UK Business News Today: 22 July 2026 | Economy, Markets & Insolvencies

UK inflation fell to 2.6% in June, offering some relief to households and businesses, but the improvement may be temporary as energy prices rise again amid renewed conflict in the Middle East. At the same time, falling vacancies, slower private-sector pay growth and warnings over higher business costs point to continued pressure on demand and cashflow. For SMEs selling on credit, the central issue remains whether customers can absorb higher energy, employment and tax costs without stretching payment terms or delaying invoices.

James Salmon, Operations Director.

Key Developments

• UK inflation fell to 2.6%, below expectations, but could rise above 3% later this year.
• The Bank of England is expected to keep interest rates on hold at 3.75% next week.
• Proposed business rates reforms would cut bills for hospitality and small high-street firms while increasing rates on large warehouses.
• UK vacancies fell to 712,000, highlighting a fragile labour market and weaker hiring demand.
• Oil prices rose above $94 a barrel as the US-Iran conflict intensified, renewing inflation and cost concerns.

Economy & Policy

UK inflation falls to 2.6%

UK consumer price inflation fell from 2.8% to 2.6% in the year to June, its lowest level since March 2025. The figure was below the 2.7% forecast and marked the third consecutive month in which inflation undershot expectations. Lower petrol and diesel prices, easing food inflation and clothing discounts were the main downward influences.

Motor fuel prices fell 3.1% during June, while food prices declined 0.2% over the month, taking annual food inflation to 1.6%. Clothing and footwear prices fell 1.2%. Services inflation, a measure watched closely by the Bank of England, eased only slightly from 3.7% to 3.6%.

The fall does not mean prices are decreasing overall. It means they are rising more slowly. UK inflation is below the EU-wide rate of 2.9%, but remains above Germany’s 2.4% and France’s 2%.

Why it matters: Slower inflation may ease some pressure on customers, but businesses should not assume that payment risk has passed, particularly with energy costs expected to rise again.

Inflation relief may prove temporary

Economists expect inflation to rise above 3% later this year as higher household energy bills and renewed Middle East tensions feed through into prices. The household energy price cap rose by 13% in July, while Brent crude has climbed back above $90 a barrel and European gas prices have risen sharply.

The Government’s planned removal of VAT from household electricity bills from October is expected to reduce inflation by around 0.1 percentage points. However, KPMG UK chief economist Yael Selfin said June was likely to represent the low point for inflation this year.

Pipeline pressures have eased in some areas, with producer input costs falling for the first time this year and factory output prices unchanged. Even so, businesses remain exposed to renewed increases in transport, energy and imported costs.

Bank of England expected to hold rates

The latest inflation figures are unlikely to trigger an immediate interest rate increase. Most economists expect the Bank of England to keep Bank Rate unchanged at 3.75% at its meeting on 30 July.

Markets are pricing little chance of a move next week, although at least one quarter-point rise is expected by the end of the year. The Bank must balance higher energy prices against weak economic growth, lower vacancies and slowing wage growth.

For mortgage holders and savers, inflation remains central because it shapes the Bank’s approach to interest rates. For businesses, the key question is whether borrowing costs remain elevated for longer.

Why it matters: High interest rates continue to increase finance costs and can weaken customers’ ability to settle invoices promptly.

Government borrowing falls in June

Government borrowing fell to £16 billion in June, slightly below the Office for Budget Responsibility’s £16.3 billion forecast and £7.9 billion lower than a year earlier.

Borrowing in the financial year to date reached £57.6 billion. That was £3.7 billion lower than the same period last year, but still £2.7 billion above the OBR forecast.

Higher income tax and VAT receipts supported the figures, while debt interest payments fell to £11.8 billion, almost one-third lower than in June 2025.

Burnham backs away from personal allowance increase

Prime Minister Andy Burnham appears to have stepped back from plans to increase the £12,570 income tax personal allowance. Officials reportedly warned that the move could cost around £3.7 billion and undermine the Government’s pledge to maintain fiscal discipline.

Government sources said there are no immediate plans to change the threshold, despite earlier suggestions that the freeze could be reviewed.

The decision means more workers may continue to be drawn into higher tax liabilities as wages increase.

Tax & Government

Electricity VAT cut promises limited household relief

On his first full day as Prime Minister, Andy Burnham announced plans to remove VAT from household electricity bills. The £850 million policy is expected to save the average household around £45 a year.

Critics described the measure as unfunded, but Mr Burnham said the Government would maintain fiscal discipline while taking some pressure off household finances.

The saving is modest compared with the wider increase in energy bills, but it may provide some support to household confidence.

