UK Business News Today: 2 September 2026 | Economy, Markets & Insolvencies

UK businesses are entering September with renewed pressure on costs, confidence and cashflow. Government borrowing costs have reached their highest levels in almost three decades, shrinking the Chancellor’s room for manoeuvre ahead of the October Budget, while the British Chambers of Commerce expects the economy to contract in the third quarter. At the same time, escalating US-Iran tensions are driving oil and European gas prices higher, increasing the risk of another energy-cost squeeze. Mortgage approvals are weakening, smaller manufacturers are struggling to match the performance of larger firms and retailers are warning against further increases in business rates; all developments that could affect customer confidence, payment behaviour and the financial resilience of businesses selling on credit.

James Salmon, Operations Director.

Key Developments

• UK government borrowing costs have reached a 28-year high, with the 30-year gilt yield touching 5.89% and reducing the Chancellor’s fiscal headroom ahead of the October Budget.
• The BCC expects the UK economy to contract 0.2% in Q3, while forecasting inflation could reach 3.6% and unemployment 5%.
• Energy risks are increasing again, with Brent crude near $95 a barrel and European gas prices close to their highest levels since January 2023.
• Mortgage approvals fell to 56,100 in July, while higher borrowing costs and slower household income growth are weighing on housing activity.
• Smaller manufacturers are under greater pressure than larger firms, with SME output and new orders falling despite continued expansion across the wider manufacturing sector.

Economy & Policy

Government borrowing costs hit 28-year high

Long-term UK government borrowing costs have risen sharply, with the 30-year gilt yield reaching 5.89%, its highest level since 1998. Ten-year gilt yields have also climbed to levels not seen since the financial crisis, reflecting concerns over inflation, elevated government debt and strong global demand for long-term capital. Bloomberg Economics estimates that higher borrowing costs could remove around £12bn from the Government’s previous £23.6bn fiscal-rule buffer, while Panmure Liberum economist Simon French estimates recent moves in longer-dated yields alone could reduce headroom by as much as £6bn.

Chancellor John Healey is due to deliver his first Budget on 28 October, increasing speculation that spending reductions, tax rises or a combination of both may be required to restore fiscal headroom.

Why it matters: Reduced fiscal flexibility increases the risk of tax rises or lower government support at a time when many SMEs are already dealing with higher employment, energy and financing costs.

BCC warns UK economy is moving into the slow lane

The British Chambers of Commerce expects UK economic growth to weaken sharply during the second half of 2026 as business investment slows. Although it forecasts growth of 1% for the full year, the BCC expects GDP to contract by 0.2% in Q3 before expanding by just 0.1% in Q4.

Unemployment is forecast to reach 5%, while inflation could rise as high as 3.6%, exceeding the Bank of England’s own expectations. Vicky Pryce, chair of the BCC’s economic advisory council, said the stronger growth recorded earlier in the year would soon be well into the rear-view mirror.

Why it matters: Slower economic activity increases the likelihood that customers will delay payments, reduce orders or seek longer credit terms, making active credit monitoring increasingly important.

Mortgage approvals fall as borrowing costs rise

Bank of England figures show mortgage approvals fell to 56,100 in July, down from 58,215 in June and the lowest level since January 2024. Net mortgage borrowing fell to £4.3bn from £7.7bn, while the effective rate on new mortgages increased to 4.45% from 4.35%.

House sales declined 2% month-on-month. Household savings increased by £3.8bn during July, compared with £6.2bn in June, while net credit-card borrowing eased to £900m from £1bn.

RSM UK chief economist Thomas Pugh warned that rising inflation and slower real household income growth could make the second half of the year more difficult.

Why it matters: Higher mortgage costs can squeeze household disposable income, affecting consumer-facing SMEs first and potentially feeding through to slower payments throughout supply chains.

House prices edge higher despite softer housing activity

Nationwide reported UK house prices rising 0.2% in August and 1.6% year-on-year, up from annual growth of 1.4% in July. The average UK property now costs approximately £275,465.

Nationwide chief economist Robert Gardner said underlying affordability has been improving because earnings continue to grow faster than house prices. However, higher mortgage rates and concerns about rising energy costs could limit buyer confidence.

Tax & Government

Businesses brace for possible Budget tax rises

Business advisers are increasingly warning that the Government’s reduced fiscal headroom could lead to additional taxation in the October Budget. Craig Harrison, a partner at JMW, said business leaders are concerned about potential measures including wealth taxes, mansion taxes, exit taxes and further increases in capital gains tax.

He argued that excessive taxation could discourage investment and entrepreneurship and potentially encourage business owners and investors to relocate.

Poll suggests voters believe top earners already pay enough tax

Research highlighted by the Adam Smith Institute found almost 70% of Britons believe the highest-earning 1% already pay a fair share of tax. Around two-thirds also recognised the possibility that higher taxes could encourage wealthy taxpayers to move overseas.

