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

The UK economy showed further signs of strain on Friday as new data revealed falling retail sales, a sharp contraction in private sector activity and a steep rise in government borrowing. Businesses are facing a difficult mix of rising costs, slowing consumer demand and political uncertainty, while concerns continue to build over labour shortages, employment regulation and mounting insolvency pressures. Global markets remained volatile as investors tracked developments in US-Iran negotiations, oil prices and interest rate expectations. Meanwhile, UK SMEs are increasingly having to navigate weakening demand alongside higher employment costs and tighter cashflow conditions.

James Salmon, Operations Director.

Key Developments

• UK PMI data fell into contraction territory for the first time in more than a year
• Retail sales suffered the sharpest monthly decline since 2020 outside pandemic distortions
• Government borrowing reached its highest April level in six years
• SMEs warned Labour employment reforms are increasing hiring costs
• Insolvency pressures continued across manufacturing, travel, hospitality and construction sectors

SME & Business Environment

UK Retail Sales Fall Sharply As Consumers Pull Back

UK retail sales fell 1.3% in May as consumers cut spending amid rising fuel prices and economic uncertainty linked to the Iran conflict. Motor fuel sales dropped 10%, marking the largest monthly decline since November 2020. Analysts said households are becoming increasingly cautious as living costs rise and economic confidence weakens.

Economists believe the figures strengthen the case for the Bank of England to pause interest rate increases in June as consumer demand slows.

Why it matters: Slowing consumer spending increases pressure on SME cashflow, especially for retailers, hospitality firms and businesses reliant on discretionary spending.

UK Private Sector Falls Into Contraction

The S&P Global Flash UK PMI composite index fell to 48.5 in May from 52.6 in April, moving below the 50-point growth threshold for the first time in over a year. Services activity weakened sharply, falling to a 64-month low of 47.9, while businesses reported weaker demand, supply shortages and rising costs.

Economists warned the data suggests the energy shock and political uncertainty surrounding Prime Minister Keir Starmer’s leadership are beginning to weigh more heavily on business confidence and investment.

Why it matters: Falling business activity often leads to delayed supplier payments, slower invoice settlement and rising credit risk for SMEs.

Economists Warn Interest Rate Rise Still Possible

Despite weakening economic data, economists said the Bank of England may still raise interest rates in July due to inflation concerns. Analysts expect inflation to rise towards 3.5% later this year as energy prices feed through into the wider economy.

The Bank now faces a difficult balancing act between controlling inflation and avoiding further damage to already slowing economic activity.

Why it matters: Higher borrowing costs can further squeeze SME cashflow and increase pressure on already stretched customers.

Government Borrowing Hits Six-Year April High

UK government borrowing reached £24.3bn in April, the highest April deficit in six years. Tax receipts missed forecasts while public spending rose by £8.9bn, increasing pressure on Chancellor Rachel Reeves.

The figures come before the full economic impact of rising Middle East energy prices has been reflected in the public finances.

Why it matters: Weak public finances increase the likelihood of future tax rises or spending restraint affecting businesses and consumers.

Employment & Labour

Businesses Warn Employment Reforms Are Increasing Hiring Costs

UK firms said Labour’s Employment Rights Act reforms are making recruitment more expensive and complex. Research from Employment Hero found more than half of businesses believe hiring has become harder due to rising compliance costs and additional employment protections.

Employment lawyers also warned the reforms could worsen the growing backlog in Employment Tribunals.

Why it matters: Rising staffing costs and legal complexity can slow hiring and increase financial pressure on SMEs.

Construction Sector Warns Housing Targets At Risk

Construction firms warned Labour’s employment reforms could threaten the Government’s target of building 1.5m new homes. The Construction Plant-hire Association said nearly half its members are “very concerned” about the impact of the new employment rules.

The sector is already dealing with labour shortages, higher energy costs and rising operational expenses.

Why it matters: Construction slowdowns can affect payment chains across contractors, suppliers and SMEs throughout the wider economy.