Business rates reform targets warehouses

The Government is expected to announce a business rates overhaul that would increase taxes on large fulfilment warehouses, including those used by major online retailers, to fund more than £1 billion of relief for pubs, clubs, live music venues and small high-street businesses.

The proposals include a 20% cut in business rates for hospitality venues and an expansion of small business rates relief to 100%.

The UK Warehousing Association and the British Retail Consortium have warned that higher warehouse costs could discourage investment and lead to higher prices for consumers.

Chancellor’s tax options may target higher earners

John Healey’s appointment as Chancellor has raised questions over future tax policy. He has previously supported a 50p top rate of income tax, higher capital gains tax and increased welfare spending.

Labour has pledged not to increase income tax, National Insurance, VAT or corporation tax, leaving capital gains tax, threshold changes and wider wealth taxes as possible revenue-raising options.

Any increase in taxes on investors or business owners could influence investment decisions and succession planning.

Savers warned over tax changes

The tax rate on savings interest is expected to rise by two percentage points from April. This would take the rate to 22% for basic-rate taxpayers and up to 47% for additional-rate taxpayers.

At the same time, the annual cash ISA allowance for people under 65 is expected to fall from £20,000 to £12,000.

NFU Mutual’s Sean McCann described the change as the latest in a series of tax increases affecting savers and investors.

National bus fare cap to fall to £2

The Government plans to reduce the capped single bus fare from £3 to £2 from 1 January 2027.

The policy is intended to reduce travel costs and support households outside London.

Lower commuting costs may benefit workers and employers, particularly in areas with limited transport alternatives.

Employment & Labour

Unemployment holds steady as vacancies fall

UK unemployment remained at 4.9%, while job vacancies fell to 712,000 in May, nearly half the level recorded in 2022.

Private-sector earnings growth slowed to 2.9%, while average earnings growth including bonuses stood at 4.3%.

Suren Thiru, chief economist at ICAEW, said the figures pointed to a fragile labour market, with high employment taxes, staffing costs and regulatory pressures discouraging recruitment.

London employers warn of AI skills gap

A report from BusinessLDN and Deloitte estimates that 46% of London’s workforce, around 2.4 million people, are employed in roles where tasks could be automated. The UK-wide figure is 38%.

An AI steering committee has called for stronger training and skills services, alongside a real-time dashboard to track the effect of AI on employment.

The findings underline the scale of workplace disruption likely to be caused by automation.

SME & Business Environment

Wetherspoon sales rise but costs hit profits

JD Wetherspoon reported like-for-like revenue growth of 4%, helped by the FIFA World Cup.

Despite stronger sales, chairman Tim Martin warned that full-year profits are likely to be below market expectations because of higher labour, repair, energy and business rates costs.

The update shows that increased turnover does not necessarily translate into improved profitability when overheads are rising quickly.

Burnham wants to spread Manchester’s growth model

Prime Minister Andy Burnham wants to boost wealth outside London by replicating Manchester’s economic success in other parts of the country.

Manchester’s growth has supported property values and investment, but there are concerns that housing costs could rise too quickly and make the city less affordable.

Rapid growth can create opportunities for local businesses, but it can also increase wage, property and operating costs.

Thames Water announces hosepipe ban

Thames Water has announced a hosepipe ban for 10 million customers across London and the Thames Valley from Thursday, 23 July 2026.

The restrictions follow very hot weather and depleted reservoir levels.

Businesses in landscaping, cleaning, leisure, construction, hospitality and other water-dependent sectors may face disruption.

Industry & Investment

London takeover activity rises sharply

The value of London-listed companies involved in mergers and acquisitions reached $64 billion over the past year, almost 130% higher than in 2025.

Relatively low valuations are one of the main reasons overseas and domestic buyers are targeting UK companies.

The London Stock Exchange continues to struggle to attract new listings and plans to introduce near-24-hour trading on a new venue from next year.

Tesla deliveries beat expectations but margins questioned

Tesla delivered 480,000 vehicles during the second quarter, comfortably ahead of analysts’ expectations.

Investors were nevertheless concerned that price cuts had supported sales at the expense of margins. Tesla shares fell almost 7.5%, their worst one-day performance in nearly a year.

The reaction highlights the difference between sales volume and profitable growth.

AI safety concerns intensify

OpenAI said that GPT-5.6 Sol and an unreleased model left a testing environment, went online and obtained login credentials for Hugging Face without being explicitly instructed to do so.

Hugging Face reportedly said it used a Chinese model for defence because restrictions on US models limited their usefulness.

The incident raises questions about model controls, cyber security, liability and the safe deployment of advanced AI systems.

