Business news 21 January 2026

UK businesses face a difficult mix of falling employment, persistent cost pressure and rising insolvency risk, even as headline stock markets hit record highs. Global markets were rattled by renewed trade war fears linked to Donald Trump’s Greenland plans, while UK inflation ticked higher and wage growth cooled further. The gap between large corporates and small firms continues to widen, with cash flow risk rising sharply across SME supply chains.

James Salmon, Operations Director.

Business News

UK job losses accelerate sharply

The UK lost around 43,000 jobs in December, equivalent to nearly 1,400 a day, marking the largest monthly fall since November 2020. Business leaders at Davos linked the deterioration to higher taxes and regulatory pressure, while the Government defended its approach. The data reinforces signs of a cooling labour market already visible in slowing wage growth.

Why it matters for SMEs selling on credit:
Rising unemployment weakens demand and household cash flow, increasing late payment and default risk across SME customer bases.

UK inflation rises, but underlying pressures ease

UK inflation rose to 3.4 percent in December, slightly above forecasts, ending a five-month cooling trend. The rise was driven mainly by tobacco duty timing and volatile air fares. Core inflation held steady at 3.2 percent, while services inflation rose modestly to 4.5 percent, below expectations. The Bank of England still expects inflation to fall back towards its 2 percent target in the spring, helped by energy bill cuts and frozen rail fares.

Why it matters for SMEs selling on credit:
Costs remain elevated in the short term, while customers remain cautious, meaning payment delays are likely even if interest rate cuts are expected later in the year.

Wage growth cools as rate-cut expectations shift

Private-sector regular pay growth slowed to 3.6 percent in the three months to November, slightly below expectations and the lowest level in several years. While this reduces inflation pressure, it also signals weakening household income growth. The Bank of England is unlikely to rush into easing in February, but risks are increasingly skewed toward rate cuts later this year.

Why it matters for SMEs selling on credit:
Slower wage growth often feeds directly into longer payment times, particularly for consumer-facing SMEs.

FTSE hits record highs while small firms struggle

The FTSE 100 is close to all-time highs, driven largely by global earners and large multinationals. Critics argue this masks the reality facing the UK’s 5.6 million small businesses, which continue to face weak growth, rising unemployment and unresolved policy uncertainty, particularly around business rates.

Why it matters for SMEs selling on credit:
Strong equity markets can disguise real-economy stress, increasing the risk of misjudging customer creditworthiness.

SMEs scale back green investment to survive

Only 30 percent of SMEs now view sustainability as a high priority, the lowest level since early 2020. Rising staff and raw material costs have pushed many businesses to postpone or abandon green finance initiatives in favour of short-term survival.

Why it matters for SMEs selling on credit:
When businesses shift from investment to survival mode, payment discipline weakens and credit risk rises across SME-to-SME trade.

Labour’s proposed non-compete ban alarms employers

Labour’s plan to ban non-compete clauses has triggered strong warnings from employers and the Federation of Small Businesses. Around five million workers are affected, with small firms warning that loss of commercial protection could threaten their survival and deter investment.

Why it matters for SMEs selling on credit:
Higher staff turnover and weaker protection of confidential information increase operational risk and make cash flow harder to control.

Trade, geopolitics and global risk

Trump tariffs trigger global market sell-off

Global stock markets fell sharply after Donald Trump said there was “no going back” on plans linked to taking control of Greenland. He threatened eight European countries with tariffs of up to 10 percent, raising fears of a transatlantic trade war. Wall Street recorded its steepest daily fall since October, while Asian markets followed lower.

Why it matters for SMEs selling on credit:
Trade shocks often lead to cancelled orders, delayed payments and tighter credit conditions for SMEs exposed to international supply chains.

Tariffs could slash EU exports by up to 50 percent

Economists warn that combined tariffs could reduce European exports to the US by as much as 40 to 50 percent. Slower growth could push the European Central Bank toward rate cuts and increase pressure for further Bank of England easing later this year.