Figures cited by the TaxPayers’ Alliance suggest the top 1% receive around 13.3% of UK income but contribute 28.2% of total tax. Critics of further capital gains or wealth taxation argue that higher rates could reduce investment or discourage company owners from selling businesses.

Court ruling closes “box shifting” business rates loophole

A court ruling has brought an end to the practice known as “box shifting”, which was used by some property owners to obtain empty-property business rates relief. The arrangement involved briefly placing boxes or other items inside vacant commercial premises to establish supposed occupation before claiming another period of relief.

The City of London Corporation successfully challenged the practice, with the court deciding that this did not constitute genuine occupation for statutory purposes. The scheme is estimated to have cost local authorities more than £1bn.

The Government is considering further action over the use of empty-property relief.

Major retailers warn against further business rates increases

Tesco, Sainsbury’s, Marks & Spencer, Morrisons, Primark and Asda are among retailers urging Prime Minister Andy Burnham not to increase business rates for the sector.

The Retail Jobs Alliance, which represents businesses employing more than one million people, says retailers already pay approximately 21% of all business rates despite generating around 5% of UK GDP. It is calling for the retail sector to be exempted from the highest business rates multiplier.

SME & Business Environment

Manufacturing remains in growth but smaller firms struggle

The S&P Global UK manufacturing PMI slipped from 51.9 in July to 51.7 in August, remaining above the 50 level separating expansion from contraction.

Business confidence nevertheless rose to a six-month high and job creation reached its strongest level in two years, supported by stronger orders and efforts to clear backlogs.

The headline figure masks an important divergence. Larger manufacturers continued to grow, while smaller manufacturers recorded falling output and new orders. Rising energy prices and geopolitical uncertainty are also expected to increase production costs.

Summer 2026 confirmed as the UK’s hottest on record

The Met Office has confirmed that Summer 2026 was the hottest UK summer on record, based on a dataset extending back to 1884.

Extreme temperatures increasingly have operational consequences for businesses, particularly those operating warehouses, factories, transport fleets, hospitality venues and temperature-sensitive supply chains.

Energy & Costs

European gas prices rise for third day

European natural gas prices have risen for a third consecutive session as renewed fighting between the US and Iran reduces expectations that normal energy flows through the Strait of Hormuz will resume quickly.

Benchmark European futures rose as much as 4.3% during Wednesday trading and remain close to their highest intraday level since January 2023.

European gas storage is currently only around 65% full, the lowest seasonal level in records dating back to 2009. Europe therefore needs to attract substantial LNG supplies before winter.

Ineos warns North Sea tax changes could increase energy bills

Ineos has warned that extending higher taxation on North Sea oil and gas producers beyond 2030 could discourage investment and increase the UK’s reliance on imported liquefied natural gas.

The petrochemicals company argues that greater dependence on imported LNG would expose UK businesses and households to greater global price volatility.

Industry & Investment

Electric Range Rover to start at more than £154,000

Jaguar Land Rover’s first fully electric Range Rover will have a starting price of £154,070.

The Range Rover Electric has a claimed test range of 372 miles and can recharge its battery from 10% to 80% in approximately 22 minutes.

The launch will be an important test of demand for large premium battery-powered vehicles at a time when EV demand has been uneven across the luxury automotive sector.

Apple signals strong product pipeline under new leadership

Apple chief executive John Ternus has described next week’s iPhone launch as “phenomenal” and said the company has a significant pipeline of future products.

Ternus also thanked former chief executive Tim Cook for supporting the leadership transition. Cook is remaining with Apple as executive chairman.

Apple’s product launches remain important indicators of global technology demand and consumer appetite for premium devices.

Ryanair grows passenger numbers but trims traffic target

Ryanair carried 22.2 million passengers in August, approximately 6% more than a year earlier, with a load factor of 96%.

However, the airline reduced its FY27 traffic target from 216 million to 214 million passengers, citing greater exposure to unhedged winter fuel costs.

Ryanair warned that European short-haul fares could rise materially if oil prices remain elevated. More than 400 flights were also cancelled during August because of eruptions at Mount Etna.

Economy & Public Services

Burnham leaves water nationalisation on the table

Prime Minister Andy Burnham has sharply criticised the structure of Britain’s water industry, describing it as a “leaking monument” to the failures of privatisation.

Burnham said the Government should examine all possible solutions for the sector, while his team has indicated that placing Thames Water into special administration remains an option.

The comments reopen the wider debate around ownership, regulation and investment across essential infrastructure.

International & Trade

G20 finance ministers fail to agree joint statement

G20 finance ministers ended a two-day meeting in North Carolina without issuing a joint communiqué.

US Treasury Secretary Scott Bessent said 19 participants supported language criticising countries with “excessive and persistent external surpluses” and an overreliance on exports for growth. China opposed the proposed wording.

China recorded a trade surplus of approximately $1.2tn in 2025, and trade imbalances are becoming an increasingly important source of tension between major economies.