Amazon UK Boss Says Youth Unemployment Is A Skills Problem

Amazon UK boss John Boumphrey said record youth unemployment levels are being driven by failures in the education system rather than a lack of motivation among young people. He called for mandatory work experience for over-16s and said Amazon struggles to recruit enough workers with technical and engineering skills.

Boumphrey said businesses, colleges and local authorities need to work together more closely to close regional skills gaps.

MPs Warn Disabled Workers Face “Hostile” Workplaces

The Work and Pensions Committee said disabled employees still face significant barriers at work, with many employers taking months to implement reasonable adjustments. MPs proposed a legal requirement forcing employers to respond within two weeks.

The report highlighted that 82% of adjustment requests currently take more than four months to complete.

Economy & Policy

Reeves Announces “Great British Summer Savings” Measures

Rachel Reeves announced a package of temporary support measures including free bus travel for children in August and a VAT cut on children’s entertainment from 20% to 5%.

The Government also confirmed plans to reduce VAT on summer attractions and children’s meals while delaying fuel duty increases.

Wealth Tax Proposals Alarm Entrepreneurs

Wes Streeting proposed aligning capital gains tax rates with income tax rates as part of a potential Labour leadership campaign platform. The move could raise CGT rates to 40% or 45% for higher earners.

Tech entrepreneurs warned the proposals could damage investment and weaken the UK’s AI and start-up sectors.

Pension Reform Plans Criticised

Pensions experts warned planned inheritance tax changes on pensions could create significant administrative complications for bereaved families from 2027 onwards.

Industry figures said the changes risk creating delays and confusion during probate processes.

Net Migration Falls To Lowest Level Since 2021

Net migration to the UK fell to 171,000 in 2025 as tighter visa rules reduced arrivals from outside the EU. At the same time, emigration by British nationals increased sharply.

Economists warned the changing composition of migration may weaken labour supply and reduce economic growth potential.

Industry & Investment

BT Shares Fall After Investor Disappointment

BT shares came under pressure after investors reacted negatively to the company’s full-year outlook despite progress on fibre rollout and cost savings.

easyJet remained under scrutiny as investors assessed summer travel demand against rising costs, while Intermediate Capital Group rose after strong fundraising results.

Samsung Avoids Semiconductor Strike

Samsung reached a provisional agreement with trade unions to avoid strike action in its semiconductor division. Workers are expected to receive a combined share and cash bonus package worth around £297,000 over ten years.

The agreement removes a potential disruption risk from the global semiconductor supply chain.

Jamie Dimon Takes Softer Tone On AI Job Losses

JPMorgan CEO Jamie Dimon said AI is likely to reduce banking jobs over time but argued the transition can largely be managed through staff attrition rather than mass redundancies.

Dimon’s comments contrasted with more aggressive warnings from other global banking executives regarding AI-driven workforce reductions.

Weather & Energy

European Heatwave Could Boost Solar Output

A high-pressure heat dome is expected to push temperatures up to 11C above normal across parts of Europe, including temperatures of 32C in London and 38C in Spain.

The hot weather is expected to increase solar power generation but may also reduce wind energy production across parts of Europe.

Global Market Summary

Global markets ended the week in a stronger but still fragile position, with investors balancing hopes of progress in US-Iran peace talks against renewed oil-price volatility. European stocks closed slightly higher, with the STOXX 600 up 0.04%, while US markets recovered from early losses as Brent crude fell sharply during Thursday’s session before rebounding again this morning.

The FTSE 100 stood at 10,487.27 this morning, with the STOXX 600 at 624.15, the DAX at 24,742.84 and the CAC 40 at 8,120.99. European markets were trading higher, with the FTSE 100 up 0.3%, the DAX up 0.6% and STOXX 600 futures ahead by 0.8%, helped by cautious optimism over diplomacy in the Middle East and improved German business expectations.

US equities also advanced. The S&P 500 rose 0.2% to 7,445.72, the Dow Jones Industrial Average climbed 0.6% to a record 50,285.66, and the Nasdaq Composite added 0.1% to 26,293.10. The Dow’s record close reflected hopes that a diplomatic route may still be possible in the US-Iran conflict, although sentiment remained uneven. Nvidia fell 1.8% despite issuing forecasts, while older economy sectors such as utilities and materials outperformed. Arm Holdings ADRs rose 16%, Ralph Lauren jumped 13.9%, Intuit fell 20% and Walmart dropped after disappointing guidance.

