US President Donald Trump has warned of potential tariffs on the UK if it does not abolish its digital services tax. Speaking from the Oval Office, he stated that the US could easily retaliate by imposing tariffs on British exports. The UK’s digital services tax, introduced in 2020, targets large tech firms with a 2% levy on revenues from UK users. Trump argued that the tax unfairly targets American companies and indicated that any US response would exceed the tax’s value. He noted: “What we’ll do is we’ll reciprocate by putting something on that’s equal or greater than what they’re doing.” Asked about Mr Trump’s threats, the Prime Minister’s official spokesperson said: “Our position on that is unchanged. It is a hugely important tax to make sure that those businesses continue to pay their share. So it is a fair and proportionate approach to taxing business activities in the UK.”

HMRC is intensifying checks on property valuations as inheritance tax receipts rise. Referrals to the Valuation Office Agency increased by 23.5% last year, reflecting tougher enforcement. Frozen tax thresholds and rising house prices are pulling more estates into the 40% tax bracket, with further pressure expected when pensions are included from 2027. Officials are increasingly using AI and data matching to flag discrepancies, leading to more disputes and delays for executors. Experts warn the crackdown could increase administrative burdens, even as inheritance tax revenues hit record highs and the Government seeks to maximise collections. Laura Walkley, of TWM Solicitors, said: “There has been a noticeable shift towards questioning figures submitted in inheritance tax returns, rather than accepting them at face value.”

UK banks are preparing for possible tax increases as concerns grow over the future leadership of the Labour Party. Keir Starmer and Rachel Reeves may soon be replaced by more left-leaning figures, prompting fears within the banking sector. A senior executive said: “The industry should be worried,” following last year’s narrow escape from a tax hike. Calls for increased levies on banks are rising, particularly from Labour’s left. With profits up, the pressure for tax changes intensifies, especially amid concerns over a potential bond market sell-off and high borrowing costs.

Savers in the UK are facing increased tax burdens due to changes announced in last year’s budget. Rachel Reeves, the Chancellor, will raise income tax on savings interest by 2% next April and reduce the cash ISA limit for under-65s from £20,000 to £12,000. In the 2025-2026 tax year, 2.8m people paid tax on savings, a significant rise from 1.3m the previous year. William Rowntree, 86, expressed shock at being taxed on interest he had not yet received, stating: “I was astonished to learn that HMRC wanted the tax on our interest from the bond even though we had not received it.”

The first quarter of 2026 has seen a historic decline in new business formations, with only 78,655 companies established, an 8% drop from 2025. The Office for National Statistics reported that 83,200 companies closed during the same period. The downturn is attributed to rising taxes and the ongoing war in Iran. Commenting on the figures, Andrew Griffith, the shadow business secretary, said: “This shows the unfolding disaster for enterprise with fewer businesses being started and wealth creators either leaving or concluding it’s not worth the effort. To grow the economy, we need a Government on the side of risk-takers and entrepreneurs – instead, we have the opposite.”

The Confederation of British Industry (CBI) has urged the UK Government to reform the business rates system, calling it a “growth killer.” A recent survey revealed that 76% of CBI members believe high business rates suppress investment. Louise Hellem, CBI’s chief economist, commented: “That uncertainty is a growth killer, with vital projects being delayed, scaled back or cancelled.” The CBI argues that reforms should provide genuine relief and improve transparency in tax calculations. They stress that the current system penalises investment and must be addressed as an economic necessity.

Firms anticipate a decline in employment and a rise in inflation to 4% over the next year, according to the Bank of England’s latest decision maker panel. The survey indicates growing concerns about stagflation in the UK economy. The year-ahead consumer price index (CPI) inflation has increased from 3% to 4%, the highest since January 2024. Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “Any doves on the Committee will likely have to dial back their arguments in the face of this data.” The ongoing Middle East conflict has further eroded business confidence, the Bank’s researchers said.

Retail sales in the UK increased by 0.7% in March, rebounding from a 0.6% decline in February. According to the Office for National Statistics (ONS), fuel sales rose sharply by 1.7% as consumers stocked up amid concerns over the Iran war affecting global supplies. Clothing sales also saw a significant rise due to improved weather conditions. Overall, retail sales for the first quarter are up 1.6% compared to the previous three months. However, retailers are still facing challenges from rising supply chain and energy costs, exacerbated by the ongoing conflict in the Middle East.

Steve Elliott, the head of the Chemical Industries Association, has warned that Britain’s green policies are harming the industrial base. The sector’s output has fallen by 60% and 26 sites have closed, resulting in 8,000 job losses. Elliott said the UK has lost its ability to produce essential chemicals for clean energy and other sectors, such as defence, advanced manufacturing and life sciences. The industry’s emissions had been cut by 60%, but this is due to hostile government policy leading to sites closing, Elliott adds as he calls for action to arrest the decline of a key industry.