Global Market Summary

Global markets remain under pressure as investors respond to an increasingly difficult combination of US-Iran military escalation, rising oil and gas prices, higher government bond yields and more hawkish central-bank expectations.

UK and Europe

The FTSE 100 was down 0.35% at 10,751 during Wednesday morning trading.

Across Europe:

• STOXX Europe 600: 645.69, down 0.27%
• Euro STOXX 50: 6,361, down 0.13%
• DAX: 25,859, down 0.43%
• CAC 40: 8,276, down 0.31%

European markets are being pressured by rising bond yields and renewed inflation concerns as energy prices rise. Energy shares have been among the few beneficiaries.

The UK’s 30-year gilt yield reached around 5.86%–5.89%, its highest level since 1998, significantly increasing concerns about government borrowing costs and the fiscal position ahead of October’s Budget.

United States

US equities recorded a third consecutive session of losses on Tuesday:

• S&P 500: 7,631.47, down 0.71%
• Dow Jones: 52,766.88, down 0.79%
• Nasdaq Composite: 26,099.77, down 1.03%

Technology stocks were particularly sensitive to higher bond yields, although strong results from Dell provided some support after the close. Dell reported quarterly revenue of $46.97bn, up 58% year-on-year, following exceptional demand for AI servers.

Asia

Asian equities suffered some of the sharpest falls:

• Nikkei 225: 64,325.64, down 2.85%
• Hang Seng: 25,278.15, down 0.20%

South Korea’s Kospi fell around 4%, while the broader MSCI Asia Pacific index dropped more than 2%. Energy-importing Asian economies are particularly exposed to the sharp increase in oil prices.

Market drivers

The biggest market influence is the escalation in fighting between the US and Iran, including attacks involving oil tankers and military assets around the Gulf.

The conflict has increased concern about energy supplies travelling through the Strait of Hormuz, one of the world’s most important oil and LNG routes.

At the same time, global government bond yields have risen sharply:

• US 10-year Treasury: around 4.80%
• US 30-year Treasury: around 5.28%
• UK 30-year gilt: around 5.86%–5.89%
• German 10-year Bund: around 3.37%
• Japanese 10-year government bond: around 3.03%

Markets are also responding to increasingly hawkish comments from policymakers at the ECB and Bank of Japan.

For business owners, the combination matters because higher bond yields tend to keep borrowing costs elevated while higher energy prices increase operating expenses.

Currencies

Sterling was relatively stable:

• GBP/USD: approximately 1.3513, down around 0.02%
• GBP/EUR: approximately 1.1669, up around 0.09%

Sterling’s performance against the euro has been supported by wider euro weakness, although concerns over UK fiscal policy remain a potential drag.

Commodities

Energy markets remain the clearest signal of geopolitical risk into business costs.

• Brent crude: approximately $94.81 per barrel, up 0.17%
• WTI crude: approximately $90.05 per barrel, down 0.19%
• Gold: approximately $4,331 per ounce, up 0.05%

Brent has risen sharply over recent sessions and briefly traded close to $96 as concerns increased about disruption to Gulf shipping.

European gas prices have also moved significantly higher. Dutch TTF futures recently reached approximately €73.95/MWh, around their highest level since January 2023.

For UK SMEs, sustained increases in oil and gas prices could affect transport, production, heating, electricity and supplier costs at the same time as higher interest rates keep finance expensive.

Insolvency Watch

Administrations (5)

• FPS UK ASSET REALISATIONS LTD
• HELLIWELL AND COMPANY PROPERTIES LIMITED
• KEYSTONE COLLECTIVE LTD
• SIXTYEIGHTDEGREES FIRE SPRINKLER SPECIALISTS LTD
• VIA.CC LIMITED

Liquidations (8)

• BUSHEY INVESTMENTS LIMITED
• GEE PROPERTIES LIMITED
• LA LUMP LIMITED
• PMO LIMITED
• S B HARRIS LIMITED
• ST. LAWRENCE COLLEGE ENTERPRISES LTD.
• TWIN BRIDGES 2021-1 PLC
• WANSFORD ENVIRONMENTAL SERVICES LIMITED

Winding-up Petitions (1)

• JONESYGAINS LTD

Protecting cashflow as costs and credit risks rise

Today’s news highlights a difficult combination for SMEs: slowing economic growth, rising energy costs, expensive borrowing and uncertainty over future taxation.

Those conditions can change customer payment behaviour quickly. A customer that has historically paid within agreed terms may begin stretching payments because its own costs have risen or because its customers are paying more slowly.

This is where disciplined credit control becomes especially important.

CPA can help businesses strengthen their credit-to-cash process through CreditCare credit reports, debtor monitoring, structured Overdue Account Recovery and professional collections.

Early intervention matters. The longer an invoice remains unpaid, the greater the risk that it becomes harder to recover; particularly if the customer’s financial position is deteriorating.

CPA’s approach is designed to improve payment performance while preserving valuable customer relationships. Debtors pay CPA Members directly, helping businesses restore cashflow without unnecessarily disrupting future trade.

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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