Asian markets were stronger overnight, supported by AI optimism and hopes of easing Middle East tensions. Japan’s Nikkei 225 surged 2.7% to a new record high of 63,324.21, while the Topix rose 1.0% to 3,892.46. Hong Kong’s Hang Seng rose 0.9% to 25,606.03, with Lenovo up 19.8% after strong growth figures and SMIC also contributing to gains. China’s Shanghai Composite climbed 0.9% to 4,112.90 after recovering from the previous session’s decline.

The main market driver remains the US-Iran conflict. Investors were encouraged by comments suggesting some progress in negotiations, but differences remain over uranium stockpiles and control of the Strait of Hormuz. This has kept oil markets volatile and left businesses exposed to swings in fuel and energy costs.

Currency markets reflected renewed dollar strength. The pound traded at 1.3429 against the dollar, while EUR/GBP stood at 0.8644, putting GBP/EUR at roughly 1.1579. The dollar has been supported by widening rate differentials, with US rates moving decisively higher relative to European peers. The yen remained near 159 against the dollar, close to its weakest level since late April, raising concerns about possible intervention.

Oil prices remained the key pressure point for businesses. Brent crude rebounded to $105.34, up 2.7%, after falling below $103 on Thursday. WTI crude rose to $98.41, up 2.1%. The renewed rise came after Iranian comments reduced optimism over a quick diplomatic breakthrough. Gold eased 0.4% to $4,523.60 per ounce, while LME copper stood at $13,515.50 after large inventory withdrawal orders signalled tightness in the market.

For UK SMEs, the market picture remains mixed. Strong equity markets show investors are still willing to take risk, especially in AI and technology-linked sectors, but volatile oil prices, a stronger dollar and persistent inflation risks all point to continued pressure on costs. Businesses importing goods, buying fuel, managing transport costs or relying on energy-intensive operations may remain exposed to further cashflow pressure if oil prices stay elevated.

Insolvency Watch

Administrations (8)

• Composite Tech Holdings Limited
• GH Bio-Power Limited
• Hescott Engineering Company Limited
• Integrated Estates Management Ltd
• Lakes Bathrooms Limited
• Offsite Engineered Products UK Ltd
• PFL Realisations Limited
• Tong Dinner Ltd

Liquidations (18)

• Beacons Telecom Ltd
• Brera Life Sciences Consultancy Limited
• ConsultCRM Limited
• Entertainment Merchandise Ltd
• Flexiss Consultants Limited
• Locum X Ltd
• Monitor Solutions Ltd
• Novasecta Limited
• Payal Consultancy Limited
• Peprotech EC Ltd
• Phoenix Completion Services Limited
• Readshield Limited
• SDJW Limited
• Smarketeer Ltd
• Stanthip Limited
• Timber Treatments Limited
• Trevelloe Substations Limited
• Wimpole Industrial Finance Company Limited

Winding-Up Petitions (13)

• Zhoosh Health Ltd
• A Consultancy Services Limited
• AK79 Management Limited
• Brands Hatch Performance Limited
• Dawat Spice Ltd
• External Construction Solutions Limited
• First Phase Property Limited
• GLB Development Ltd
• Mouse Valley Plant Limited
• Nashcare 2 Limited
• Out At Sea & Co. Ltd
• R D T Solutions Ltd
• Taftan Admin Management Services Ltd

What CPA Can Do For You

Rising uncertainty makes strong credit management more important than ever

With business activity slowing, retail sales falling and insolvencies continuing across multiple sectors, SMEs face increasing pressure on cashflow and customer payment behaviour.

CPA helps businesses reduce risk through:

• Credit checking and CreditCare monitoring
• Debtor tracing and overdue account recovery
• Payment performance support
• Customer risk monitoring during uncertain trading conditions

To find out how CPA can help protect your cashflow 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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