Business news 27 October 2025

Confidence is creeping back into the UK economy as key indicators turn positive and business sentiment improves. But with Chancellor Rachel Reeves under intense pressure over potential tax rises, small firms remain on edge. A sharp rise in public pension liabilities and wage costs adds to the challenge, while global trade tensions ease — at least for now.

James Salmon, Operations Director.

🏦 Economic & Fiscal

UK economy shows signs of recovery
The S&P Global composite PMI rose to 51.1 in October, suggesting the UK may be turning a corner. Manufacturing and services both strengthened, with analysts noting a potential rate cut as early as December.

Former BoE governor calls for tax reforms
Mervyn King criticised the Government’s “piecemeal” approach to taxation, urging a full strategic review. He said a mansion tax would “add to an already messy and complex system”.

Public sector pensions bill to skyrocket
Persistent inflation is driving the pensions bill to £59bn next year, with total unfunded liabilities of £5.8tn. Former BoE economist Neil Record warned taxpayers face a £52bn cost over two decades.

Graduate loan repayments hit record low
Only 44,527 graduates from Russell Group universities began repaying loans in 2024 — a 20% drop — reflecting weak wage growth and a tougher graduate jobs market.

Manufacturers ramp up investment plans
Make UK reports 37% of manufacturers have boosted investment in machinery since the new industrial strategy launch, but warns tax relief reforms are needed to sustain confidence.

Workers’ rights reforms threaten jobs market
The Resolution Foundation says Labour’s Employment Rights Bill could trigger a tribunal backlog and curb hiring. The Government insists reforms will boost productivity and resilience.

Chancellor launches scale-up unit for fintechs
A new FCA–PRA Scale-up Unit aims to help fast-growing financial firms navigate regulation and boost high-skilled job creation across the UK.

Global outlook improves
S&P’s Chris Williamson says “September was a low point from which business conditions are starting to improve.” Optimism is bolstered by new US–China trade talks and surging Asian markets.

💷 Tax & Treasury

Reeves warned over breaking manifesto tax pledge
Cabinet ministers and economists caution against income tax rises to plug a £30bn Budget hole, warning it could hit growth and confidence.

Chancellor mulls mansion tax
Rachel Reeves is weighing a levy on homes over £2m, potentially raising £3bn. Critics say it would “punish aspiration” and fail to reflect true wealth.

NatWest warns against tax hikes
CEO Paul Thwaite urged balance, warning that overtaxing banks could undermine lending and economic stability.

Tax hike could drive GPs away
Accountancy firm Ramsay Brown warned ending NI exemptions for partnerships could push many GPs abroad or into early retirement.

Shein and Temu face tax crackdown
The Treasury will close a loophole allowing duty-free imports under £135 — a move expected to reclaim £600m and level the playing field for UK retailers.

🏢 Business & Regulation

Labour moves to empower unions
The Employment Rights Bill may give trade unions workplace access rights, with fines up to £75,000 for refusal — a move business groups call “heavy-handed”.

Directors banned in insolvency scam
Two directors received seven-year bans for running a £67m debt-avoidance scheme. The Insolvency Service warned such abuses damage market fairness.

🛍️ Retail & Employment

Reeves set to boost minimum wage
The National Living Wage could rise to £12.70, helping 1m workers but adding costs for employers already squeezed by NI and business rates.

Low Pay Commission calls for increase
The Commission recommends a 4.1% rise to £12.71, noting it exceeds inflation and will pressure margins and prices across retail and hospitality.

Tory leader’s plan to revive high streets
Kemi Badenoch proposes scrapping business rates for small shops and cutting energy costs, blaming Labour’s “job tax” for high street closures.

UK retail sales edged up in September
Sales rose 0.5%, defying expectations. Strong online and tech demand offset weak high street footfall, marking four months of growth.

Retailers hit out at Budget timing
Independent retailers warn that a late-November Budget disrupts Christmas trading. BIRA’s Andrew Goodacre said uncertainty on rates is “killing confidence”.

🌍 International Snapshot

US–China trade thaw
Treasury Secretary Scott Bessent says both nations have agreed a “positive framework” for talks. China may delay export bans on rare earths and buy more US soybeans.

Trump imposes tariffs on Canada
Donald Trump announced a 10% tariff after Ontario ran a pro–free trade advert featuring Ronald Reagan audio, calling it “a hostile act”.

Japan’s Nikkei hits record high
The Nikkei 225 reached 50,000 as new PM Takaichi Sanae’s fiscal stimulus lifted optimism. The Topix also surged 1.6%.

📈 Market Snapshot

Global markets ended the week on a high:

  • FTSE 100: +0.66% on Friday (UK outperformed peers)
  • Stoxx Europe 600: +0.20%
  • DAX (Germany): +0.17%
  • US S&P 500 & Dow: both hit new records after mild inflation data (CPI +3.0%)
  • Copper: near all-time high on trade optimism
  • Oil: steady
  • Gold: slightly down
  • Bitcoin: 2½-week high
  • MSCI Asia-Pacific: +1.5% (fresh record)

Market Summary:

The positive market sentiment appears driven by optimism around potential US-China trade talks, with Asian markets also performing strongly.

The overall theme since Friday has been risk-on sentiment driven by encouraging inflation data from the US and growing optimism about trade relations, benefiting equity markets across the UK, Europe, and North America.

💡 Today’s CPA Insight

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