Business news 2 July 2025
Tax raid would undermine the UK economy. Labour’s welfare U-turn prompts tax concerns. Reeves under pressure. Confidence falls among business leaders. Some workers’ rights reforms pushed back. Manufacturing, house prices, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
Tax raid would undermine the UK economy – IoD
The Institute of Directors (IoD) has warned Chancellor Rachel Reeves that a new tax raid to finance a U-turn on welfare reform could “undermine the UK economy.” This comes after analysis by the IoD found that a rise in employer National Insurance has raised concerns among businesses, leading to a significant drop in confidence levels. Shadow Chancellor Mel Stride argues that Labour’s policies are “hitting business confidence hard,” saying: “Instead of fostering growth, the Chancellor’s costly jobs tax and reckless regulatory overreach are driving uncertainty and squeezing investment.” Meanwhile, James Smith, an economist at ING, has warned that the Government “has probably gone as far as it can politically on the spending side, which means tax rises are more likely.” He added: “It’s going to be hard to avoid looking at the major taxes. I can imagine employer National Insurance going up again.” With Labour pledging that it will not hike income tax, National Insurance and VAT, Eir Nolsøe in the Telegraph says that businesses “are likely to be targeted again” in the autumn Budget.
Labour’s welfare U-turn prompts tax concerns
Recent concessions over welfare reforms have created a £4.8bn gap in Chancellor Rachel Reeves’s spending plans, leading to speculation about potential tax increases. Helen Miller, deputy director at the Institute for Fiscal Studies, said: “Since departmental spending plans are now effectively locked in… tax rises would look increasingly likely.” With the Chancellor’s fiscal margin of error significantly reduced, the Government’s commitment to its fiscal rules remains under scrutiny. The Conservatives have accused Labour of making unfunded spending commitments. Shadow chancellor Sir Mel Stride has written to Ms Reeves, calling for clarity on where the money was coming from, asking: “Will you raise tax or increase borrowing?”
Reeves under pressure as forecasts falter
The Office for Budget Responsibility (OBR) overestimated economic growth by an average of 0.3% over two-year periods and 0.7% over five years. The OBR’s revised projections suggest a potential downgrade, which could compel Chancellor Rachel Reeves to raise taxes to balance the budget. Currently, she has £9.9bn of fiscal headroom, but recent policy reversals threaten to eliminate over £6bn of this. Experts estimate that a 0.2% reduction in output could cost the Treasury up to £12bn.
Confidence falls among business leaders
Analysis from the Institute of Directors (IoD) shows a sharp decline in confidence among business leaders, with the latest Economic Confidence Index dropping to -53 in June 2025 from -35 in May. This fall reflects growing concerns over recent tax hikes, particularly the increase in employer National Insurance. The index saw investment intentions drop significantly from 0 in May to -10 in June, while headcount expectations also declined, from -1 to -10. IoD chief economist Anna Leach said: “Business leaders are finding economic conditions increasingly challenging,” adding that “the message coming through is that the tax increases unleashed on business have already undermined the industrial strategy’s ambition to make the UK the best country to invest.”
Investment delays are hitting growth
Bank of England Governor Andrew Bailey has warned that firms are delaying investment plans due to global uncertainty, with this hindering the UK’s economic growth prospects. In an interview with CNBC, Mr Bailey said: “That increase in uncertainty and unpredictability is definitely coming through in terms of activity and growth.” This comes as the Office for National Statistics (ONS) revealed that UK business investment increased by 3.9% in Q1, with this revised down from a previous estimate of 5.9%. The ONS report also shows that whole economy investment, which includes public sector data, increased by 2% in the first quarter.
Some workers’ rights reforms pushed back
The Government has set a new timeline for the Employment Rights Bill, pushing back several reforms by a year. Day-one protection against unfair dismissal, which was due to come into force next year, has been delayed until 2027, as has guaranteed flexible working and a ban on “exploitative” zero-hours contracts. Ministers say the roadmap will give businesses the “clarity and certainty they need to plan, invest and grow.” Other measures set out in the Bill include removing the current limits on statutory sick pay, day-one paternity leave and unpaid parental leave rights, with these expected to come into force in early 2026. New whistleblowing protections are also due early next year, while October 2026 will see a ban on fire and rehire practices alongside rules to ensure that tips are allocated more fairly. Tina McKenzie, policy chair at the Federation of Small Businesses, said the timetable “sets out when waves of disruptive changes will now hit small employers,” warning that “without listening to proposals from business to improve these reforms, the changes simply add complexity and risk to new hiring and existing employment.” TUC general secretary Paul Nowak said the changes were “long overdue,” adding that the new rights needed to be put in place “as soon as possible.”
