Business news 5 February 2026

The UK economy has started 2026 on a more positive footing, with fresh survey data pointing to improving activity in the services sector and rising private-sector confidence. However, beneath the headline growth figures, businesses continue to face rising employment costs, regulatory uncertainty and weakening labour market conditions. Globally, markets remain volatile as investors reassess technology valuations, artificial intelligence spending and economic resilience, while insolvency levels underline the importance of tight credit control and early action on overdue invoices.

James Salmon, Operations Director.

Economic & SME-Focused Stories

UK economy shows early signs of growth at start of 2026

The UK economy began the year with renewed momentum, according to S&P Global’s composite PMI, which rose to 53.7 in January from 51.4 in December. The expansion was driven by a strong rebound in the services sector as both businesses and households increased spending following the November Budget. S&P Global’s Tim Moore described the data as an encouraging start to 2026, with activity levels pointing to modest but sustained growth.

However, the improvement comes with caveats. Redundancies continued to rise, with many firms linking job cuts to higher employer National Insurance contributions and ongoing cost pressures. While confidence across the private sector has climbed to its highest level since September 2024, businesses remain cautious about hiring and investment.

Why it matters: Improving demand can support turnover and cash inflows, but rising employment costs mean SMEs must manage cashflow carefully as growth remains uneven.

Bank of England expected to hold interest rates at 3.75%

The Bank of England is widely expected to keep interest rates unchanged at 3.75% at its latest policy meeting. Most economists believe the Monetary Policy Committee will opt for caution, balancing easing inflation against fragile economic growth. Analysts at AJ Bell and EY Item Club have both described a hold as almost certain, reflecting the Bank’s reluctance to move too quickly in either direction.

Oxford Economics noted that policymakers remain caught between supporting growth and preventing inflation from becoming entrenched. With signs of economic recovery emerging alongside a softening labour market, the MPC’s task remains finely balanced.

Why it matters: Higher-for-longer rates keep borrowing and overdraft costs elevated for SMEs and can slow customer payments, increasing late-payment risk.

UK services sector grows at fastest pace since August, but job losses persist

UK services activity expanded at its fastest pace since last August, with the services PMI rising to 54.0 in January from 51.4 in December. This marked the ninth consecutive month of expansion and pointed to stronger workloads across much of the economy.

Despite the growth, the survey showed continued job losses, as firms remained cautious on hiring amid cost pressures and uncertainty. Businesses appear to be prioritising productivity and efficiency over expanding headcount, even as demand improves.

Why it matters: Stronger activity supports revenue opportunities, but ongoing job cuts may restrain consumer spending and heighten payment risk for SMEs.

Job market downturn stretches into longest slump since financial crisis

The UK job market is experiencing its longest sustained downturn since the financial crisis, with private-sector job losses continuing to accelerate. S&P Global’s PMI data shows employment in the services sector has fallen every month since October 2024, reflecting squeezed margins and fragile demand.

The National Institute of Economic and Social Research expects unemployment to rise further, forecasting a peak of 5.5% later this year, the highest level since 2015. Analysts warn that hiring caution is likely to persist well into 2026.

Why it matters: Weaker job security can dampen consumer confidence and spending, increasing the risk of delayed payments for SMEs trading on credit.

Political and regulatory uncertainty narrows workforce planning horizons

Political change and regulatory uncertainty are making long-term workforce planning increasingly difficult for UK businesses. A survey by law firm Lewis Silkin found nearly 80% of employers are unable to plan more than 12 months ahead. Rising compliance costs linked to the Employment Rights Bill, alongside higher employer National Insurance and a 4.1% increase in the national living wage, are forcing firms to rethink staffing strategies.

Employers reported growing caution around hiring and retention, with many shifting to shorter-term planning as cost pressures intensify.

Why it matters: Shorter planning horizons and higher fixed costs increase financial strain on SMEs and raise the importance of predictable cashflow and prompt payment.

Graduate tax floated as student loan system comes under pressure

The UK’s student loan system could face reform after former Office for Students director John Blake warned it is becoming unsustainable. He suggested a graduate tax could replace loans, citing widespread concern among graduates over repayments exceeding 9% of income. Martin Lewis has also urged the Chancellor to review frozen repayment thresholds.

Any reform would represent a major shift in how higher education is funded and could influence long-term employment costs and expectations.

Corporate & Industry Stories

UK M&A slows by volume but deal values rise as confidence steadies

UK merger and acquisition activity fell by volume in 2025, but total deal values rose 12% to £131bn, according to PwC. Fewer but larger deals dominated the market, supported by stabilising interest rates and easing inflation.

PwC expects deal activity to improve further this year as firms rebuild confidence and pursue strategic opportunities across multiple sectors.

Construction sector still contracting despite modest improvement

UK construction activity remained in contraction in January, with the S&P Global Construction PMI rising to 46.4 from December’s very weak 40.1. While the improvement exceeded expectations, activity levels remain subdued.

Higher borrowing costs and cautious investment continue to weigh on the sector, leaving many firms operating defensively.

Why it matters: Construction businesses often trade on long payment terms, increasing the risk of delayed payments and insolvencies across supply chains.

BT limits broadband losses as fibre investment gains traction

BT Group shed fewer broadband customers than expected in its latest quarter, with Openreach losing around 210,000 customers versus forecasts of 239,000. Strong demand for higher-value fibre services helped offset losses.

However, intense competition from challenger networks and mobile rivals continues to pressure pricing and margins.

Global Markets & Technology

Global markets volatile as AI fears drive tech sell-off

Global markets remain unsettled as investors rotate away from technology stocks amid growing concern over artificial intelligence spending and disruption. European markets steadied on Wednesday, with the FTSE 100 rising 0.9% while the STOXX 600 finished flat. Defensive and cyclical sectors outperformed as technology stocks continued to slide.

