Political changes and regulatory uncertainty are obstructing long-term workforce planning for UK businesses. A survey by law firm Lewis Silkin has found that nearly 80% of employers cannot plan any further than 12 months ahead. Lucy Lewis, partner at Lewis Silkin, said: “Economic pressures, and political and regulatory change narrow the planning window even further.” The Employment Rights Bill poses significant challenges, with 25% of organisations citing compliance costs. Additionally, rising employee costs – such as increases in employer National Insurance contributions and a 4.1% rise in the national living wage – are further complicating workforce strategies, according to the report.

UK merger and acquisition (M&A) deal values increased by 12% to £131bn in 2025, despite a 12% drop in deal volumes to 2,991, according to analysis by PwC. Lucy Stapleton, head of deals at PwC UK, said: “We would not usually expect deal values to rise so sharply when volumes are falling.” The stabilisation of interest rates and inflation moving closer to target levels helped drive investor confidence. PwC expects “to see more deals crossing the finish line” this years as companies build their investment portfolios as opportunities open up across a range of sectors.

The UK job market is experiencing its longest downturn since the financial crisis, with private sector job losses accelerating. According to the purchasing managers’ index (PMI) from S&P Global, firms are facing squeezed profit margins and fragile market conditions, leading to decreased hiring. The PMI survey showed that in the services sector, employment numbers have fallen every month since October 2024. Tim Moore from S&P Global said: “There were again gloomy signals for the UK labour market outlook as staff hiring decreased at a steeper pace in January.” The National Institute of Economic and Social Research think-tank forecasts unemployment could peak at 5.5% this year, the highest since 2015.

A Times investigation has found that despite a high-profile Home Office crackdown on abuse of the skilled worker visa system, a number of firms stripped of their sponsor licences have since been reapproved or continue sponsoring migrants through companies run by the same directors. Analysis shows that of 566 care providers sanctioned between 2022 and 2025, at least 74 have regained approval or have directors doing so, even after serious breaches such as illegal hiring, fake roles, or exploitation. Critics have condemned the system, warning that short bans amount to little deterrent and allow repeat offenders to exploit migrants and the visa system. The findings come amid wider evidence of fraudulent visa sponsorship schemes, prompting calls for tougher sanctions, longer bans on directors, and tighter enforcement.

Tens of thousands of families will face increased repayments of child benefit by 2030 due to frozen tax thresholds. An additional 54,000 families will be subject to the high-income child benefit charge (HICBC) as wages rise while the income threshold remains at £60,000. The number of families liable for HICBC is expected to increase from 324,000 to 378,000 by 2030/31, generating £486m for HMRC. Sean McCann, a chartered financial planner, noted: “The good news is anything you’ve paid into your pension is knocked off your income before the charge is assessed. If it reduces your income below £60,000 you won’t need to pay the charge.”

Brian Duffy, CEO of Watches of Switzerland, has condemned high taxes under Labour, warning they threaten retail jobs. He said that the UK has become one of the most expensive places for retailers due to rising business rates and the scrapping of tax-free shopping. Stressing the importance of retail to the economy, Mr Duffy said: “I don’t quite know why the Government aren’t more open to understanding the challenges that retail faces.”

The Scottish National Party’s (SNP) proposed council tax reforms have drawn criticism from the Conservative Party, which claims they are a “smokescreen” for increased taxes on middle-income households. The SNP’s consultation suggests options including a revaluation of properties and a new progressive band system. Conservative MSP Craig Hoy warned that some households could see tax bills rise significantly, with new bands affecting those “asset rich but cash poor.” Finance Secretary Shona Robison said the government is aiming for a fairer local taxation system.

The UK economy began 2026 positively, with the S&P Global composite purchasing managers’ index (PMI) rising to 53.7 in January from 51.4 in December. This increase was driven by a surge in the services sector, as businesses and households increased spending following the November budget. Tim Moore, economics director at S&P Global Market Intelligence, said: “The latest survey revealed an encouraging start to 2026 for the UK service sector.” Despite a rise in redundancies – which has been linked to increased National Insurance contributions for employers – confidence in the private sector has reached its highest level since September 2024.

Simon Carter, the CEO of British Land, believes Britain is on the verge of a scientific and technological revolution. The company recently acquired Life Sciences REIT, marking a shift from traditional investments in London offices and retail parks. The move reflects optimism about the UK becoming Europe’s Silicon Valley. Despite economic challenges, including high inflation and tax increases, signs of recovery are emerging. The S&P purchasing managers’ index reported a 17-month high in manufacturing output, while Lloyds Bank’s barometer indicated increased business confidence.

The Financial Stability Board (FSB) has raised alarms about the potential risks in the leveraged short-term repo market. The global financial watchdog warned that asset managers, particularly hedge funds, may need to liquidate holdings during market stress, causing significant downward pressure on bond prices. The FSB’s report highlights the need for regulators to address data gaps in the $16trn repo market and develop metrics to monitor vulnerabilities. “Strains in repo and government bond markets may spill over into each other or across multiple jurisdictions, given the international nature of repo markets,” the report said, adding: “Given the importance of repo markets within the global financial system, it is critical to preserve their functionality, particularly during periods of stress.”

David Geale, managing director of the Payment Systems Regulator (PSR), has said that he does not expect the regulator to be officially abolished any earlier than the opening quarter of 2027. Mr Geale, who noted that he has not seen the Treasury’s consultation results regarding the PSR’s future, told MPs on the Treasury Committee that there has not been much change at the PSR since plans to consolidate the regulator into the Financial Conduct Authority were announced by Prime Minister Sir Keir Starmer and Chancellor Rachel Reeves in 2025. He also noted that the PSR’s Budget for the year was £28m, adding that he expects it to come in “reasonably under.”

Mobile data shortages are costing UK businesses an average of £3,462 annually, according to a survey by OnePoll. The study involved 1,000 decision-makers, revealing that 56% experienced financial losses due to data exhaustion. Key disruptions included payment processing failures (35%) and customer contact issues (34%).  The research highlights the critical role of connectivity in maintaining customer service and business operations. Mayuresh Thavapalan, commercial and marketing director for Sky Business, said the fear of running out of data “can be a real problem” for SME owners, adding: “When mobile data dries up, so can the payments, purchases, deliveries, and all-important customer service.”