Business news 12 June 2025

GDP, The spending review, SME finance, tax, unemployment, markets, insolvencies & more business news that we thought would interest our members.

James Salmon, Operations Director.

Breaking – GDP shrinks!

In figures released this morning the UK economy shrank 0.3% in April as the threat of Trump’s tariffs and tax hikes hit.

UK GDP was down 0.3% in April after a 0.2% rise the month before, and worse than the 0.1% decline expected. On a three-month rolling basis, GDP grew 0.7% as expected, which was unchanged from the previous three months. Industrial production fell 0.6% month-on-month, though this was an improvement from the prior month, while on an annual basis was down 0.3% compared to a 0.7% fall in March. The index of services was down 0.4% on the month, worse than expected after a 0.4% gain in March. Construction output grew 0.9% though, following a 0.5% rise the previous month and better than expected.

Small firms struggle with financing

Research indicates that nearly a third of smaller UK firms have paused or reduced operations due to financing difficulties. According to YouGov data analysed by Manx Financial Group, 30% of small- and medium-sized enterprises (SMEs) have cut back on hiring, research and development, and marketing since 2023. Douglas Grant, chief executive of Manx, stated: “Accessing finance remains difficult, and this funding gap threatens not only their survival but also the broader UK economy.” With 38% of SMEs anticipating stagnation over the next year, the need for targeted measures to unlock credit is critical. The UK Government has raised the national insurance threshold to support smaller firms, but many still face high borrowing costs and inflexible terms.

What you should know about the Spending Review

The Chancellor, Rachel Reeves, set out the government’s departmental-spending plans for the next three years, until the 2028-29 fiscal year. Day-to-day budgets will increase by 2.3% in real terms across the 3 years, with defence and health spending receiving big boosts. But some big departments, such as the Home Office (policing, border-security and immigration) face real-term spending cuts.

  • Health – Day-to-day budget for the NHS in England to go up by 3% on average over the next three years, accounting for inflation, reaching £226bn by 2029
  • Defence – The government has pledged to increase defence spending from 2.3% to 2.5% of overall economic output by 2027
  • Home Office day-to-day budget to go down by 1.7% in real terms over the next three years
  • Housing – £39bn allocated for social housing in England between 2026 and 2036, an average of £3.9bn a year over the period compared to £2.3bn currently
  • Energy – Budget to go up by 0.5% in real terms with an additional £11.5bn committed to Sizewell C in Suffolk.
  • International – Foreign Office day-to-day budget to go down by 6.8% in real terms over next three years, the biggest drop, largely due to reduced aid spending
  • Science – budget to increase by 7.4% in real terms. £2bn set aside for the government’s “opportunities action plan” for artificial intelligence

Prepare for tax hikes this autumn

Top economists are warning that British taxpayers should prepare for significant tax increases this autumn following Chancellor Rachel Reeves’ announcement of a £190bn spending review. The review, which includes additional funding for the NHS, defence, housing, and nuclear energy, has raised concerns about a potential shortfall of up to £23bn. KPMG’s chief UK economist, Yael Selfin, said: “Looking ahead to the autumn budget, by cementing in substantial increases in departmental spending, Reeves has made further tax rises look increasingly inevitable.” Business leaders, including Rain Newton-Smith from the Confederation of British Industry, have cautioned against imposing more tax burdens on firms, asserting that “business cannot shoulder more” tax hikes.

Tax burden hits record levels

The Adam Smith Institute warns that the tax burden on workers in Britain is at its highest in 40 years and is projected to reach unprecedented levels within three years. This year’s “tax freedom day” fell six days later than last year, marking the latest date since 1985. The think tank predicts that by 2028, this day could be as late as June 24, surpassing historical tax burdens seen during the Second World War. James Lawson, chairman of the Adam Smith Institute, stated: “A tax system that consumes 162 days of our working year is…not sustainable.” The report highlights that the top 1% of earners contributed 28.2% of total tax liabilities, with many wealthy individuals considering leaving the UK due to increasing tax pressures.

