Business news 4 February 2026

UK businesses are facing a difficult mix of slowing growth, rising costs and ongoing uncertainty around tax, interest rates and labour supply. New warnings from leading economic forecasters suggest higher taxes and tighter public finances could weigh on activity over the medium term, while fresh insolvency data highlights continued pressure across multiple sectors. Markets remain volatile, with sharp moves in technology stocks, commodities and cryptocurrencies reflecting nervous investor sentiment.

James Salmon, Operations Director.

Economic & Policy News

Tax rises threaten economic growth

The National Institute of Economic and Social Research has warned that planned tax increases could slow UK economic growth and hit job prospects for low-paid and younger workers. NIESR forecasts GDP growth of 1.4% this year and 1.3% in 2027, but expects a gradual slowdown from 2027/28 as frozen tax thresholds and higher levies on dividends and rental income take effect. Rising employment costs, driven by increases in the minimum wage and employer National Insurance contributions, were also flagged as a growing challenge for businesses.

Why it matters: Higher taxes and rising wage costs can squeeze SME margins and cashflow, increasing the risk of late payments as both businesses and customers come under pressure.

Chancellor ‘out of headroom’

NIESR has warned that the Chancellor’s £26bn package of tax rises has failed to create sufficient fiscal headroom. The think-tank says public finances remain extremely tight, leaving little room to respond to economic shocks, while unemployment could rise to nearly 2 million and growth slow to around 1.3% next year. Critics have warned that higher taxes, spending and regulation risk undermining growth further.

Why it matters: Tight public finances and weaker growth increase the risk of delayed payments and bad debts, making strong credit control more important for SMEs.

Net zero migration would cut UK output, warns NIESR

Reducing net migration to zero would cut UK economic output by 3.6% by 2040 and increase public borrowing by £37bn, according to NIESR. The think-tank said the policy would be fiscally unsustainable without major tax rises, even if it temporarily boosted real wages. Trend growth would also be around 0.2 percentage points lower due to a smaller workforce and slower employment growth.

Why it matters: A smaller workforce and higher taxes would raise operating costs and payment risk for SMEs, particularly those already trading on tight margins.

Tax & Government

One million miss tax return deadline

Around one million people failed to submit their self-assessment tax returns by the 31 January deadline, according to HMRC. Anyone who missed the cut-off now faces an automatic £100 penalty, with further daily fines, interest and charges applying if delays continue. Tax advisers warn that recent changes to capital gains tax rates may also have led some taxpayers to underreport without realising.

Why it matters: Unexpected tax penalties can strain finances and increase the risk of missed payments to suppliers, affecting cashflow across SME supply chains.

Monetary Policy & Interest Rates

Bank of England urged to hold rates

Most economists on City AM’s Shadow Monetary Policy Committee believe the Bank of England should keep interest rates on hold at 3.75%. They argue inflation remains persistent and that the effects of recent rate cuts are only just beginning to feed through to the economy. A minority favoured cutting rates sooner as inflation pressures ease.

Why it matters: Higher-for-longer interest rates keep borrowing and overdraft costs elevated, adding pressure to SME cashflow.

Bank of England rate cuts expected later this year

Economists at Goldman Sachs expect the Bank of England to leave rates unchanged this week but forecast cuts in March, June and September, taking the Bank Rate to 3.0%. They argue weakening labour market data will push policymakers to ease later in the year. Money markets are more cautious, currently pricing in a single cut by July.

Why it matters: Potential rate cuts could ease borrowing costs, but uncertainty over timing makes cashflow planning harder for SMEs offering credit terms.

Consumer & Retail

UK grocery sales rise as shoppers trade down

UK grocery sales rose 3.6% year-on-year to £37.69bn in the 12 weeks to 25 January, according to data from Wordpanel by Numerator. Take-home sales were also higher, but spending on own-label products reached a record level as households continued to manage tight budgets. The shift highlights ongoing consumer caution despite easing food inflation.

Why it matters: Trading down can pressure supplier margins and increase the risk of slower payments to SMEs in retail and food supply chains.

Markets & Digital Assets

Bitcoin sell-off deepens as crypto volatility continues

Cryptocurrency markets remain volatile, with Bitcoin trading around $76,100 after recovering from sharper losses earlier in the week. Nearly $470bn has been wiped off the crypto market since late January, with prices hit by reports of large-scale selling by major holders. Analysts say sharp swings are likely to continue as sentiment remains fragile.

Why it matters: Crypto losses can reduce liquidity for exposed businesses and individuals, increasing cashflow risk and the likelihood of delayed payments.

Market Snapshot

Global markets saw sharp sector rotation overnight as fears around artificial intelligence disruption triggered a heavy sell-off in US technology stocks, while energy and commodities rebounded on renewed geopolitical tensions.

In the UK and Europe, markets were mixed during Tuesday’s cash session. The STOXX 600 edged slightly higher to 617.91, briefly hitting a fresh all-time high before giving back most gains. The FTSE 100 slipped 0.3% to 10,314.59, ending a three-day winning streak but still sitting close to record levels. Mining stocks were among the strongest performers as precious metals rebounded sharply, while professional publishers and media firms fell heavily after concerns that new AI tools could disrupt their business models.

US markets closed lower overnight, led by a sharp technology sell-off. The S&P 500 fell 0.8% to 6,917.81 and the Nasdaq 100 dropped 1.6%, marking the worst day for tech stocks in several weeks. Software, data and consultancy firms were hit particularly hard following the release of a new AI-powered legal automation tool by Anthropic, which raised fears about pricing pressure and lost revenues across the sector. Despite the headline declines, market breadth was more resilient, with small-cap stocks and equal-weight indices outperforming. Energy stocks rose strongly as Middle East tensions pushed oil prices higher.

