UK Business News Today: 12 May 2026 | Economy, Markets & Insolvencies

The UK business environment remains under pressure as slowing consumer spending, weaker retail sales and falling permanent recruitment point to softer economic conditions for SMEs. Rising geopolitical tensions in the Middle East are adding to inflation and energy concerns, while businesses continue to face uncertainty around tax, regulation and borrowing costs. Insolvency activity also remains elevated, particularly among property, recruitment and service sector firms.

James Salmon, Operations Director.

Key Developments

• UK households and retailers report weaker spending activity
• Permanent job placements fall as employers delay hiring
• EY warns Middle East tensions could push UK growth close to recession
• E.ON moves to create Britain’s largest energy supplier through Ovo takeover
• Insolvency activity continues across multiple sectors

SME & Business Environment

UK households cut back spending

UK households reduced spending in April, marking the first annual decline in card spending since late 2024. Barclays reported a 0.1% fall overall, with travel spending dropping 5.7% as consumers became increasingly cautious. Fuel spending rose sharply due to higher oil prices and concerns linked to Middle East tensions.

Barclays said 72% of consumers expect the conflict in the Middle East to worsen living costs, particularly through higher energy, food and inflation pressures.

Why it matters: Reduced consumer spending can quickly impact SME cashflow, particularly for retailers, hospitality firms and service businesses already dealing with higher operating costs.

Retail sales slip 3%

Retail sales fell 3% year-on-year in April, according to the British Retail Consortium and KPMG. Food sales dropped 2.5%, while non-food sales fell 3.3%, reversing strong growth seen during the same period last year.

The figures suggest consumers are becoming increasingly cautious as inflation fears and geopolitical uncertainty weigh on confidence.

Why it matters: Weaker retail demand can increase late payment risks throughout supply chains, particularly for wholesalers, logistics firms and smaller suppliers.

Permanent job placements fall sharply

Permanent recruitment activity weakened significantly in April, with the Recruitment and Employment Confederation and KPMG reporting the steepest decline since January. Employers delayed hiring amid cost pressures and uncertainty linked to global events.

Temporary hiring improved modestly, suggesting businesses remain cautious about committing to long-term employment costs.

Why it matters: Slower hiring often signals weaker business confidence and can indicate tightening cashflow conditions across the wider SME economy.

New driving test booking rules introduced

The Government has introduced new driving test booking rules designed to reduce long waiting times and stop automated bulk-buying of test appointments.

From 12 May, only learner drivers themselves can book, change or swap driving tests. Driving instructors are no longer permitted to make bookings on behalf of pupils.

Economy & Policy

EY warns economy could stagnate

EY has warned that prolonged disruption in the Middle East could push UK economic growth close to recession levels this year. The consultancy said growth could slow to just 0.3% if disruption to the Strait of Hormuz continues.

Inflation is forecast to rise toward 4%, with unemployment potentially reaching 5.8% later this year.

Peter Arnold, chief economist at EY UK, said the UK economy is once again being shaped by external shocks.

Why it matters: Higher inflation and slower growth can increase borrowing costs, reduce customer spending and worsen payment performance across the SME sector.

HMRC targets tax loophole disclosures

HMRC is consulting on plans to widen its Uncertain Tax Treatment regime to wealthy individuals and trusts claiming tax advantages of more than £5m.

The proposals would require taxpayers to notify HMRC where tax rules are open to multiple interpretations. Critics argue the focus is misplaced given that small businesses account for most of the UK’s tax gap.

Scottish business leaders call for growth strategy

Business groups in Scotland are urging the new government to focus on long-term economic growth and investment confidence.

The Institute of Chartered Accountants of Scotland stressed the importance of stable tax policy, improved productivity and clearer economic direction.

Banking sector calls for regulation rethink

UK Finance has urged the Government and regulators to adopt a more pro-growth approach to banking regulation and taxation.

The industry body warned that excessive caution and regulatory tightening are limiting investment and economic growth.

Industry & Investment

E.ON agrees takeover of Ovo

E.ON has agreed to acquire Ovo in a deal that would create the UK’s largest gas and electricity supplier with approximately 9.6m customers.

The transaction is expected to face regulatory scrutiny before completion later this year. Ovo is also selling its home services division to Hometree.

British Steel set for nationalisation

The Government has confirmed plans to bring British Steel into public ownership following its intervention in the Scunthorpe steelworks last year.

Industry leaders welcomed the move but stressed the need for long-term investment and industrial strategy.

Asos sells fulfilment centre to M&S

Asos has sold its Lichfield fulfilment centre to Marks & Spencer for £66m as part of efforts to streamline operations and reduce excess warehouse capacity.

The online retailer said the disposal would save around £6m annually.

Vodafone profits improve

Vodafone reported stronger annual revenue and profits, helped by recovery in Germany and the inclusion of Three UK in its results.

The telecoms group also increased its dividend and completed the final stage of a €2bn share buyback programme.