Jobless claims soar

Jobless benefits claims in the UK have surged by nearly 40% in certain areas over the past year, revealing the impact of recent tax increases. According to the Office for National Statistics (ONS), the claimant count rose to 1,733,645 in May, an increase of 8% or 128,355 from the previous year. The rise has been particularly pronounced among younger workers, with 303,280 claimants aged 18-24, marking a 10% increase. Kate Nicholls, chief executive of UK Hospitality, commented: “Losing more than 100,000 jobs across the economy in a month goes far beyond the worst-case scenario predicted.” The unemployment rate has reached 4.6%, the highest in nearly four years.

Markets

Yesterday, the FTSE 100 closed up 0.13% at 8864.35 and the Euro Stoxx 50 closed down 0.41% at 5393.15. Overnight in the US the S&P 500 fell 0.27% to 6022.24 and the NASDAQ fell 0.5% to 19615.88.

Investors were watching the progress in the US-China trade talks, a US inflation reading below expectations (it rose 0.1% in the month against expectations of 0.3%  as tariffs are not expected to hit inflation until June) as well as the UK spending review to be outlined by the UK chancellor where health and defence were the big winners. Also in the US, Trump said he’ll set unilateral tariffs again in 2 weeks, instead of continuing with the trade talks with partners, hitting the dollar and markets and reigniting trade war concerns.

And something this writer can claim to have had a hand in, West London pub chain, Fuller, Smith & Turner said profit more than doubled in its recent financial year, as the pub chain recorded sales growth from food, drink and accommodation.

This morning on currencies, the pound is currently worth $1.356 and €1.175. On Commodities, Oil (Brent) is at $69.15 & Gold is at $3356. On the stock markets, the FTSE 100 is currently down 0.06% at 8859 and the Eurostoxx 50 is down 0.9% at 5345.

Investors jittery as borrowing costs rise

Borrowing costs have increased as investors express concerns over how Chancellor Rachel Reeves will finance her spending plans. The yield on ten-year gilts peaked at 4.62%, reflecting worries that the Chancellor may need to raise taxes or increase borrowing. Despite a slight easing to 4.55% due to lower-than-expected US inflation, the UK still faces the highest borrowing costs among the G7 nations. Neil Mehta from RBC BlueBay Asset Management noted that “another fiscal event goes by with little resolved,” indicating ongoing investor apprehension regarding the sustainability of fiscal policy.

UK’s AI ambitions at risk without skills

Salesforce has issued a warning that the UK may not achieve its economic growth goals without accelerating investment in workforce skills to keep pace with the rapid development of AI technologies. Despite advancements in infrastructure, there is a significant skills gap, with Salesforce supporting a government initiative to train 7.5m workers in AI skills over the next five years. Zahra Bahrololoumi CBE, Salesforce’s chief executive of UKI, commented: “Agentic AI represents a new economic model reshaping UK businesses.” The need for widespread skills development is critical, as 78% of firms are already using AI agents, anticipating a 26% productivity increase.

HMRC intensifies efforts to reduce tax gap

Rachel Reeves is intensifying tax collection efforts as the tax gap has ballooned to £40bn, with some estimates suggesting it could be as high as £100bn. To tackle this, the Chancellor has allocated £100m to HMRC, hiring compliance officers and employing advanced artificial intelligence to identify tax evasion. Ian Robotham, legal director at Pinsent Masons, noted that Reeves has set “very hard targets” for HMRC, which has already seen a significant increase in tax investigations. In the tax year ending April 2024, specialist investigations alone generated £1.5bn, more than double the previous year’s recovery. HMRC is focusing on high-income individuals and utilising data from various sources, including social media, to uncover discrepancies.

HMRC to stop sending letters to taxpayers

HMRC aims to save £50m by the end of this Parliament by eliminating all outbound post except letters that generate revenue such as tax demands. The cost-cutting would reduce the number of letters HMRC sends by 75%. But experts warn that taxpayers could miss important correspondence. Antonia Stokes, of the Low Incomes Tax Reform Group, said: “HMRC’s plan to virtually eliminate all outgoing post will need to be handled carefully, with clear safeguards in place for those customers who are digitally excluded or lack digital confidence.”

