since 2021. Nearly half of respondents said they were cutting jobs as a result of the decision to increase employer National Insurance (NI) contributions, with a higher minimum wage also having an impact. Since the NI increase came into force in April, 20% of companies have reported lowering wages, while a third have increased prices. The analysis also shows that annual wage growth came in at 4.6% in the same period, with this 0.1% lower than the three months to July. Looking ahead, the poll found that expectations for employment growth over the next year fell by 0.3% to 0.2% in the three months to August.

David Postings, chief executive of banking industry lobby group UK Finance, has warned Rachel Reeves that tax hikes on the sector could hinder economic growth. While Mr Postings has praised the Chancellor’s decision to put the financial services sector at the heart of growth plans, he warned that increasing taxes would harm its international competitiveness. Tax hikes, he cautioned, would “run counter to the Government’s aim of supporting the financial services sector” and “risk undermining the sector’s ability to drive growth, innovation and productivity across the UK economy.” Mr Postings also noted that the financial services sector made a significant tax contribution of approximately £45bn last year. The Chancellor is expected to increase taxes in the Budget as she looks to plug a gap in the public finances, and Ruth Gregory, deputy chief UK economist at Capital Economics, has predicted banks will “bear the brunt.”

Analysis by the TaxPayers’ Alliance (TPA) suggests that tax policies proposed by Reform UK could increase average annual wages by £755. Darwin Friend, head of research at the TPA, said scrapping inheritance tax, an increase in the personal allowance and more generous provisions for married couples “would make a real difference,” but noted that they “need to be part of a complete transformation of the tax system.” The analysis suggests the changes could boost the UK’s growth rate by 0.2% annually, adding £66bn to the economy over ten years.

The Treasury could raise £1.9bn a year by ending a tax exemption for business partnerships, according to a report from the Centre for the Analysis of Taxation (CenTax). Partnerships currently avoid employer National Insurance contributions and CenTax has proposed equalising the tax treatment of partners with regular employees, calling for the end of the “stark differences in how earnings are taxed” that give partnerships a “significant advantage.” This would affect 190,000 people, mostly in high-paying sectors such as law, accountancy and finance.

UK Government long-term borrowing costs have eased, having hit the highest level since 1998 earlier this week. The interest rate on 30-year government bonds, which rose to 5.75% on Wednesday, has since slipped to 5.57%. Despite concern over the recent increase, Bank of England governor Andrew Bailey insists it is “important not to focus too much” on longer-term bond yields. He told the Treasury Committee that while the 30-year yield on UK bonds had hit “quite a high number … it is not what is being used for funding at all at the moment actually.”

British businesses invested an average of £236,000 in artificial intelligence (AI) over the past year, according to the Barclays Business Prosperity Index survey. Large companies, with over 250 employees, led the way, spending around £400,000 on AI and emerging technologies. Medium firms spent £225,500, while small companies invested £125,250. The survey, which included 1,000 decision-makers, revealed that 68% of businesses plan to increase their AI budgets next year. Matt Hammerstein, chief executive of Barclays UK corporate banking, said: “Our research suggests that AI is becoming a key tool to drive innovation, encourage investment and upskilling to lift productivity and build confidence in the UK as a global business hub.”

The construction sector is facing significant challenges, with a new survey showing that business confidence has fallen to its lowest level since December 2022. S&P Global’s purchasing managers’ index (PMI) shows construction has contracted for eight consecutive months. While the Office for National Statistics reported a 1.2% growth in output, firms are facing payroll pressures and intense price competition.

An independent review led by Lord Murphy has found that SMEs in Northern Ireland are often confused by post-Brexit trade rules. The review notes that while larger companies can manage new costs, SMEs struggle with the complexities of the trade arrangements. Lord Murphy said: “These companies find themselves often bewildered by the processes.”

Over a third of UK parents are delaying retirement to finance their children’s university education, according to a study by Rathbones. Parents expect to work an average of five years longer, with many estimating a need to extend their careers by up to 10 years. On average, parents spend £7,200 annually, with some paying between £10,000 and £15,000. Despite tuition loans, about 20% cover all costs.