UK Business News Today: 25 August 2026 | Economy, Markets & Insolvencies

UK businesses begin Tuesday facing a familiar combination of uncertainty over taxation, rising employment costs and signs of increasing pressure on household finances. Credit card balances and missed payments are climbing, graduate recruitment is weakening and business groups remain concerned about proposed employment reforms. Against that backdrop, new analysis suggests UK productivity may be stronger than official figures indicate, while European markets opened firmer after encouraging German economic data.

James Salmon, Operations Director.

Key Developments

• Andy Burnham has refused to rule out further Budget tax rises as pressure on the public finances intensifies.
• Credit card balances have reached record levels while missed payments are increasing across all stages of delinquency.
• Business groups warn zero-hours contract reforms could add as much as £3bn a year to employer costs.
• Graduate vacancies have fallen 45.6% in a year as employment costs and AI reshape entry-level recruitment.
• Markets opened cautiously firmer in Europe, although geopolitical tensions, energy prices and US trade policy remain significant risks.

Economy & Policy

PM refuses to rule out Budget tax rises

Prime Minister Andy Burnham has declined to rule out further tax increases in the Budget, describing the state of the public finances as challenging. Previously announced measures including the removal of VAT from electricity bills and restoration of the £2 bus fare cap are expected to be funded through spending reprioritisation, but the Prime Minister left open the possibility of further revenue-raising measures.

Labour has committed not to increase income tax, VAT or employee National Insurance, narrowing the Chancellor’s options if additional revenue is required.

Why it matters: Further business or investment-related tax increases could reduce confidence, constrain cash available for expansion and place additional pressure on SMEs already managing higher operating costs.

Business leaders criticise the ‘creep of tax rises’

Prominent business figures have backed calls for the Government to halt what they describe as the steady creep of taxation on entrepreneurs. An open letter signed by business leaders including John Caudwell and Lord Rose criticised increases affecting dividends, capital gains and business assets.

Separately, the Institute of Economic Affairs says taxes on investment have risen by around 10 percentage points since the financial crisis, while increasing complexity within the tax system may also be weakening incentives to invest and grow.

Why it matters: Lower investment and reduced appetite for expansion can weaken demand throughout SME supply chains and potentially lengthen payment cycles.

Two-thirds of people back higher bank taxes

The TUC is calling for a bank windfall tax ahead of the October Budget, with polling suggesting 65% of the public supports additional taxation of bank profits.

The union body has proposed increasing the existing 3% bank profit surcharge to at least 8%, which it estimates could raise £9bn over four years. More aggressive options could potentially raise substantially more.

The banking sector has warned that higher taxes could weaken UK competitiveness and discourage international investment.

Tax trap looms for millions

More than 2m taxpayers are expected to earn above £100,000 this tax year, exposing increasing numbers to the effective 62% marginal tax rate created when the personal allowance begins to be withdrawn.

The £100,000 threshold has remained unchanged since 2010, meaning wage growth has steadily brought more people into the affected income range.

For employers competing for senior or specialist staff, the tax position may increasingly influence salary expectations and remuneration structures.

Benefits bill set for £1.7bn increase

Persistently high inflation could add approximately £1.7bn to the benefits bill, according to the Institute for Fiscal Studies.

The IFS estimates inflation could increase total government expenditure by around £4.7bn once benefits, public-sector pensions and debt interest are considered. UK inflation reached 2.9% in July, with some forecasts suggesting it could reach 3.5% by year-end.

Productivity rises, despite official figures

Resolution Foundation analysis suggests UK productivity may be performing considerably better than official statistics indicate.

Its measure suggests output per hour increased 1.1% over the past two years, compared with an official decline of 0.2%. The think-tank argues the improvement appears to reflect stronger output from employees already in existing jobs rather than an AI-driven productivity boom.

The figures accompany recent data showing the UK among the fastest-growing G7 economies during the first half of 2026.

Tax & Government

Ministers criticised over ‘piecemeal’ business rates reform

Business groups have criticised the Government’s approach to business rates reform after a review was announced focusing primarily on valuations affecting pubs and hotels.

The British Chambers of Commerce and the Real Rates Reform Alliance argue the review should extend across sectors including retail and restaurants.

The criticism reflects broader frustration that business rates remain a major fixed cost regardless of profitability or customer demand.

Employment & Labour

Business groups question zero-hours contract reforms

Retail, hospitality and business organisations have warned that changes to zero-hours contracts could reduce employment flexibility and increase costs.

The Government intends to introduce guaranteed hours and improved notice of shifts. Its impact assessment estimates additional employer costs could reach £3bn a year through administration, staffing changes, lost revenue and reduced flexibility.

CIPD research found 65% of employers using zero-hours contracts expect higher management and HR costs, while 31% believe redundancies could result. Around a third expect greater reliance on temporary, casual or self-employed workers.

Graduate job market hits record low

Graduate vacancies fell 45.6% to 8,383 in the year to July, according to Adzuna.

Non-graduate entry-level vacancies were down 8% to 192,864, while total UK vacancies fell 9.6% to 791,490. Employers are citing higher employment costs and increasing use of AI for entry-level tasks as reasons for reducing recruitment.

