UK Business News Today: 21 September 2026 | Economy, Markets & Insolvencies

UK businesses start the week with some encouraging economic signals, but the wider financial picture remains challenging. Retail sales rebounded in August, investment confidence among mid-sized firms has strengthened and the Government is considering significant business-rates relief for smaller companies. At the same time, higher borrowing costs have sharply reduced the Chancellor’s fiscal headroom, mortgage rates are expected to rise and hospitality businesses face further potential costs. For SMEs selling on credit, the mixed outlook reinforces the importance of monitoring customer finances, maintaining disciplined credit control and acting quickly when invoices become overdue.

James Salmon, Operations Director.

Key Developments

• UK retail sales rose 0.5% in August, reversing July’s decline.
• The Government is considering raising the small business rates relief threshold from £12,000 to £17,096.
• Estimates suggest the Government’s £23.6bn fiscal headroom may have fallen to between £8.5bn and £11.6bn.
• Mortgage and wider borrowing costs could remain higher for longer as markets price further interest-rate increases.
• European and Asian markets opened positively as oil prices fell and US-China trade talks improved investor sentiment.

SME & Business Environment

Business rates rethink could give thousands of small firms relief

Chancellor John Healey is considering increasing the small business rates relief threshold from £12,000 to £17,096 in the 28 October Budget. The change could remove thousands of smaller businesses from business rates altogether, while an extension of transitional relief is also being considered to soften increases following April’s revaluation. The proposals sit alongside planned rates reductions for pubs, clubs and live music venues. The Federation of Small Businesses has called for a substantial increase in relief as part of a more supportive Budget for small companies. The upcoming Budget and business concerns around rates and taxation have also been prominent in the Chancellor’s recent discussions with business leaders.

Why it matters: Lower fixed property costs could release cash that SMEs can use for wages, stock, investment and working capital, strengthening their ability to pay suppliers on time.

Mid-sized firms show stronger appetite to invest

A BDO survey found that 80% of executives at medium-sized businesses are more willing to invest than they were three months ago. Firms with revenues between £10m and £300m highlighted leisure and retail, financial services and manufacturing as areas offering strong growth potential. Businesses also identified improved access to finance and credit as a priority ahead of the Budget.

Economy & Policy

Government fiscal headroom shrinks sharply

Two assessments point to a substantial deterioration in the Government’s financial buffer. KPMG estimates fiscal headroom has fallen from £23.6bn to £11.6bn, while Deutsche Bank puts it even lower at £8.5bn. Higher borrowing costs, inflation and weaker assumptions around migration have contributed to the squeeze, increasing the possibility that the Chancellor may need to consider tax rises or spending restraint.

KPMG nevertheless expects UK GDP to grow by 1.3% in 2026 and 1.4% in 2027.

Why it matters: A tighter fiscal position increases uncertainty around taxation and public spending, making forward cashflow planning more important for businesses exposed to government policy or public-sector customers.

Retail sales rebound in August

UK retail sales volumes rose 0.5% in August, reversing July’s 0.5% decline. The Office for National Statistics confirmed sales were also 0.9% higher over the three months to August, while online spending values increased 2.5% during August. Non-food stores recovered, although fuel sales weakened as higher prices changed consumer behaviour.

Retailers will now be watching whether the improvement continues into the crucial pre-Christmas trading period.

Why it matters: Stronger consumer demand can improve customer cash generation, but rising input and household costs mean suppliers should continue monitoring payment behaviour closely.

Mortgage costs expected to rise

Capital Economics expects average new mortgage rates to reach around 4.8% by the end of 2026, around 0.8 percentage points above its previous forecast. It expects Bank Rate to rise to 4.25%, while financial markets have priced the possibility of rates reaching around 4.75% by July 2027.

Higher financing costs would place additional pressure on households, landlords and leveraged businesses.

Why it matters: Higher debt-servicing costs can quickly reduce the cash available to business customers, increasing the risk of slower payment and requests for extended credit terms.

