Business news 21 August 2025
Inflation, rates, the budget deficit, property prices and taxes, pensions, AI, markets, insolvencies & more business news that we thought would interest our members.
James Salmon, Operations Director.
📈Inflation hits 3.8% in July
Office for National Statistics (ONS) data shows that inflation hit 3.8% in July, with this putting price growth at the highest level since January 2024. The figure from July is up from the 3.6% growth recorded in the year to June and far exceeds the Bank of England’s target of 2%. Economists polled by Bloomberg had forecast that inflation would hit 3.7% in the year to July. The Bank expects inflation to peak at 4% in September. Reflecting on the ONS data, Chancellor Rachel Reeves said the Government has “taken the decisions needed to stabilise the public finances, and we’re a long way from the double-digit inflation we saw under the previous government.” Shadow Chancellor Mel Stride commented: “Labour’s choices to tax jobs and ramp up borrowing are pushing up costs and stoking inflation.” Suren Thiru, economics director at ICAEW, said: “July’s outturn probably extinguishes hope of a September interest rate cut.” Thomas Pugh, chief economist at RSM UK, commented: “There is a genuine risk of some higher inflation becoming baked into the system.” Meanwhile, Eurostat data shows that eurozone inflation held at 2% in July. This means the gap between UK and eurozone inflation is now at its widest since September 2023.
🛒Retailers warn of rising prices
Big retailers, including Tesco, Sainsbury’s, John Lewis, and Boots, have warned that the Government’s tax plans could jeopardise living standards. They argue that proposed tax increases and rising business rates may lead to a 6% rise in food prices. The British Retail Consortium says that additional costs from National Insurance and minimum wage hikes have already added £7bn to retailers’ expenses. Helen Dickinson, CEO of the British Retail Consortium, has emphasised the need for stable prices and sustainable employment, urging the Chancellor to reduce the retail rates burden.
🏦Rate cuts unlikely as inflation climbs
The Bank of England is unlikely to cut interest rates any further in 2025 after inflation came in higher than economists had forecast. Markets had priced in a 50% chance of an interest rate cut being made in November but with inflation hitting 3.8% in the year to July, investors now believe it is more likely that interest rates will be held at 4%. Deutsche Bank’s Sanjary Raja suggested that a weakened jobs market and high inflation may mean the Bank’s Monetary Policy Committee opts to “look for more patience” as it decides on whether to alter interest rates. Meanwhile Hargreaves Lansdown’s Susannah Streeter said that another interest rate cut “is not likely in the next few months,” adding that it is “touch and go for December, with a reduction not fully priced in by financial markets until the spring.” Pantheon Macroeconomics’ Elliott Jordan-Doak commented: “The big picture remains that inflation is set to stay miles above target for the foreseeable future.”
💰The budget deficit shrinks
The UK’s budget deficit shrank more than expected in July as a deadline for paying self-assessed income tax boosted Treasury coffers, bringing temporary relief for Chancellor of the Exchequer Rachel Reeves. Spending exceeded revenue by £1.1 billion compared with £3.4 billion a year earlier, the Office for National Statistics said Thursday. It was the first year-on-year decline in borrowing since November and the lowest July borrowing for three years
📈Markets
📈Yesterday, the FTSE 100 closed up 1.08% at 9288.14 and the Euro Stoxx 50 closed down 0.2% at 5472.32. The FTSE stood out with investors flocking in. 73 out of 100 shares rose while only 25 fell, indicating widespread buying interest across the index. Unilever was the biggest contributor to the index gain, rising 3.3%. It was the biggest rise for the index since July 10th.
Overnight in the US the S&P 500 fell 0.24% to 6395.78 and the Composite NASDAQ fell 0.67% to 21172.86. Technology and consumer-discretionary sectors led the declines as traders rotated out of technology high-flyers into less risky sectors following the Fed minutes. The Fed minutes revealed officials saw inflation risks outweighing labor market concerns.
OpenAI’s CEO Sam Altman warned of a potential AI bubble, comparing current market conditions to the 1990s dotcom boom, while maintaining AI remains the most important recent development. This warning contributed to tech stock declines.
💱This morning on currencies, the pound is currently worth $1.3468 and €1.1562 .
On Commodities, 🛢️Oil (Brent) is at $67.55 & 💰Gold is at $3330.