Decline in manufacturing output slows in June
The latest purchasing managers’ index (PMI) from S&P Global shows that manufacturing output continued to decline in June, although at a slower rate. The PMI shows that declines in new orders and employment also slowed last month. The report saw business optimism hit a four-month high, while 46% of manufacturers said a recovery in sales and new product launches could mean production levels are higher in a year’s time. S&P Global director Rob Dobson said the PMI points to “stabilising” conditions but noted: “Any hopes for stabilisation remains fragile and subject to potential headwinds that could severely impact demand, supply chain reliability and future growth prospects,” pointing to “heightened geopolitical tensions, weak global markets, tariff uncertainties and fears over the direction of future government policy.”
More high-growth businesses are selling up
Over the past decade, nearly 8,000 high-growth businesses have opted to sell, with acquisitions dominating the exit landscape, according to analysis by investment management firm Charles Stanley. The last two and a half years have seen almost 40% of exit activity, while the peak occurred post-pandemic, with 1,110 acquisitions. Cliadhna Law, head of direct and professional sales at Charles Stanley, said acquisitions “remain the dominant form of exit.”
Markets
Yesterday, the FTSE 100 closed up 0.3% at 8,785. Overnight in the US the S&P 500 fell 0.11% to 6,198 and the NASDAQ fell 0.82% to 20,203.
The US Senate narrowly passed Mr Trump’s “One, Big, Beautiful Bill”. Three Republicans defected, leaving the vote split at 50-50; J.D. Vance, the vice-president, broke the tie.
MPs voted 335-260 to advance Labour’s welfare bill, after the government offered last-minute concessions to party rebels. A controversial reform to disability benefits will be delayed at least until a review concludes next year and many of the proposed cuts were stripped out.
US President Donald Trump threatened Japan with tariffs of up to 35% as he ramped up tensions for a third straight day, fueling fears of a trade war.
This morning on currencies, the pound is currently worth $1.37 and €1.164. On Commodities, Oil (Brent) is at $67.85 & Gold is at $3344. On the stock markets, the FTSE 100 is currently up 0.28% at 8810 and the Eurostoxx 50 is up 0.57% at 5312.
Heathrow & National Grid
A report has found that the power outage at Heathrow in March that shut the airport was due to the failure of critical equipment at the nearby substation. A build up of moisture in the insulators led to the fire. National Grid identified the problem in 2018 but failed to act on it. The report highlighted numerous oversights by National Grid regarding maintenance schedules and fire safety, including inspections that found some fire-control measures to be “inoperable” or “out of service”.
House prices fall 0.8% in June
UK house prices fell by 0.8% in June, according to Nationwide, with this the steepest monthly decline since February 2023. Year-on-year, prices rose by 2.1%, marking the slowest annual growth rate for nearly a year. Matt Swannell, chief economic adviser to the EY Item Club, said that monthly house price changes “can be quite volatile and this has been exaggerated by April’s change in stamp duty thresholds,” while Rosie Hooper, chartered financial planner at Quilter Cheviot, said the housing market is “still digesting” the stamp duty reforms in April.
Ofgem approves grid upgrade
Energy regulator Ofgem has approved a £24bn investment that will see the UK’s energy infrastructure upgraded. As a part of a green transition as ministers look to deliver cleaner energy, more than £15bn is set to be deployed into the UK’s gas transmissions and distribution systems. Meanwhile, £8.9bn will be spent on expanding Britain’s high-voltage electricity grid.
Apple
Foxconn has reportedly asked hundreds of Chinese engineers and technicians to return home from its iPhone factories in India. All the rerason for trhe move is unknown it has sparked concern about Apple’s manufacturing there.
Spectris
Spectris has agreed to the terms of a takeover by private equity consortium Kohlberg Kravis Roberts & Co at £40 per share in cash. The offer comprises £39.72 in cash per Spectris share plus an interim dividend of 28 pence per share. The KKR offer would be reduced by any additional Spectris dividend payment. Spectris notes that KKR’s bid represents a 6.3% premium to the offer by Advent for £37.63 per Spectris share, and so the Spectris board withdraws its recommendation of the Advent offer.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Get compensated for previous late payments
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Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!
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