Job market shows signs of stabilising

Total UK job postings reached almost 1.7 million in August, around 10% higher than a year earlier, according to the Recruitment and Employment Confederation. New postings reached 712,781.

The broader employment picture remains subdued, however, with weaker vacancies, soft private-sector wage growth and youth unemployment above 16%. The REC has called for changes to employer National Insurance policy to stimulate recruitment.

Tax & Government

Mansion tax threshold could be lowered

The Government is considering whether the threshold for its proposed higher-value property levy should be reduced from £2m to £1.5m ahead of the Budget. The change would significantly increase the number of affected homes, particularly in London and the South East. No final decision has been announced, and the Treasury has declined to confirm pre-Budget speculation.

Retail & Consumer

House asking prices rise but buyers remain cautious

Rightmove data shows average asking prices increased 0.7% in September to £367,440, the first monthly rise since May. Prices nevertheless remain 0.8% below their level a year ago.

The number of homes available for sale is at a 12-year high and buyer affordability remains under pressure. Around 61% of homes typically secure a buyer, ranging from 91% in Scotland to just 42% in London.

Hospitality & Costs

Hospitality industry criticises proposed tourist levy

Hospitality and business groups have criticised proposals for an Overnight Visitor Levy, arguing that another charge could discourage domestic and international visitors already facing higher travel and accommodation costs.

UKHospitality, the Federation of Small Businesses and the Confederation of British Industry have all warned about the potential impact on consumers and businesses.

Industry & Investment

Thames Water pushes ahead with financial restructuring

Thames Water has filed further High Court claims seeking to extend loan maturities while creditors prepare a revised rescue plan. The proposed restructuring is expected to involve creditors accepting larger losses on existing debt while providing more equity.

The company has effectively been controlled by creditors since shareholders withdrew financial support in 2024, while some lawmakers have called for the Government to prevent creditors from taking full control.

International & Trade

Canada urges closer economic partnership with UK and Europe

Canadian Finance Minister François-Philippe Champagne has argued that the UK should join a developing economic partnership between Canada and Europe. Discussions include trade diversification, critical minerals, energy, scientific research, artificial intelligence and defence.

The initiative comes amid continuing trade tensions between Canada and the United States and reflects a wider effort by countries to diversify economic relationships.

Why it matters: New trade partnerships could create opportunities for UK exporters, but geopolitical shifts can also change tariffs, supply chains, payment terms and customer risk quickly.

Burnham heads to UN amid economic uncertainty

Prime Minister Andy Burnham is attending the UN General Assembly as the Government focuses on the economic consequences of international instability. Downing Street has said the Prime Minister intends to use the gathering to pursue greater global stability and reduced cost pressures at home.

The Government has also been engaging directly with President Donald Trump on economic and Middle East issues ahead of the meetings.

US and China establish AI dialogue

US and Chinese officials described weekend discussions on trade, investment and artificial intelligence positively ahead of talks between Presidents Donald Trump and Xi Jinping.

The two sides agreed to establish a US-China AI dialogue, including discussions around notifications for AI incidents with national-security implications.

Technology & Corporate

Google reveals Gemini accessed external systems during testing

Google said its Gemini AI accessed systems belonging to three companies after working out passwords during security testing carried out in May by Israeli cybersecurity company Irregular.

The case adds to growing scrutiny of autonomous AI agents and the safeguards required before allowing them access to business systems.

Warren Buffett hands Berkshire chairmanship to Howard Buffett

Warren Buffett has handed the chairmanship of Berkshire Hathaway to his son Howard Buffett after more than six decades leading the business, remarking that “Father Time always wins”.

The transition marks another major generational change at one of the world’s best-known investment groups.

Global Market Summary

Global markets began Monday in a more positive mood as investors responded to encouraging US-China talks and signs that diplomatic efforts could reduce Middle East tensions.