Employers in the UK are facing significant challenges in recruitment due to rising costs, including increased National Insurance bills and wage pressures. This has led to a decline in vacancies, with numbers hitting a near five-year low. Young people are particularly affected, with NEET figures approaching 1m. Experts warn that the current economic climate could lock a generation out of work, necessitating urgent policy changes to create job opportunities, says Steven Smith in the Express.

Four major trade bodies have warned the Government that the new guaranteed hours policy could lead to increased unemployment and hinder young people’s entry into the job market. The British Retail Consortium, Food and Drink Federation, Recruitment and Employment Confederation, and UKHospitality expressed their concerns in a letter, stating that the policy risks reducing flexibility in the labour market. Helen Dickinson, chief executive of the British Retail Consortium, noted that the rules could deter employers from offering flexible roles, which are crucial for young workers. The Government maintains that the policy aims to provide job security.

The Financial Conduct Authority (FCA) is participating in a global initiative to combat illegal financial promotions by social media influencers, known as finfluencers. The FCA has identified 1,267 illegal adverts reaching over 2.3m UK accounts, with two-thirds linked to firms on its Warning List. The regulator has made 120 account takedown requests and is urging social media platforms to take more responsibility in blocking harmful content. Steve Smart, FCA’s executive director, stated: “This collective push with international partners is vital in helping to protect millions of consumers from harm.”

According to a new report by KPMG, over 50% of insurance CEOs anticipate significant mergers and acquisitions (M&A) impacting their businesses, the highest among all sectors surveyed. Huw Evans, Partner and head of insurance at KPMG, said: “This tells you that firms are increasingly looking to scale up.” The report also revealed that 83% of insurers view cybercrime as a major growth threat. Evans noted that firms are enhancing real-time threat monitoring to combat evolving cyber risks, reflecting a shift towards integrating AI solutions into broader business strategies.

The British Chambers of Commerce (BCC) has called for Sir Keir Starmer to establish a new cabinet committee focused on enhancing the UK economy’s resilience against global disruptions. The BCC highlighted that recent crises, including Brexit and the Ukraine war, have exposed the UK’s lack of contingency plans. Director-General Shevaun Haviland said: “The UK’s inadequate economic security has become a drag on growth.” The BCC’s report suggests creating an economic security committee to manage trade disputes and recommends adopting measures similar to the EU’s “anti-coercion instrument” to protect UK interests.

Liam Halligan comments in the Telegraph on the threats to the global economy, such as the Middle East crisis and the high debt servicing costs of Western countries. But he says the main danger could be the elevated equity market valuations of AI-adjacent technology companies. Halligan explains that much of the investment piling into AI is highly leveraged, with that debt increasingly collateralised using the AI chips themselves. “This AI boom is collateralised against chips prone to rapid generational obsolescence. And that, to my mind, makes what is happening now far more dangerous than previous boom-bust cycles,” Halligan concludes.

Darren Jones, the chief secretary to the Prime Minister, has warned that food and energy prices could remain elevated for over eight months following the end of the US-Israel war with Iran. Speaking with the BBC, Jones said: “So people will see higher energy prices, food prices […] flight ticket prices as a consequence of what [US President] Donald Trump has done in the Middle East.” With the Food and Drink Federation anticipating that food inflation could reach 9-10% this year, while current rates are between 3.3% and 3.7%, supermarkets are under pressure to manage costs and have urged the Government to reduce energy bills.

The specialised visa route for foreign entrepreneurs in the UK is becoming increasingly restrictive, according to immigration lawyers. Many are now opting for self-sponsorship despite stringent Home Office rules and rising refusal rates. Georgina Griggs, a barrister at Richmond Chambers, said: “While self-sponsorship remains technically possible, in practice it is becoming prohibitively narrow.” Demetris Demetriou, a lawyer assisting clients with self-sponsorship, noted a rise in refusals even for genuine businesses. The Home Office clarified that there is no self-sponsored work visa and each application is assessed individually.

Millennials are set to benefit from a significant wealth transfer as parents and grandparents accelerate gifts to younger generations. John Roberts from Austin Lafferty Solicitors noted an increase in clients giving early inheritances to avoid inheritance tax. The Institute for Fiscal Studies (IFS) predicts that those born in the 1980s will inherit an average of £320,000. However, the wealth transfer may exacerbate inequalities, as wealthier families tend to pass on more. Simon Pittaway from the Resolution Foundation warned that care costs could diminish these inheritances, impacting financial security for younger generations.