Coinbase to hire aggressively in UK

Coinbase is significantly increasing its presence in the UK, with plans to hire extensively as the country approaches a new regulatory framework for cryptocurrency. Keith Grose, Coinbase’s UK lead, stated: “We’re going to be hiring like crazy in the UK,” adding that London will be a key global office. The expansion coincides with the UK’s efforts to establish a comprehensive regulatory regime, which Grose believes could provide a strategic advantage. Coinbase’s recent VASP registration from the FCA allows it to operate more freely in the UK, further solidifying its commitment to the market.

Fuller’s increases pint prices following tax hike

Fuller’s has increased the price of a pint by approximately 15p due to £8m in additional staff costs. The decision was made following the Chancellor’s tax changes, which raised employers’ National Insurance contributions and the minimum wage. Despite these challenges, Fuller’s reported a 32% increase in underlying pre-tax profits, reaching £27m for the year ending March 29, with like-for-like sales up by 5.2%. Additionally, Michael Turner is set to retire as chairman next month.

Premier League profits soar to new heights

In the 2023-24 season, Premier League clubs achieved their highest collective operating profit since 2019, with an increase of 36% to £533m, as reported in Deloitte’s latest Annual Review of Football Finance. Revenue also rose by 4% to a record £6.3bn, driven by stricter profitability and sustainability regulations. Despite a pre-tax loss of £136m, this marked an improvement of nearly £550m from the previous season, aided by the relegation of loss-making teams. The report also highlighted concerns over the upcoming Independent Football Regulator and its potential impact on the governance of English football.

Poundland faces court claims amid rescue talks

Poundland’s rescue deal is in jeopardy as the retailer faces multiple court claims for unpaid business rates, which could deter potential buyers. Sources indicate that the overdue taxes, estimated to be worth millions, may hinder the company’s turnaround plan. Poundland aims to write off these payments and proposes a freeze on future business rates for up to nine months under new ownership. The plan includes closing 150 to 200 stores and reducing rents by 10% to 50% for others. Despite having over 800 shops and employing 16,000 people, Poundland reported a 7.3% decline in like-for-like sales and a significant drop in pre-tax earnings.

Haulage firm collapses after 50 years

B Taylor & Sons Transport Limited, a Nottinghamshire haulage company, has entered administration after 50 years of operation, resulting in the redundancy of most of its 91 employees. The firm filed a notice of intent on Friday, with Benjamin Peterson and Danny Dartnaill from BDO appointed as joint administrators. The company ceased trading “with immediate effect” due to “unfavourable market conditions” that led to “unsustainable commercial losses,” according to Peterson.

Latest Insolvencies

Appointment of Administrator – PAVILION HP13 LTD
Appointment of Liquidators – KIER SHEFFIELD LLP
Appointment of Administrator – GB-BIO LIMITED
Appointment of Liquidators – ADAM SOUTHERN DEVELOPMENTS LTD
Appointment of Liquidators – K V COMPUTER SERVICES LIMITED
Appointment of Liquidators – CAROLINE BADGER LTD
Appointment of Liquidators – MATERIAL HANDLING DEVICES LIMITED
Appointment of Administrator – WORKINGTON ENGINEERING LIMITED
Appointment of Liquidators – CAXTON INTEGRATED SERVICES HOLDINGS LIMITED
Appointment of Liquidators – CHARLES STREET CONDUIT ASSET BACKED SECURITISATION 2 LIMITED
Petitions to wind up (Companies) – ESF PUBS LIMITED
Petitions to wind up (Companies) – CORE CREATIVE PROJECTS LTD
Petitions to wind up (Companies) – PRIMITIVE PETS LTD
Petitions to wind up (Companies) – GRIMI CONSTRUCTION LTD
Petitions to wind up (Companies) – KRJ COOLING SERVICES LTD
Petitions to wind up (Companies) – ALPINE CAR SALES LTD
Petitions to wind up (Companies) – RS PREMIUM CAR SALES LTD
Petitions to wind up (Companies) – HERITAGE ROAD MOTOR GROUP LTD
Petitions to wind up (Companies) – CARS JUNCTION LTD
Petitions to wind up (Companies) – PICK MY MOTOR HOLDINGS LIMITED
Petitions to wind up (Companies) – FUEL STORAGE SYSTEMS LIMITED
Appointment of Administrator – MARYFIELD LTD
Appointment of Liquidators – OHNE LIMITED
Appointment of Liquidators – VC-TECHS LIMITED
Appointment of Liquidators – ORIGIN ASSET MANAGEMENT LIMITED LIABILITY PARTNERSHIP
Petitions to wind up (Companies) – MENLOVE CAR CENTRE LTD
Petitions to wind up (Companies) – MARCH MOTORS (CAMBS) LTD