📈On the stock markets, the FTSE 100 is currently up 0.06% at 9293.47 and the Eurostoxx 50 is down 0.14% at 5465.05.
💻HMRC cracks down on online sellers
HMRC has begun accessing online selling data, raising concerns among UK residents using platforms like eBay, Etsy and Vinted. Those completing over 30 transactions annually or exceeding £1,700 in sales must comply with tax regulations. Lee Murphy, managing director of The Accountancy Partnership, said: “HMRC uses data provided by the platform to match against each individual’s tax records.” Sellers earning more than £1,000 annually are advised to notify HMRC to avoid penalties.
🏠House Prices
UK House Prices grew 3.7% compared to last year, in June, according to the ONS official house price data. This annual growth rate is up from 2.7% in May, revised down from 3.9% previously. In seasonally adjusted terms, prices rose by 0.9% month-to-month in June, up from a gain of 0.6% in May, with the successive bounces following the disruption to the market caused by the return of normal stamp duty rates in April.
🏠Property tax plans could hurt the market, experts warn
Economists are warning that a proposed mansion tax on high-value properties could harm the housing market. Paul Johnson, former director of the Institute for Fiscal Studies, says that the tax could “gum up the housing market” and lead to a loss of revenue for the Treasury. The plan reportedly being considered by the Chancellor would tax gains on properties over £1.5m, impacting around 120,000 homeowners. Critics argue this could deter sales and exacerbate the exodus of wealthy individuals from the UK. Mr Johnson argues that there is a need for a comprehensive overhaul of housing taxation rather than piecemeal changes. Meanwhile, plans for a national property tax on the sale of homes worth more than £500,000 have also drawn criticism. James Browne, senior economic policy adviser at the Tony Blair Institute, said: “While replacing stamp duty with a new annual property levy on homes worth more than £500,000 is economically sensible, it would be politically challenging.”
🏠Levy would hit one in ten London homes
One in ten houses in London would face extra levies in the Government were to introduce a “mansion tax” on the sale of houses above £1.5m, according to data from Rightmove. Analysis shows that 10.9% of houses in London are worth over £1.9m, compared to just 1.6% of homes outside the capital. The levy is reportedly being considered by the Chancellor as she looks to fill a £40bn gap in public finances. It would introduce capital gains tax for primary residences, with higher-rate taxpayers paying 24% of the value of any gain they make from an increase in the value of the property. Basic rate taxpayers would have to pay 18%.
🏗️Homebuilders stalling
London builders are taking longer to start home constructions after receiving permits, as a slump in demand threatens to derail the government’s plan to build 1.5 million homes. The median time taken for a housing project to kick off after getting full planning permission rose to a record 16.3 weeks last year, according to an analysis of about 700 sites of at least 100 private homes in London by broker Knight Frank. That’s 31% longer than in 2023.
⚖️Pension lump sum cut could raise £2bn
Chancellor Rachel Reeves is considering reducing the tax-free pension lump sum, a move that could pull in more than £2bn a year for the Treasury. This proposal is part of a broader strategy to address a £50bn public finance shortfall. Currently, pensioners can withdraw 25% of their pot tax-free, capped at £268,000. John Havard, a consultant at Blick Rothenberg, said that while Ms Reeves “has taken all her easy choices for increasing tax revenue off the table by sticking with her manifesto promises … one option that remains open to her is targeting pension tax reliefs.” Andrew Wishart, an economist at Berenberg Bank, comments: “If she were to go ahead with a raid on pensions, Ms Reeves could also make a argument to slashing the tax-free allowance.”
⚖️Judge slams AI over fictitious tribunal cases
A taxpayer has faced criticism from Judge Rupert Jones for using an AI chatbot in his tax case against HMRC. Marc Gunnarsson claimed £12,918 in self-employment support during the pandemic but was later deemed ineligible. The AI generated fictitious tribunal cases, leading to the judge’s warning about the unreliability of AI in legal matters. Judge Jones said Mr Gunnarsson was not “highly culpable” because he was not legally trained and “may not have understood that the information and submissions presented were not simply unreliable but fictitious.”
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➕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:
- 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.
- Our monitoring service will alert you to any significant changes in the status of those customers.
- ️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.