UK Business News Today: 1 October 2026 | Economy, Markets & Insolvencies

October begins with a reminder that modest economic growth does not necessarily translate into easier trading conditions. UK GDP performed slightly better than first estimated in Q2, but business confidence has weakened, bank lending is expected to slow and housing activity remains subdued. At the same time, businesses and households face renewed pressure from energy, fuel and borrowing costs as the Middle East conflict continues to affect global markets. For SMEs selling on credit, the start of a new month provides a useful opportunity to review what is outstanding, reassess customer risk and act early where payment is beginning to slip.

James Salmon, Operations Director.

Key Developments

• UK GDP growth was revised up to 0.5% in Q2, although the wider outlook remains subdued. Office for National Statistics
• Energy pressures are intensifying, with household bills forecast to rise 16% in January and diesel reaching around £2 a litre. Cornwall Insight
• Business confidence has weakened, while high costs and uncertainty are discouraging investment.
• UK corporate lending growth is forecast to more than halve to 2.1% in 2026, indicating greater caution among businesses. EY
• Global bond yields have surged, with the UK 30-year gilt reaching 6% as markets reassess inflation and interest-rate risks. Pasted text

SME & Business Environment

Business confidence falls as firms “run to stand still”

The Institute of Directors’ confidence index fell to -54 in September from -49 in August, with 65% of business leaders reported as pessimistic about the UK economy. More than 70% said they intended to freeze or reduce investment over the next year, with taxation, energy costs and policy uncertainty among the concerns. The August IoD reading had already shown exceptionally high cost expectations, at +83. Institute of Directors

Why it matters: When margins and confidence deteriorate, businesses may conserve cash by delaying investment and stretching supplier payments, increasing the importance of monitoring payment behaviour closely.

Bank lending growth expected to hit three-year low

EY expects UK bank lending growth to households and businesses to slow from 3.6% in 2025 to 2.9% in 2026 and 2.2% in 2027. Corporate lending growth is forecast to more than halve from 5.3% last year to 2.1% this year, while mortgage lending is expected to grow 3.3% before slowing to 2.2% in 2027. EY says economic pressures and uncertainty are reducing borrowing demand, although its central forecast continues to expect lending growth rather than contraction. EY

Why it matters: Businesses with less appetite or capacity to borrow may become increasingly reliant on their own working capital, making prompt collection of customer invoices more important.

Economy & Policy

UK Q2 growth revised higher to 0.5%

The ONS has revised UK economic growth in the second quarter from 0.4% to 0.5%, following 0.6% growth in Q1. However, growth for 2025 as a whole was revised down to 1.2%. Real household disposable income per head increased 1% to £6,577, reversing a 0.8% decline in Q1. The increase reflected, among other factors, a £5.3bn rise in net social benefits compared with a £2.8bn increase in wages and salaries. Office for National Statistics

Why it matters: The stronger GDP revision is welcome, but businesses extending credit should remain focused on customers’ individual financial position rather than assuming modest headline growth means payment risk is falling.

Retail and hospitality face heavy tax burden

Analysis from the British Retail Consortium and UKHospitality estimates that retail and hospitality paid a combined £62bn in taxes during 2025/26. For every £1 of pre-tax profit, the analysis calculates that hospitality businesses paid the equivalent of 82p in business taxes and retailers 72p, against an average of 50p across the 11 sectors examined. Retail employment has fallen by 122,000 over two years and hospitality employment by 93,000, according to the trade bodies. BRC

Why it matters: Businesses supplying retail and hospitality customers on credit should pay particular attention to changing payment patterns where tax, wage, property and energy costs are simultaneously squeezing margins.

National care service funding remains uncertain

Prime Minister Andy Burnham has said tax increases would not be used specifically to fund his proposed national care service, with implementation potentially phased or delayed according to affordability. Part of the proposed funding is linked to reform of the pension triple lock, although estimates of the potential savings vary significantly.

For businesses, the immediate issue is the wider fiscal environment ahead of the 28 October Budget, with the government balancing spending ambitions against rising borrowing costs and limited fiscal room. Chancellor John Healey has reiterated his commitment to the fiscal rules ahead of the Budget.

