With markets thinly traded in the post-Christmas period, attention has turned back to the underlying pressures facing UK businesses. A mix of slowing hiring, weaker retail demand, higher taxes and regulatory change is continuing to weigh on confidence — particularly for smaller firms operating on tight margins and extended payment terms.

James Salmon, Operations Director.

SME & Economy Focus

UK economic outlook: cautious optimism, weak foundations

Britain is heading into 2026 with modest growth prospects and persistent structural challenges. Global growth is slowing, productivity remains weak and business costs are rising, even as inflation eases and interest rate cuts come into view.
Why it matters: Slower growth and higher costs increase late-payment risk, even if borrowing costs fall.

Reeves breaks modern record for tax rises

Rachel Reeves has overseen £75.1bn a year in tax rises within 18 months — the largest increase by any modern Chancellor, according to the OBR. Two of the ten biggest tax-raising Budgets on record sit under her watch.
Why it matters: Higher taxes reduce cash-flow headroom, increasing the risk of delayed supplier payments.

Tax policies blamed for stalling UK growth

The UK is forecast to fall from 19th to 21st globally for GDP per head by 2026, with think-tanks pointing to tax and spending policies weighing on investment and productivity.
Why it matters: Falling living standards tend to feed through into slower customer payments.

Employment & Labour Market

Job market weakens as hiring slows

New job adverts have fallen 12.3% since the Chancellor’s first Budget, according to Indeed. Unemployment has reached 5.1%, with redundancies rising as firms face higher National Insurance, wage costs and new employment rules.
Why it matters: Rising unemployment often precedes payment delays across supply chains.

Most sole traders unprepared for Making Tax Digital

Only 4% of sole traders feel ready for MTD reforms coming in April 2026, despite 2.9m people being affected. Awareness remains low.
Why it matters: Poor tax readiness increases the risk of penalties and cash-flow shocks.

Workers’ rights reforms face scrutiny

The TUC has welcomed the Employment Rights Act but warned against further dilution, highlighting ongoing tension between employment protection and business flexibility.
Why it matters: Higher compliance costs can tighten cash flow for labour-intensive firms.

Retail, Consumer & High Street

Boxing Day sales disappoint

Footfall fell on high streets and in shopping centres, with shoppers spending an estimated £3.6bn — down £1bn year-on-year. Retail parks were the exception, seeing increased visits.
Why it matters: Weaker festive trading often leads to slower January payments.

Hedge funds bet against retailers

Investors are increasing short positions in non-food retailers amid subdued consumer confidence and disappointing Christmas expectations.
Why it matters: Market pessimism can precede profit warnings and restructurings.

Pub sector splits in two

Large pub chains reported strong sales in 2025, while independent pubs continue to close under the weight of energy, wage and rates pressures.
Why it matters: Smaller operators are at higher risk of sudden payment failure.

Tax, Property & Regulation

HMRC warns over January Self Assessment deadline

Taxpayers face automatic penalties from 31 January if returns are late, with fines escalating quickly after three and six months.
Why it matters: January tax bills often coincide with late payments to suppliers.

HMRC offers rewards for reporting tax evasion

Whistleblowers can receive up to 30% of tax recovered on cases exceeding £1.5m.
Why it matters: Enforcement activity increases disruption risk for non-compliant firms.

Second-home owners face tax clampdown

The Treasury plans to close loopholes allowing holiday lets to avoid council tax, with changes expected from 2027.
Why it matters: Higher property taxes squeeze cash flow for small landlords and service suppliers.

Mass company registrations raise red flags

Tens of thousands of companies are registered at single addresses, prompting fraud and money-laundering concerns and increased strike-offs.
Why it matters: Shared addresses should trigger enhanced credit checks.

Energy & Industry

Windfall tax blamed for collapse in North Sea investment

No new North Sea wells were drilled this year for the first time in over 50 years, with the 78% headline tax rate blamed for falling investment and employment.
Why it matters: Regional supply chains face higher insolvency risk.

Defence investment gains support

Financial services leaders increasingly see defence spending as a balance-sheet issue rather than a policy choice.
Why it matters: Defence supply chains may benefit — but rapid growth still carries credit risk.

Markets Snapshot

Equity markets were largely flat in holiday-thin trading. The FTSE 100 edged higher, European markets were subdued, and US indices held near record levels after last week’s gains.

The real action was in commodities. Silver surged above $80 an ounce before pulling back as traders took profits, while gold briefly touched record highs above $4,500. Industrial metals remained strong, supported by a weaker US dollar and long-term demand from energy and technology investment. Oil prices recovered modestly, with Brent trading just above $61 a barrel.

Sterling was steady, trading around $1.35 against the dollar and just under €1.15 against the euro.

Insolvency Appointments

Appointments of Administrators

  • Apache Six Ltd
  • Circle Express Limited
  • Enablelink Limited
  • Five Oaks Green Holdings Limited
  • MT Transport (UK) Limited
  • Reflex Vehicle Hire Limited

Appointments of Liquidators

  • 05945946 Limited
  • 14028947 Ltd
  • Belmont Green Funding 1 Limited
  • Belmont Green Funding 3 Limited
  • Bowcliffe (Leeds) Limited
  • Copperleaf Technologies UK Limited
  • DV4 Residual Limited
  • Eckford Power Consulting Limited
  • Egerton-Dowling Limited
  • Famalamb Limited
  • FKL Trading Ltd
  • GlaxoSmithKline US Trading Limited
  • Interagro (UK) Limited
  • Knocknaloman Ltd
  • Laurence Property Limited
  • Mobility Trader UK Ltd
  • Oakbrook Capital (I) PLC
  • Opus 102 Limited
  • Opus Trust Group Limited
  • Opus Trust Investments Limited
  • Power Sustainable Infrastructure UK Credit Manager Ltd
  • RCL Air Conditioning Contracts Limited
  • Remlive Limited
  • Revival Limited
  • Smartpath Digital Limited
  • The Johnners Trust
  • The Market Place (Leeds)
  • Tower Bridge Funding 2021-2 PLC
  • Tower Bridge Funding 2023-1 PLC
  • Tower Bridge Funding 2023-2 PLC

CPA Membership

Late December and January are peak risk periods for late payment. If you’re extending credit into the New Year, now is the time to review limits, refresh monitoring and act early on overdue accounts. CPA members get access to credit checking, monitoring and recovery support designed to protect cash flow before problems escalate.

Just call Peter Uwins, CPA’s National Sales Manager, on️ 020 8846 0000 on Monday 5th January when we open (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.