Why you should become a member of CPA!

The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid, since 1914. We have supported our members through all sorts of difficult trading environments.  With high interest rates and a struggling economy and elevated insolvencies, our services can help your business navigate these difficult waters.

Unlike other credit management and debt collection companies, we offer a range of services to our members that are all included as part of a fixed annual subscription, tailored to your needs.

Under your annual subscription you will have access to our main services:

  1. Our Creditcare credit reports provide credit ratings and limits along with a host of detailed information on your potential customers to enable you to trade with confidence and set appropriate credit policies for new customers.
  2. Our monitoring service will alert you to any significant changes in the status of those customers.
  3. Our Overdue account recovery service can be used to chase up payment on any invoices to those customers that have not been paid on time. Unlike other debt collection companies, this service directs your customer to pay direct to you and allows you to maintain your goodwill with them, rather than inserting ourselves into your relationship with you customer and insisting they pay CPA instead. Our Overdue account recovery service resolves over 80% of accounts referred to us.

All of the above services and other complimentary services such address verification, are included in your subscription!

And for the small minority of debts not resolved through our Overdue account recovery service, you can refer the debt to our collections department to escalate the late payment collections process.

CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. And we provide credit information so you can monitor and assess your key customers and be warned of any potential risks. CPA has been improving business cash flow for over 100 years, by tackling late payers and campaigning against the late payment culture in the UK.

Unlike other credit management companies, we offer our members a fixed annual subscription regardless of how high the value of their debts maybe!

Rather than to borrowing more money to improve your cashflow, CPA suggests that business owners tackle the problem at its source. If late payments are a strain on your cashflow, then talk to CPA about how we can help you reduce those late payments.

Just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.

When you see your money come in, you will be so glad you used CPA.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections

 

Do you have a commercial late payer that is causing you grief? Use CPA’s no-win, no-fee, commercial debt recovery service!

If you have a particular business customer who is late paying and causing you sleepless nights, why not offer it to CPA’s collection department for purchase on recourse?

CPA’s collection department will then pursue the debt. We will be liable for any costs incurred and then when we have recovered the debt, we will pay you the net principle debt recovered less our percentage.

Once you have enjoyed that success then you can consider the more cost effective membership which includes our Overdue Account Recovery service and Status/Credit reports as well as a range of other complimentary services.

Just call  020 8846 0000 and ask for Godfrey Nelson or Cris Shirley (business hours) or email debtpurchase@cpa.co.uk today.

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.

 

Get compensated for previous late payments

Have you been paid late by business customers in the last six years?

Maybe you no longer work with them. Under legislation, you are entitled to  compensation you for those late payments you have suffered.

You put up with the PAIN – now claim the GAIN!

Claim late payment compensation (LPC) from former business customers who paid you late in the last six years!

CPA (LPC) Recoveries is using our bespoke software and decades of experience to do just that for our clients

Check our compensation calculator to see how much your business could be owed!

Discover NOW the potential value of late payment compensation hidden in your sales ledger!

The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.