Energy & Costs

Household energy bills forecast to approach £2,000

Cornwall Insight forecasts the typical household energy price cap could rise 16% from £1,723 to £1,999 in January, an increase of £276 and the largest rise since January 2023. The consultancy attributes the forecast primarily to disruption to global gas supplies from the Middle East conflict and unusually low European gas storage. The £1,999 figure remains a forecast rather than an Ofgem decision. Cornwall Insight

Although this is a household price cap, the same wholesale energy pressures are affecting the broader economy. Cornwall Insight reported in August that business energy bills had already risen 25% since February. Cornwall Insight

Petrol and diesel prices intensify cost pressure

UK motorists are reported to be paying almost £1.75 a litre for petrol, while diesel has reached around £2 a litre amid disruption to global energy markets. The higher prices are also generating increased tax receipts, prompting calls from business and motoring groups for measures such as continued fuel-duty restraint or relief for commercial users ahead of the Budget. Rising road-fuel costs are adding to the broader energy pressures facing households and businesses.

Housing & Construction

Planning approvals fall sharply

Only 51,503 new homes received planning approval between April and June, down 18% from the previous quarter, according to figures reported by the Home Builders Federation. This was described as the lowest quarterly level since 2012. Separately, official planning statistics show that English authorities granted 6,900 residential applications during the quarter, 2% fewer than a year earlier. The Times

The weakening pipeline raises further questions over the government’s ambition to build 1.5 million homes during the parliament.

Why it matters: Construction has long supply chains of subcontractors and suppliers, so weaker development pipelines can affect order books, working capital and payment behaviour well beyond housebuilders themselves.

House prices and transactions soften

Nationwide reported annual house-price growth slowing to 0.8% in September from 1.6% in August, with prices falling 0.2% month-on-month.

Housing transactions also weakened in August, with approximately 95,220 sales, while Bank of England figures show mortgage approvals for purchases falling to 54,900, below the previous six-month average of around 60,100. Bank of England

Why it matters: Softer housing activity can flow into construction, trades, furnishings, professional services and other SME sectors dependent on property transactions.

Technology & Financial Stability

Bank of England warns over growing AI risks

Bank of England Governor Andrew Bailey has argued for stronger understanding and testing of increasingly capable frontier AI systems. Meanwhile, the Financial Policy Committee says growing AI-related debt issuance is exposing a wider range of investors and markets to the sector. It also highlighted potentially opaque and circular financing arrangements that could amplify losses if expectations for AI earnings and productivity disappoint. Bank of England

The FPC also noted incidents in test environments where autonomous models took unexpected actions, including exploiting vulnerabilities and accessing systems outside their intended task. Bank of England

AI development continues despite safety concerns

US regulators and policymakers are paying increasing attention to the risks associated with rapidly developing AI systems, while major technology companies continue investing heavily in new models and infrastructure. Google has introduced its latest Gemini generation, while Amazon, Apollo and other major groups are committing significant capital to the infrastructure required for AI.

For SMEs, the important point is less about individual benchmark contests and more about balancing productivity opportunities against cybersecurity, operational and supplier risks as AI becomes embedded in everyday business systems.

Global Market Summary

Global markets entered the fourth quarter under pressure from the combination of higher oil prices, rising government bond yields, inflation concerns and geopolitical uncertainty. The UK 30-year gilt yield reached 6% for the first time since 1998, while the US 10-year Treasury yield climbed to around 5.33%, its highest level since 2002.

UK and Europe

The FTSE 100 was down 1.27% at 10,471.35, while the STOXX Europe 600 was down 0.75% at 630.11. The Euro STOXX 50 fell 0.60% to 6,231.66, Germany’s DAX was down 0.36% at 25,107.27, and France’s CAC 40 was down 0.90% at 7,892.61. Banks were among the weakest sectors as higher yields and concerns around France’s fiscal position weighed on sentiment.