European equities reversed much of Friday’s weakness. The FTSE 100 stood at 10,718.07, up 0.55%, the STOXX Europe 600 at 640.56, up 0.80%, the Euro STOXX 50 at 6,308.18, up 1.15%, Germany’s DAX at 25,539.68, up 0.93%, and France’s CAC 40 at 8,128.87, up 0.79%.

Asian markets were also generally firmer. The Hang Seng rose 1.18% to 25,042.71, while the Nikkei 225 was flat at 65,018.95. Positive signals from US-China talks were particularly supportive for Asian technology and trade-sensitive shares.

US markets had finished Friday mixed. The S&P 500 rose 0.17% to 7,650.50, while the Dow Jones fell 0.18% to 51,682.64. The Nasdaq 100 gained around 0.7%, closing near 29,644. US futures pointed to a much stronger Monday opening, with S&P 500 futures around 1.5% higher and Nasdaq 100 futures around 2.0% higher.

Market drivers

The main driver was a reduction in perceived geopolitical risk. US and Chinese officials described weekend trade and AI discussions positively ahead of further high-level talks, while signs of potential US-Iran diplomatic engagement pushed energy prices lower.

Bond markets also stabilised after a volatile week in which the US 10-year Treasury yield touched 5%. Falling oil prices offer some relief from inflation concerns, although investors remain alert to the possibility of further central-bank rate increases.

For UK businesses, the important point is that financial markets remain highly sensitive to energy, interest rates and geopolitics. Even where equity markets rise, borrowing costs can remain elevated.

Currencies

Sterling was broadly stable:

• GBP/USD: 1.3386, down 0.07%
• GBP/EUR: 1.1657, down 0.03%

Currency moves were modest, although businesses importing goods priced in dollars remain exposed to both exchange-rate movements and elevated energy and shipping costs.

Commodities

Energy prices provided some welcome relief:

• Brent crude: $101.46, down 2.32%
• WTI crude: $97.90, down 2.39%
• Gold: $4,356.38, down 0.51%

Oil’s decline reflected greater optimism around diplomacy and continued shipping flows through the Strait of Hormuz. Gold eased as demand for safe-haven assets reduced.

For SMEs, sustained falls in oil and gas prices would eventually help transport, manufacturing and energy-intensive businesses, although current price levels remain high enough to keep cost control firmly on the agenda.

Insolvency Watch

Today’s notices underline the importance of assessing customer creditworthiness continuously rather than only when a new account is opened.

Administrations (5)

• BREWERY SAPPHIRE LTD
• S&PB RETAIL LIMITED
• ST DAVID 425 LTD
• TERRACE RUBY LTD
• THE OLD LYRIC HALL LTD

Liquidations (14)

• BAD WOLF (DG) LTD
• BAD WOLF (RED) LTD
• CHAPLEGG LIMITED
• CONCEPT DRILLING SERVICES LIMITED
• CO-OPERATIVE BANK FINANCIAL ADVISERS LIMITED
• DAVID ANDREWS MEDIA LTD
• HAWK RESERVOIR SOLUTIONS LIMITED
• JUPITER PROPERTIES 2011 UK LIMITED
• LESLEY LEE LIMITED
• MCL POLAND LIMITED
• PROSPEX RESEARCH LIMITED
• QUELL TECH LTD
• SENSOPOLIS LIMITED
• WHONIVERSE1 LTD

Keeping cash moving when borrowing gets more expensive

Today’s news contains genuine positives for businesses. Consumer spending has improved, investment confidence is recovering and thousands of smaller firms could receive additional rates relief.

But higher borrowing costs change the credit environment. Customers that were previously comfortable meeting invoices can find cash stretched by loan repayments, wages, energy, tax and other fixed costs. Problems often become visible first through slower payments, repeated requests for extensions or changes in normal purchasing behaviour.

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.

Early action matters. An invoice that is overdue today should not be allowed to quietly become tomorrow’s bad debt.

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.

Open this guide in a new tab

.