Business news 18 February 2026
UK inflation has eased to 3%, strengthening expectations of a spring interest rate cut. However, the labour market is deteriorating, with unemployment rising to 5.2% — the highest level in five years. Financial markets are responding positively to the prospect of lower borrowing costs, but beneath the surface the UK economy shows signs of cooling demand, rising business stress and weakening innovation. For SMEs supplying on credit, the risk environment is becoming more complex.
Please note the CPA business news will be taking a short break and returning on Tuesday 24th February.
James Salmon, Operations Director.
SME & Economic Developments
UK Unemployment Hits Five-Year High
The UK jobless rate has climbed to 5.2%, up from 5.1%, with 130,000 fewer workers on payrolls over the year. London’s unemployment rate has surged to 7.6%, with youth unemployment reaching 18.8% in the capital. Wage growth slowed to 4.2%, its lowest rate in five years, while private sector pay momentum continues to ease. Economists warn that rising labour costs are pushing firms from hiring freezes into active redundancies.
Why it matters: Rising unemployment and slower wage growth increase the risk of late payments and consumer-led demand weakness for SMEs.
Inflation Falls to 3% — Rate Cut Now Likely
Annual inflation fell to 3% in January from 3.4%, driven by lower food, fuel and airfare costs. While prices are still rising, they are doing so more slowly. Economists now see an 80% probability of a Bank of England rate cut in March, with expectations of three cuts this year potentially taking rates to 3% by year-end.
Why it matters: Lower rates may ease borrowing costs, but falling inflation combined with rising unemployment signals weakening demand and tighter cashflow conditions.
Record Start-Ups — But Innovation Slips
A record 36% of working-age adults are now starting businesses, according to the ERC. However, SME innovation has dropped to a four-year low, with only 24.1% reporting new products or services. Export activity has also declined to 17.2%, while local funding support faces uncertainty with the end of the UK Shared Prosperity Fund.
Why it matters: More start-ups increase credit exposure risk, while falling innovation and exports point to margin pressure and slower growth.
Tax & Government
UK Shelves Post-Brexit Single Trade Window
The government has effectively suspended its £110m Single Trade Window project designed to streamline border trade processes. No new funding has been allocated since January last year, and the programme is being closed early.
Why it matters: Continued trade friction ties up working capital and increases the risk of delayed payments across supply chains.
UK Pushes Back on French Procurement Rules
Britain is lobbying EU partners to prevent strict “EU preference” rules that could exclude UK firms from public procurement bids in sectors such as automotive, advanced technology and renewables.
Why it matters: Reduced access to EU contracts could compress export opportunities and increase domestic competition for SMEs.
HMRC Hires 1,000 Staff Ahead of Mansion Tax
HMRC is recruiting 1,000 valuation officials ahead of a proposed surcharge on homes worth over £2m from 2028. Around 200,000 properties will require revaluation.
Industry & Structural Pressures
Tourist Tax Warning — £14bn Risk
The World Travel & Tourism Council warns that a proposed £9 tourist tax could cost the UK economy £14bn by 2027. International visitor numbers may fall sharply, with hospitality SMEs most exposed.
Why it matters: Hospitality suppliers face heightened payment risk if visitor demand weakens.
Holiday Park Enters Administration
Stonham Barns Holiday Park has entered administration, though it continues trading while a buyer is sought.
Insurers Face Record Weather Claims
UK insurers paid out £6.1bn in property claims in 2025, with weather-related claims rising 14% to £1.2bn. Storm damage payouts jumped 32%.
AI Investment Surges — But Jobs Cut
Nvidia has signed a multi-year deal with Meta to supply millions of AI chips, as Meta plans to spend $135bn on AI this year. Meanwhile, over 25,000 tech jobs have been lost in 2026, with some experts suggesting AI is being used to justify previous over-hiring.
Market Snapshot – UK at the Centre
Markets are increasingly focused on the UK growth outlook, unemployment data and interest rate expectations.
UK & Europe
The FTSE 100 closed at a record 10,556.17, rising 0.8%, and extended gains to 10,624.68 Wednesday morning. Defensive sectors such as healthcare and real estate led the rally as investors rotated away from cyclical exposure. The STOXX 600 rose to 625.69, while the DAX climbed to 25,161.33 and the CAC 40 to 8,394.35.