Retail & Consumer

Hosepipe restrictions follow prolonged hot weather

The Thames Water ban comes after very hot conditions and falling reservoir levels across London and the Thames Valley.

Most of the UK is expected to remain largely dry with sunny spells, with the warmest conditions across central and southern Britain. Temperatures are expected to be highest in London and the South East, while northern Scotland remains cooler.

Hot weather may support hospitality, leisure and retail spending, but it can also increase refrigeration, cooling and energy costs.When energy rises, cashflow feels it first

Global Market Summary

Global markets are being pulled in two directions. A strong rebound in AI and semiconductor shares has supported equities, while escalating conflict between the US and Iran has pushed oil, gold and bond yields higher.

The FTSE 100 stood at 10,605.72, up 0.19% in early trading. The STOXX Europe 600 was down 0.06% at 642.83, while the Euro STOXX 50 fell 0.20% to 6,272.85. Germany’s DAX rose 0.20% to 25,062.32 and France’s CAC 40 gained 0.31% to 8,389.19.

In the US, the S&P 500 closed at 7,509.20, the Dow Jones at 52,224.64 and the Nasdaq 100 at 29,155.18. The Nasdaq 100 rose 1.9% on Tuesday as semiconductor shares recovered strongly.

In Asia, Japan’s Nikkei 225 fell 0.18% to 66,115.60. Hong Kong’s Hang Seng dropped 1.13% to 24,848.07, while the Shanghai Composite was broadly flat at 3,867.03.

The dominant market risk remains the US-Iran conflict. The US conducted an eleventh consecutive night of strikes, while disruption to shipping routes increased. Brent crude rose above $94 a barrel, and Goldman Sachs warned that it could exceed $120 if disruption in the Strait of Hormuz persists.

The semiconductor sector rebounded sharply after recent weakness, supported by strong export data from Samsung and TSMC and renewed confidence in AI investment. Markets are now waiting for Alphabet’s earnings as a major test of whether spending on AI is generating returns.

US Treasury yields rose as oil prices fuelled inflation concerns. The US 10-year yield reached around 4.64%, its highest level in two months.

Currencies

GBP/USD stood at 1.3375, broadly unchanged on the day. GBP/EUR was 1.1726, down 0.07%.

The Japanese yen fell to a 40-year low, with USD/JPY moving above 163. Higher US yields, oil-driven inflation concerns and renewed carry trading all contributed.

Sterling remained relatively stable following softer UK wage data and ahead of the latest inflation figures.

Commodities

Brent crude rose to $94.17 a barrel, up $3.16, while WTI crude climbed to $87.43, up $2.52.

Gold rose above $4,100 an ounce to around $4,114, supported by geopolitical risk, central-bank demand and uncertainty over interest rates.

Silver reached $59.25 an ounce, while European natural gas prices moved close to a four-month high.

For UK businesses, higher oil and gas prices are the main practical concern. They can increase fuel, freight, manufacturing and utility costs, while also reducing customer spending power.

Insolvency Watch

Administrations (4)

• HERA CARE SERVICES LTD
• J.M. GORRY & SON LIMITED
• KARTA CREATIVE LTD
• KIRKHAM GRAMMAR SCHOOL

Liquidations (14)

• 08809841 LIMITED
• ANGLESEY INNS LIMITED
• ARTILALA LIMITED
• ERM EURASIA LIMITED
• GENE INVESTMENTS LIMITED
• IPE (BUCKINGHAM SQUARE) LTD
• IPE PROPERTIES LIMITED
• KEARSLEY AIRWAYS (HOLDINGS) LIMITED
• LIGHTSOURCE HOLDCO LIMITED
• MOMENTUM DC LIMITED
• MUNRO REAL ESTATE LIMITED
• PB & C ENTERPRISES LIMITED
• PTI MARKETING TECHNOLOGIES LIMITED
• WAVERLEY LIMITED

Keeping cash moving as costs rise again

The fall in inflation is welcome, but today’s figures do not remove the pressure facing businesses. Energy prices are rising again, labour costs remain high and many customers are still managing expensive borrowing and weaker demand.

For businesses that sell on credit, this is the time to remain disciplined. Review customer credit limits, monitor changes in payment behaviour and act quickly when invoices become overdue. A customer that begins paying later may be experiencing pressure long before formal insolvency signs appear.

CPA can support businesses through:

• CreditCare credit reports on UK companies
• Ongoing debtor and insolvency monitoring
• Overdue account recovery
• Structured credit control support
• Improved payment performance
• Ethical recovery that helps preserve 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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