Why it matters for SMEs selling on credit:
Export-linked slowdown increases insolvency risk and weakens customer payment behaviour well before any benefit from lower interest rates appears.

Industry-specific stories

Hospitality margins under extreme pressure

The price of a pint in pubs has risen to more than double supermarket prices, yet landlords earn an average profit of just 12 pence per pint. JD Wetherspoon warned that higher-than-expected costs will push first-half and full-year profits below last year, despite like-for-like sales growth.

Why it matters for SMEs selling on credit:
Razor-thin margins increase the likelihood of delayed payments and supplier losses across hospitality supply chains.

Retail: DFS upgrades outlook while others struggle

DFS Furniture upgraded its first-half profit outlook to between £30 million and £31 million, driven by strong orders and improved margins. The update highlights a widening gap between resilient large brands and smaller retailers under pressure.

Why it matters for SMEs selling on credit:
Credit risk is becoming increasingly uneven, requiring closer monitoring of smaller or weaker retail customers.

Luxury London property sales slump

Sales of London homes priced above £5 million fell 11 percent in 2025, with total spending down 18 percent. Tax uncertainty, including a proposed mansion tax from 2028, has dampened buyer confidence, despite a modest pickup late in the year.

Why it matters for SMEs selling on credit:
Weakness at the top end of property feeds into construction, professional services and specialist suppliers.

Tax, policy and regulation

Chancellor reassures on tax stability at Davos

Rachel Reeves told business leaders that no further tax rises are anticipated before the Autumn, despite limited fiscal headroom. She stressed the importance of maintaining strong international alliances, while the Bank of England warned that geopolitical risks remain a threat to financial stability.

Why it matters for SMEs selling on credit:
Short-term tax stability aids planning, but thin public finances mean cash-flow resilience remains essential.

Government seeks to attract global talent

The Chancellor announced plans to refund visa fees and speed up sponsorship for skilled migrant workers. The pro-growth message sits alongside domestic pressure from rising business rates, particularly in hospitality.

Why it matters for SMEs selling on credit:
Labour access may improve for some firms, but higher fixed costs continue to strain cash flow.

Wealthy elites call for higher taxes

Hundreds of millionaires and billionaires urged governments to raise taxes on the super-rich, arguing extreme wealth undermines democracy. While not an immediate policy change, the move adds to long-term tax uncertainty.

Why it matters for SMEs selling on credit:
Long-term policy uncertainty reinforces the need for strong credit control rather than reliance on future fiscal clarity.

Market snapshot – global markets under pressure

Global financial markets saw a sharp deterioration in sentiment over the past 24 hours, driven primarily by escalating geopolitical risk after Donald Trump said there was “no going back” on plans linked to taking control of Greenland. His renewed threat to impose tariffs on European countries reignited fears of a transatlantic trade war, triggering the heaviest market sell-off in several months.

Equity markets

US markets suffered their worst session since April. The S&P 500 fell 2.1% to 6,796.86, wiping out all of its gains for 2026 to date. The Nasdaq dropped 2.4% to 22,954.32, its steepest daily decline since October, while the Dow Jones Industrial Average slid 1.8% to 48,488.59. Selling was broad-based, with technology and consumer-facing stocks hit hardest as investors reassessed growth and earnings risk.

European markets were more resilient but still ended lower. The FTSE 100 slipped 0.06% to 10,121.52, while Germany’s DAX fell 0.30% to 24,628.71 and France’s CAC 40 declined 0.04% to 8,059.00. Investors remain cautious about Europe’s exposure to US tariffs and the potential knock-on effect on exports, corporate profits and employment.

Asian markets followed Wall Street lower in early trading. Japan’s Nikkei 225 fell 0.41% to 52,774.64 amid continued volatility in long-dated Japanese government bonds. Chinese equities were a notable exception, with the Hang Seng rising 0.37% to 26,585.06 and the Shanghai Composite edging up 0.08% to 4,116.94, supported by optimism around Beijing’s push for technology self-reliance.

Currencies

The US dollar weakened broadly as investors questioned its traditional safe-haven status in the face of escalating political risk. The Bloomberg Dollar Spot Index fell around 0.3% to a two-week low.

