Senior Labour backbenchers have introduced a Bill that would force banks to increase affordable lending to small businesses and low-income areas. Gareth Thomas, who tabled the Bill, said: “We need to unlock far better access to cheap loans for the millions of people on low and middle incomes.” The proposed legislation mirrors the US Community Reinvestment Act, requiring banks to report on their lending to underserved communities. Meg Hillier, the chair of the Treasury Select Committee and a co-sponsor of the Bill, said the committee has launched an inquiry into the Treasury’s proposals to improve financial inclusion, adding: “We will be looking at whether the Government has the plan and resources to genuinely tackle the real barriers people face. If this is not done properly, we all lose out.” Michelle Ovens, the founder of campaign group Small Business Britain, said the Bill “would be an important step towards tackling financial exclusion by increasing transparency and accountability across the banking sector.”

Confidence among small business owners has dropped to its lowest level since 2020, according to the Federation of Small Businesses (FSB). The quarterly small business index fell by 13 points, with a confidence score of minus 71. Taxation emerged as the primary concern for 64% of 1,200 respondents, marking a record high. The FSB noted that 26% of businesses reduced their workforce last quarter, with expectations for further cuts. With revenues falling and costs rising, investment plans have been hit, with 37% of small firms planning to reduce investment levels next quarter and just 13% planning an increase. The FSB said: “Policy decisions are now landing directly on small business growth plans.”

UK adults are generally optimistic about their finances for 2026, with 60% expressing positive sentiments, according to Aegon. However, women show less confidence, with only 55% feeling positive. The financial services sector has warned of a “confidence gap” among women, with 20% deterred from investing. Women also face challenges in building pension wealth due to part-time work and caregiving. Generation X is also struggling, with only 49% feeling optimistic about their finances. Overall, six in ten adults said they felt positive about their financial situation. This is on par with last year’s results and up from the 52% confidence rate reported in 2024. While close to half of those polled were “somewhat positive,” 11% said they felt “extremely positive.”

Analysis of HMRC figures shows that over 2m UK employees will earn more than £100,000 in the 2026/27 financial year. This marks an increase from 1.95m this year and 1.218m in 2021/22. Many will fall into the 60% tax trap due to frozen tax thresholds, which will remain until 2031. Those earning over £100,000 are subject to 40% income tax and lose their tax-free personal allowance, resulting in an effective tax rate of 60% on income between £100,000 and £125,140. Olly Cheng, senior financial planning director at Rathbones, said: “Earning £100,000 once felt like financial freedom, but today it often comes with a hidden tax sting.”

The UK labour market weakened significantly in December, with jobseekers increasing sharply amid declining hiring demand. Analysis from S&P Global’s purchasing managers’ index revealed a continued drop in permanent staff placements, marking the 39th month of decline. The PMI for permanent placements stood at 44.3, falling short of the threshold of 50 which separates growth from contraction.

Polling by the British Chambers of Commerce shows that just 23% of firms expect to increase the size of their workforce in the next three months. Jane Gratton, deputy director of public policy at the BCC said: “As more firms struggle under the weight of rising cost pressures, we are beginning to see an adverse impact on the jobs market. High taxes and rising wage bills present huge barriers to investment and growth.”

Analysis by recruitment agency Morgan McKinley shows that the number of financial services jobs available across London fell by 13% in the fourth quarter of 2025 compared to Q3. Brokers and administrators saw the steepest fall in job numbers but fintech roles saw a 50% year-on-year rise in hiring.

Growing competition between lenders and a surge in available mortgage products are expected to push mortgage rates lower in the coming weeks, with Moneyfacts forecasting a buoyant housing market in 2026 as rates fall, deal choice hits an 18-year high and lenders relax affordability rules to help first-time buyers. This comes despite concerns that global economic uncertainty, expiring fixed-rate deals for millions of borrowers and regional differences will continue to have an impact on confidence and overall demand. Moneyfacts said: “Expectations are high for a booming market in 2026. Mortgage rates are lower year-on-year, and the choice of deals is abundant,” adding: “First-time buyers are not being left behind by this progress.”

Retail sales rose by 1.2% in December compared to the same month in 2024 but growth was below the 12-month average of 2.3%. Non-food sales dropped by 0.3%, while food sales increased by 3.1%. Helen Dickinson, chief executive of the British Retail Consortium, said: “It was a drab Christmas for retailers,” noting that sales growth has slowed for four consecutive months. KPMG’s Linda Ellett added that retail sales “largely froze in December” and warned that it “remains a challenging time for retailers, with consumers cutting back due to higher household bills.” Elsewhere, Barclays reported a 1.7% decline in card spending year-on-year.

London faces a severe shortage of high-quality office buildings, with experts predicting that no prime space will be available by 2028. Following a post-pandemic shift, demand for secondary offices turned positive in 2025, but the best locations remain scarce. Rising construction costs and geopolitical uncertainties have exacerbated the situation, leading to a 59% increase in prime rents in the West End over six years.