The rally is being driven largely by expectations of a March Bank of England rate cut following weak labour data.
United States
The S&P 500 edged up 0.1% to 6,843.22 after volatile trading. The Dow closed at 49,533.19 and the Nasdaq slipped 0.1% to 22,578.38. AI-related uncertainty continues to drive sector rotation, with defensive stocks outperforming.
Asia
The Nikkei 225 rose 1% to 57,143.84, leading gains in the region. The MSCI Asia Pacific index rose 0.5%.
Currencies
Sterling was the weakest major currency following the unemployment data.
- GBP/USD trades around 1.3562
- EUR/GBP at 0.87205
Markets are pricing in multiple Bank of England rate cuts this year.
Commodities
Oil weakened on progress in US-Iran nuclear talks.
Gold recovered slightly to $4,916.68 after recent declines. Copper trades at $12,619.50 amid rising inventories.
Market Theme: Equities are celebrating rate-cut hopes, but those hopes are being driven by weakening UK labour data and cooling inflation — a sign of slowing economic momentum rather than accelerating growth.
Insolvency Watch
Appointments of Administrators
- BARRY M. COSMETICS LTD
- BELTLINE CAPITAL LTD
- BLACK DEER LIVE LIMITED
- FIRST PACKAGING SERVICES LIMITED
- GILKS (NANTWICH) LIMITED
- LEIGHTON PACKAGING LIMITED
- O&H VEHICLE CONVERSIONS LIMITED
- TECSEW LIMITED
- VESTA ASSET MANAGEMENT LTD
- W.T. CONSTRUCTION (POOLE) LIMITED
Appointments of Liquidators
- ASH MANAGEMENT CONSULTING LTD
- B. N. LAD LIMITED
- BOBSTAY LIMITED
- BYROC PLAY PRODUCTIONS LIMITED
- C N PLASTICS LIMITED
- CHELVEY PROPERTY VENTURES LIMITED
- CHESHIRE CONSULTING LIMITED
- CLOUDINA LTD
- CONFERENCE AND TRAVEL PUBLICATIONS LIMITED
- DRJ SOFTWARE LIMITED
- FAINBOND PROPERTIES LIMITED
- G3 COMMS LIMITED
- GL ROMEO TANGO LTD
- HUNTER-MILLER LIMITED
- MABEY FAMILY TRUSTEES LIMITED
- MP APPROVED LIMITED
- PANACEA PUBLISHING INTERNATIONAL LIMITED
- POMERY’S LTD
- SALT INSURANCE SERVICES LIMITED
- SANTEC SERVICE LIMITED
- SMARTER SECURITY SOLUTIONS LIMITED
- SPV 11133K LTD
- STONEOFOY LIMITED
- SUNSHINE (HAYLING ISLAND) LIMITED
- T TROTTER LIMITED
- THOMPSONS PLANT HIRE LIMITED
- W3 STUDIOS LTD
- WATER REALISATIONS LIMITED
Petitions to Wind Up
- ASPIRARE RESOURCING LIMITED
- BARONY CASTLE LLP
- BLUE FUJI LTD
- CHICAGOS HASLINGDEN LTD
- CRAIG DICKSON JOINERY LTD
- FREIGHTFLOW LOGISTICS LTD
- PURRPLE CAT CAFE LTD
- QUEENSFERRY PLUMBING & HEATING LIMITED
- SEVENOAKS JOINERY LTD
- UK PULTRUSIONS LTD
- VALLEYSPICE 24 LIMITED
- WATSON ELECTRICAL (LIVINGSTON) LTD
How CPA Membership Could Help
With unemployment rising, innovation slowing and insolvencies continuing across multiple sectors, this is precisely when disciplined credit control matters most.
Early action dramatically improves recovery outcomes. CPA Members benefit from structured escalation, CreditCare reports, monitoring alerts and ethical overdue recovery that protects customer relationships while safeguarding cashflow.
If economic momentum is cooling, your credit control should be warming up.
Just call Peter Uwins, CPA’s National Sales Manager, on️ 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