US markets were mixed. The S&P 500 fell 0.5%, the Nasdaq 100 dropped 1.5%, while the Dow Jones rose 0.5%. Despite headline losses, most S&P 500 stocks gained, showing the sell-off is concentrated in technology.

Asian markets were mixed overnight, with Japan’s Nikkei down 0.8% and Hong Kong’s Hang Seng flat.

Alphabet results highlight scale of AI investment shift

Alphabet beat fourth-quarter expectations, with revenues rising 18% year on year to $114bn, driven by strong advertising and cloud performance. However, investor sentiment cooled after the company announced plans to invest around $185bn in AI infrastructure this year, more than double its 2025 spending.

Markets remain wary of whether heavy AI investment will generate near-term returns, despite strong cashflows.

Tech stocks slide again as chip demand weakens

Technology shares fell for a second day as concerns deepened around AI disruption and slowing chip demand. Advanced Micro Devices shares plunged 17% after warning of weaker demand, adding to pressure across the semiconductor sector.

The sell-off reflects growing caution around capital-intensive technology spending.

Bitcoin slump deepens as crypto rout accelerates

Bitcoin fell close to $72,000, extending a decline of more than 40% from its October peak. The sell-off mirrors broader risk aversion across markets, with prediction markets pointing to further downside.

Crypto remains highly sensitive to shifts in liquidity and investor confidence.

Market Snapshot

Global markets remain unsettled as investors rotate away from technology stocks amid growing concern over the pace, cost and consequences of artificial intelligence investment. In Europe, shares steadied on Wednesday despite continued tech weakness. The STOXX 600 finished flat, while the FTSE 100 rose 0.9%, helped by strength in economically sensitive sectors such as chemicals and autos. France’s CAC 40 gained 1.0%, but Germany’s DAX fell 0.7%. Pharmaceutical and banking stocks outperformed, while software and advertising firms extended losses.

US markets were volatile. The S&P 500 ended the session down 0.5%, while the Nasdaq 100 fell 1.5% as selling pressure in software and chipmakers continued. The Dow Jones bucked the trend, rising 0.5%, supported by rotation into more defensive names. Despite the headline declines, most S&P 500 stocks actually rose on the day, highlighting how concentrated the sell-off has been in technology. Apple outperformed, reinforcing its status as a perceived “safe haven” within tech.

Asian markets were mixed overnight. Japan’s Nikkei fell 0.8%, while Hong Kong’s Hang Seng finished flat. Broader Asian indices edged lower, although select stocks continued to hit new highs, reflecting uneven regional momentum rather than a broad-based sell-off.

Currency markets saw the dollar strengthen further. Sterling fell to its lowest level since late January, with GBP/USD dropping to around 1.36, while the euro was little changed near 1.18 against the dollar. The pound also weakened against the euro, reflecting renewed political uncertainty despite improving economic data.

Commodities were highly volatile. Oil prices fell on oversupply concerns, with Brent trading around $68.50 and WTI near $64. Precious metals saw sharp moves, with silver collapsing more than 15% at one point amid liquidation selling, while gold fell close to 2%. Copper dropped below $13,000 as inventories rose and demand from China softened.

Markets are now focused on central bank decisions today, with both the European Central Bank and the Bank of England expected to hold interest rates steady. While recent data such as Germany’s strong factory orders offer some encouragement, investors remain cautious amid slowing labour markets, AI-related uncertainty and rising cost pressures.

Insolvencies, Administrations & Winding-Up Notices

Appointments of Administrators

  • ALL THINGS GREEK LIMITED
  • CENTURY CAPITAL PARTNERS LIMITED
  • CHATSWORTH ROW LIMITED
  • GUYS EATING ESTABLISHMENTS LIMITED
  • HARPERS & HURLINGHAM LIMITED
  • MRJ ASSOCIATES LTD
  • SOUTH COAST INSULATION SERVICES LIMITED
  • SOUTH EAST BOTTLING LIMITED
  • THE NOTTING HILL BAKERY LIMITED

Appointments of Liquidators

  • AC MINDS LTD
  • ASSET TRAINING & CONSULTANCY LIMITED
  • ATA CASA INVESTMENT LIMITED
  • BABCOCK ASSESSMENTS LIMITED
  • CHARMAS LIMITED
  • CLAVERIE CONSULTING LTD
  • DEBEN MANAGEMENT LIMITED
  • DOLPHIN ASSETS LTD
  • GR8 SECURITY LIMITED
  • HERTS & ESSEX UROLOGY LTD
  • IJS FINANCIAL SOLUTIONS LIMITED
  • JASE CONSULTING LIMITED
  • JUTSUM MEDICAL LTD
  • K2 CARE (SOUTH WEST) LTD
  • LOGICINFO CONSULTING (UK) LIMITED
  • MICHELLE PAMMENT COMMUNICATIONS LIMITED
  • MJC PROJECT SERVICES LTD
  • ROMANOW CONSULTING SERVICES LTD
  • TELEGATE CONSULTING LIMITED
  • THE CREATIVE MARKETER LIMITED
  • TMG LIMITED
  • WEST COUNTRY CARS YEOVIL LIMITED
  • WHATELEY CONSULTANCY SERVICES LIMITED
  • WYCHWOOD INNS LTD

Petitions to Wind Up

  • APEX ALLOYS LTD
  • AUTO CARE REPAIR CENTRE LIMITED
  • CHARLESTONGROUP LIMITED
  • JMB FLOORS LTD
  • NORMANSHIRE CARE SERVICES LTD
  • POWER STUDIO LIMITED
  • SHAKO LONDON LTD
  • WEBAAZAR LIMITED

Winding-Up Orders

MY FAMILY ORGANISATION

How CPA membership could help

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