Sterling traded with limited direction following the UK inflation release, briefly weakening before stabilising around $1.3440. Against the pound, the euro strengthened modestly, reflecting relative confidence that the European Central Bank may move toward rate cuts if growth slows. The Swiss franc outperformed as investors sought safety, while the Japanese yen lagged despite market stress, weighed down by concerns over Japan’s bond market.

Bonds and interest rates

Government bond markets were volatile. US Treasury yields rose sharply as investors reduced exposure to longer-dated debt, reflecting concerns that geopolitical tension and trade disruption could keep inflation and borrowing costs higher for longer. In the UK, attention remained focused on gilt market stability after Bank of England warnings about concentration risk among hedge funds and the potential for leveraged selling through the repo market.

Commodities

Commodity markets reflected a classic risk-off pattern. Gold surged to fresh record highs above $4,800 an ounce, supported by haven demand as investors sought protection from geopolitical and market uncertainty.

Oil prices fell despite a weaker dollar, with Brent crude dropping to around $63.73 a barrel and WTI crude to $59.32. Traders focused on the potential demand impact of slower global growth if trade tensions escalate.

Natural gas was the standout mover, surging more than 20% in a single session as forecasts of severe cold across large parts of North America drove expectations of sharply higher heating demand. Prices are now up more than 50% over the past two days, marking one of the most extreme short-term moves in decades.

Market mood

Overall sentiment has shifted decisively toward caution. Investors are increasingly focused on downside risks rather than upside opportunity, with geopolitical uncertainty, trade disruption and financial stability concerns outweighing hopes of interest-rate cuts. While markets remain well above historical averages, the past 24 hours underline how quickly confidence can evaporate.

For businesses, particularly those trading on credit, this kind of market environment typically precedes tighter lending conditions, weaker customer cash flow and slower payments — often well before any relief from lower interest rates arrives.

Insolvencies – England and Wales

Appointments of Administrators

• CAESR GROUP LTD
• CALDWELL GROUP HOLDINGS LIMITED
• FALLEN PLANET STUDIOS LIMITED
• MILLSTAR PLANT LIMITED
• MINERVA BRANDS LIMITED
• MOORES FURNITURE GROUP LIMITED

Appointments of Liquidators

• A&M GROUP HOLDINGS LTD
• BBBR PROPERTY LIMITED
• BYCEN HOLDINGS LIMITED
• CORPORATE PENSION AND TRUSTEE SERVICES LIMITED
• DORTON’S BACON SUPPLIES LIMITED
• GAMMA DELTA ADVISORY LIMITED
• GHPC LIMITED
• GRENDENE GLOBAL BRANDS LIMITED
• JONES BUILDING CONTRACTORS LIMITED
• LPS PLUMBING SOUTHEAST LTD
• MCLEAN HEALTHCARE LTD
• MDW CONSULTANTS LIMITED
• MIDRANGE DIRECT LIMITED
• PM-MASTERY LTD
• PORTNALL PROPERTIES LIMITED
• QUIRA LTD
• ROADCHEF (EMPLOYEE BENEFITS TRUSTEES) LIMITED
• SAAD CONSULTANT LTD
• SPIN7 LIMITED
• SWANBORNE LIMITED
• WILLIAMS & GRAY LIMITED

Winding-up Petitions

• BAIRD TAXIS LTD
• CHARCOAL LUTON LTD
• DENTAL DESIGN LABORATORY LTD
• ECOJET AIRLINES LIMITED
• NAGS HEAD ACCRINGTON LTD
• POLYSOL LIMITED
• SEBRING WORKS LTD
• TEAM LONDON 2020 LIMITED
• WE ARE PAWPRINT LIMITED

What CPA can do for you today

With job losses rising, insolvencies elevated and global volatility feeding into slower payments, protecting cash flow has never been more important. CPA supports members with credit monitoring, early intervention and professional overdue account recovery, helping businesses stay in control before problems escalate.

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, Economical collections.