United States

At Wednesday’s close, the S&P 500 fell 0.25% to 7,651.54 and the Dow Jones dropped 0.86% to 50,906.05. The Nasdaq 100 bucked the trend, rising 0.23% to 30,408.50, helped by technology shares. Softer-than-expected core PCE inflation initially supported markets before higher bond yields and oil prices drove a late reversal.

Asia

Japan’s Nikkei 225 jumped 3.3% to 68,956.72, helped by semiconductor stocks and a less-hawkish-than-expected interpretation of the Bank of Japan’s latest meeting summary. Hong Kong’s Hang Seng was closed for the Golden Week holiday, so there was no 1 October cash-session level or percentage move to report.

Currencies

Sterling weakened against the dollar, with GBP/USD at 1.3217, down around 0.36% from Wednesday’s close. EUR/GBP was 0.8545, implying approximately GBP/EUR 1.1703. Sterling had touched a three-month low of 1.3193 as rising gilt yields and concerns over UK fiscal sustainability weighed on the currency.

Commodities

Brent crude was around $100.08 a barrel, down 3.33% from Wednesday’s front-month close amid contract-roll effects but remaining at levels capable of creating significant cost pressure. WTI was $91.71, up 1.43%, while gold rose 0.44% to $4,175.54 an ounce. European gas prices have also been volatile as low storage and disruption around the Strait of Hormuz keep supply risks elevated.

Why it matters: Higher energy prices and bond yields can work their way into transport, utilities, finance and supplier costs simultaneously. SMEs should therefore consider not only whether customers can pay today, but whether changing conditions could weaken their ability to pay over the coming months.

Insolvency Watch

Administrations (1)

• GAS-ELEC SAFETY (UK) LTD

Liquidations (25)

• ABAP CENTRAL LIMITED
• ARCH VENTURES LTD
• BLADES HEATING LIMITED
• CANTERBURY FINANCE NO.4 PLC
• E-FORENSIC SOLUTIONS LIMITED
• EGS ENTERPRISES LIMITED
• FARM FIELDS WATFORD LTD
• GRESHAM HOUSE RENEWABLE ENERGY VCT 1 PLC
• GRESHAM HOUSE RENEWABLE ENERGY VCT 2 PLC
• IVY LANE VENTURE LTD
• JOHN KIRK CONSULTING LIMITED
• M HOLDCO 1 LIMITED
• MENZIES DISTRIBUTION GROUP LIMITED
• MENZIES DISTRIBUTION HOLDINGS LIMITED
• NAVAGATOR LIMITED
• ROSEBUSH DEVELOPMENTS UK LIMITED
• SANTE GLOBAL LLP
• SENOR ENGINEERING COMPANY LIMITED
• STONE CUTTER DEVELOPMENTS LIMITED
• TAKE ONE MEDIA LIMITED
• TOYO TYRE (UK) LIMITED
• TP LEGAL CONSULTANCY LIMITED
• VIVA GYM GROUP LIMITED
• WILDMOKA LIMITED
• ZERO TOPCO LIMITED

Winding-up Petitions (1)

• EPIRUS RESTAURANT LIMITED

A new month is a good time to take stock of what you’re owed

The first working day of October is a natural point to review the sales ledger. Which September invoices remain unpaid? Which customers are starting to take longer? Where have credit limits not been reviewed recently? And which overdue accounts are already consuming too much management time?

That matters particularly as Q4 begins with businesses facing higher fuel and energy costs, expensive borrowing and weaker confidence. Waiting for an overdue invoice to become a serious problem can unnecessarily increase both cashflow pressure and recovery difficulty. CPA emphasises that overdue invoices tend to become harder and more expensive to recover as they age.

CPA can help businesses use CreditCare credit reports and debtor monitoring to identify changing customer risk, strengthen credit-control processes and improve payment performance.

Where invoices become overdue, CPA can support recovery through the professional and considerate approach of its Overdue Account Recovery Service designed to secure payment while preserving valuable customer relationships.

Call CPA on 020 8846 0000 during business hours, Monday to Friday, 9am to 5pm.
Email: PaidQuick@cpa.co.uk
Visit: https://cpa.co.uk/contact-us/

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.

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