Asian markets proved more resilient overnight. Chinese shares led gains, with the Shanghai Composite rising 0.8%, supported by industrial stocks and continued buying from mainland investors into Hong Kong markets. South Korea’s Kospi extended its rally to fresh record highs despite weakness in major chipmakers, while Japanese markets were mixed as solid earnings offset softer technology sentiment.

Currency markets were relatively stable. Sterling held near a five-month high against the euro, while the yen continued to weaken against the US dollar ahead of Japan’s upcoming election. The pound was little changed against the dollar, though options markets show traders have turned more cautious on sterling in recent days.

Commodities were a key focus. Gold staged one of its strongest daily rebounds since 2008, climbing back above $5,000 an ounce after last week’s sharp pullback, while silver surged around 8%. Oil prices also moved higher, with Brent trading near $67 a barrel and WTI above $63, as geopolitical risk premiums returned following the Iranian drone incident in the Arabian Sea.

Central banks remained in focus. Australia became the first major economy to raise interest rates in 2026, citing persistent inflation pressures, while US Federal Reserve officials continued to signal that rate cuts are still expected later this year.

Current levels (as of 9:33am GMT):

  • FTSE 100: 10,366.97
  • STOXX 600: 616.21
  • DAX: 24,629.38
  • CAC 40: 8,212.25
  • S&P 500: 6,917.81 (last close)

Current exchange rates versus GBP:

  • USD/GBP: 0.7293 (USD down 0.11% on the day)
  • EUR/GBP: 0.8621 (EUR up 0.08%)
  • JPY/GBP: 0.4659 (JPY up 0.58%)

Insolvency Notices

Petitions to wind up (Companies)

  • BLACKSTONE INSURANCE BROKERS LIMITED
  • BOX CLEVER ENERGY LIMITED
  • CAFE SIA LIMITED
  • DLM DEVCO LIMITED
  • DREAMSTONES LIMITED
  • LMND GROUP LTD
  • P & R FINISHING LIMITED
  • THE BIRKDALE PARTNERSHIP LIMITED
  • THE TINNITUS CLINIC LIMITED
  • TOPGEAR MOTORSPORTS LTD

Appointment of Administrators

  • AB SITE SOLUTIONS LTD
  • ALLEN REID LIMITED
  • CHECKFER LTD
  • COMPANY FASTENERS LIMITED
  • DARLINGTON HOUSE HOTELS LIMITED
  • HILLIN HOLDINGS LIMITED
  • JOLLIFFE-HEPBURN LIMITED
  • LNC PROPERTY DEVELOPMENT LIMITED
  • MERRIE GARDENS LIMITED
  • MK ASSETS LTD
  • ONESPACE GROUP LTD
  • SENAPT LIMITED
  • TUCO DEVELOPMENTS LIMITED
  • ULTIMATE ELECTRICAL, SECURITY & SMARTHOME LTD
  • WESTOVER PARK ESTATE LIMITED

Appointment of Liquidators

  • YELL FINANCE (USD) LIMITED
  • 42A MORNINGTON TERRACE LIMITED
  • ANDERSON MEDICAL AND TECHNICAL SERVICES LIMITED
  • ANGEL APPLICATIONS LIMITED
  • ARK HEALTH & BEAUTY (RETAIL) LIMITED
  • ARTABILITY LTD
  • BANDAI UK LIMITED
  • BECSAM LIMITED
  • BUD FUNDING LIMITED
  • CASTLEBELL LIMITED
  • COCKTAILS UN LIMITED
  • CONKAV LIMITED
  • EDINBURGH WEALTH MANAGEMENT LIMITED
  • E17 ESTATES LIMITED
  • ETHERIDGE & DAWES LIMITED
  • FORWILLIAM LTD
  • FROM AFAR LIMITED
  • HALL DONOVAN LTD
  • HEADFORWARDS GROUP LIMITED
  • HIGHFORM CONSULTING LTD
  • J.R. SCOTT (PLASTIC SURGERY) LIMITED
  • KGB FACILITY SERVICES LTD
  • MICHAEL HENDERSON & CO LIMITED
  • MFW HOLDINGS LIMITED
  • MULTIDIESELS LTD
  • NATIONWIDE PEOPLE LIMITED
  • NORTHWOOD ENGINEERING LIMITED
  • PARAGON ELECTRONICS CLOCKS AND ASSEMBLY LIMITED
  • PDT COMMERCIAL LTD
  • PQLI ASSOCIATES LTD
  • RIXON MATTHEWS APPLEYARD (FINANCIAL SERVICES) LIMITED
  • SAND MARTINS GOLF CLUB HOLDINGS LIMITED
  • SHARMARG LIMITED
  • STANFORD’S JEWELLERS LTD
  • STRATEGIC SOFTWARE PARTNERS LIMITED
  • THE DARLINGTON TEA COMPANY LIMITED
  • TTL CHILTERN PROPERTY LIMITED
  • WEST FOUR INVESTMENTS LIMITED
  • WORD MONSTER AUSTRALIA LIMITED

What CPA can do for you when costs rise and cash gets tighter

When taxes, wages and borrowing costs are all pulling in the same direction, late payment risk rises quickly. CPA helps you stay in control of cashflow with CreditCare reports, ongoing monitoring, and a professional overdue account recovery process that protects your customer relationships. If you have invoices that are starting to drift, act early and keep the pressure off your working capital.

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