New-build home sales hit 12-year low

The proportion of new homes sold before completion has fallen to its lowest level in 12 years, according to Hamptons.

Higher interest rates and weaker buyer confidence have increased financing pressures on housebuilders.

Alphabet closes in on Nvidia valuation lead

Alphabet is emerging as one of the strongest winners from the AI boom, with investors increasingly backing its wider ecosystem including Google Search, YouTube, Google Cloud, Waymo and Gemini AI.

The company is now close to overtaking Nvidia as the world’s most valuable listed company.

Wordle to become TV gameshow

Wordle will be adapted into a television gameshow for NBC, with production expected to take place in Britain next year.

The New York Times acquired the popular puzzle game in 2022.

Politics & Global Developments

Starmer faces leadership pressure

Reports suggest growing pressure within Labour over Keir Starmer’s leadership following recent election results, although the Prime Minister told Cabinet he remains focused on governing and delivering change.

The Labour Party has not formally triggered a leadership challenge process.

US-Iran tensions continue

Donald Trump said a ceasefire between the US and Iran remains fragile after rejecting Tehran’s latest peace proposal.

Iran has demanded sanctions relief and changes to US naval restrictions while tensions around the Strait of Hormuz continue to affect energy markets.

Trump heads to China with US business leaders

Donald Trump is travelling to China alongside major US business figures including Elon Musk and Tim Cook in an effort to secure new trade agreements.

The visit comes amid ongoing trade tensions between the US and China.

Global Market Summary

Markets remained volatile as investors reacted to continued Middle East tensions, renewed tariff concerns and growing fears over weaker economic growth.

The FTSE 100 rose 0.36% yesterday to close at 10,269.43, supported by energy and defence stocks as oil prices remained elevated. However, the index slipped back toward 10,220 in early trading this morning as investors digested weaker UK consumer and retail data alongside political uncertainty surrounding Keir Starmer’s leadership.

European markets were mixed, with investors balancing stronger commodity prices against concerns over slowing consumer demand and rising inflation risks.

In the US, technology shares remained relatively resilient as enthusiasm around artificial intelligence continued to support Alphabet and other major tech firms. However, broader sentiment remained cautious amid uncertainty surrounding US-Iran negotiations and global trade tensions ahead of Donald Trump’s China visit.

Sterling weakened against the dollar, with GBP/USD falling to 1.353 from 1.361 yesterday. The move reflected demand for safer assets amid the Middle East conflict, renewed tariff concerns, rising inflation expectations and political uncertainty in the UK. GBP/EUR remained relatively stable.

Oil prices stayed elevated amid concerns over disruption to shipping through the Strait of Hormuz, supporting Brent crude and WTI crude prices. Gold also strengthened as investors sought safer haven assets during heightened geopolitical uncertainty.

Insolvency Watch

Administrations (8)

• BARRETTS OF WOODBRIDGE LIMITED
• BERRIDGE VENUES LIMITED
• HOW NOW DAIRY LTD
• KCH (ASHFORD) LIMITED
• MAINLINE PRIVATE HIRE LIMITED
• TEC PARTNERS LIMITED
• TEC PARTNERS (SOUTH EAST) LIMITED
• THE TEC RECRUITMENT GROUP LIMITED

Liquidations (14)

• AST UK HOLDCO LIMITED
• CLIVE WEST CONSULTING LIMITED
• DELPH PROPERTIES MANCHESTER 1 LTD
• EGERTON ROCHE LIMITED
• GREEN QUARTER 7 DEVELOPMENT LTD
• HANFORD WASTE SERVICES LIMITED
• HITACHI INFORMATION CONTROL SYSTEMS EUROPE LTD.
• KOCHA LIMITED
• NEURAFLASH LTD
• PMO CONSULTING LIMITED
• QLARIFI HOLDINGS LIMITED
• QLARIFI LIMITED
• SRC INVESTMENTS ANGLIA LIMITED
• WEST HERTS PROPERTIES LIMITED

Winding-up Petitions (13)

• ACCES LINK LTD
• BANTUWAY LIMITED
• BUILD PARTNERSHIPS LIMITED
• CINMECH SERVICES LIMITED
• CUBE VENTURES LTD
• CULENA LONDON LIMITED
• FOCUS HOUSING LIMITED
• G A R & D LTD
• LAWRENCE ANTONY HOMES LIMITED
• MCVICAR DEBT COLLECTION LTD
• METDEM LIMITED
• NEW HOLME PROPERTY SERVICES LTD
• RESTAURANT BRANDS LIMITED

What CPA can do for you

As economic conditions become more uncertain, strong credit management becomes increasingly important. Slower consumer spending, weaker hiring activity and rising insolvencies can all lead to delayed payments and increased bad debt risk.

CPA helps businesses protect cashflow through CreditCare reporting, debtor monitoring and professional overdue account recovery services designed to preserve customer relationships while improving payment performance.

To find out how CPA can support your business, call 020 8846 0000 (Monday to Friday, 9am to 5pm) or email PaidQuick@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.

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