The average advertised salary has also weakened since May, reaching £43,675 in July.

Consumer & Credit Conditions

Credit card pressure climbs

FICO data provides one of the clearest warnings in today’s news for businesses that extend credit.

Average credit card spending increased 5.6% to £835 in June, while the average active balance rose to a record £1,975, up 4.7% from a year earlier.

At the same time, the proportion of balances being repaid fell to 33.3%.

Payment difficulties are also increasing. Accounts one payment behind rose 7.7% year-on-year, two-payment delinquencies increased 9.1%, and accounts three payments behind jumped 14.3%.

Average credit limits also increased to £5,985.

Why it matters: Rising household arrears can eventually feed through into weaker consumer spending and greater financial pressure on customer-facing businesses, potentially increasing late-payment and credit risk further along supply chains.

£2bn in lost wealth returned to savers

More than £2bn of previously unclaimed financial assets was reunited with UK consumers during the first half of the year through Gretel’s Billions 4 Millions programme.

Average recoveries were £31,647, while the largest exceeded £3.2m.

The Pensions Policy Institute estimates around £31.1bn remains unclaimed in pensions alone.

Finance & Credit Markets

European private credit lending reaches record

European private credit firms provided a record €63.2bn of lending during the first half of the year, according to Debtwire.

Much of the activity resulted from private equity groups refinancing portfolio-company debt as exits slowed.

However, second-quarter lending fell 25% to €28.4bn as larger companies increasingly accessed cheaper public debt markets.

Why it matters: The continued growth of private credit shows how businesses are increasingly looking beyond traditional bank lending, but borrowing costs and refinancing risk remain important considerations for highly leveraged companies.

Industry & Infrastructure

Thames Water administration plans shelved

Andy Burnham has shelved immediate plans to place Thames Water into administration because of concerns over taxpayer exposure, legal challenges and practical difficulties.

Officials are continuing work to establish whether a viable route into administration exists, but that assessment is expected to take several months.

The decision highlights the complexity and potential cost of resolving financial distress at a major infrastructure provider.

Energy, Climate & Business Resilience

Extreme heat moves from weather risk to credit risk

European asset managers are increasingly treating extreme heat, drought and low river levels as financial and credit risks rather than temporary weather events.

Low Rhine water levels are already forcing barges to reduce loads, increasing transport costs for chemicals, steel and cement producers. Utilities dependent on water for cooling or hydroelectric generation have also reduced output.

Agriculture, logistics, retail and manufacturing are among the sectors facing growing exposure, while companies providing cooling systems, grid infrastructure, automation, resilient logistics and climate-adaptation technologies may benefit.

Economists estimate extreme weather could drive more than $20tn of global spending over the next decade.

Why it matters: Climate disruption can affect suppliers unexpectedly through transport delays, energy shortages, lower sales or higher production costs, making sector and customer monitoring increasingly important for businesses selling on credit.

Global Market Summary

Markets began Tuesday cautiously positive, although investors remain focused on Iran, global energy supply, the US–Canada trade dispute and the outlook for interest rates.

Monday’s FTSE 100 closed 0.35% higher at 10,854.32, outperforming continental Europe. On Tuesday morning it added a further 0.24% to 10,879.63.

European markets also opened higher following stronger German economic data. The STOXX Europe 600 gained 0.33% to 656.40, the Euro STOXX 50 rose 0.34% to 6,469.84, the DAX gained 0.50% to 26,238.39 and the CAC 40 advanced 0.31% to 8,478.91. Germany’s final second-quarter GDP reading showed growth of 0.3% quarter-on-quarter, while the IFO business climate index strengthened to 88.8.

US markets were more mixed on Monday. The S&P 500 fell 0.28% to 7,652.86 and the Nasdaq 100 declined 0.97% to 29,023.18, while the Dow Jones gained 0.26% to 53,417.16. Technology and AI-related shares were under pressure ahead of Nvidia’s results.

Asian markets were mixed overnight. The Nikkei 225 gained 0.50% to 65,856.43, while the Hang Seng was virtually unchanged at 25,511.10, down 0.02%.

Market drivers

Geopolitics remains the dominant source of uncertainty. US sanctions targeting Iran have stopped short of specifying exactly how secondary sanctions could be enforced against major Iranian oil buyers, allowing oil prices to retreat from recent highs.

Trade relations are also back in focus after the breakdown of US–Canada negotiations and President Trump’s threat to increase tariffs on Canadian autos, parts and steel.

Investors are also looking ahead to Nvidia’s results and Federal Reserve chair Kevin Warsh’s Jackson Hole speech, which could shape expectations for US interest rates.

Currencies

Sterling remains relatively firm.

GBP/USD was trading around 1.3634, while GBP/EUR stood at approximately 1.1694.

Sterling’s relative strength reflects firmer UK interest-rate expectations, although currency markets remain vulnerable to changing expectations around central banks and geopolitical risk.

Commodities

Oil continued to retreat after the recent geopolitical rally.

• Brent crude: $90.93 per barrel, down 1.35% on Tuesday after falling 2.35% Monday.
• WTI crude: $83.67 per barrel, down 1.58% after falling 2.36% Monday.
• Gold: $4,630.99 per ounce, down 0.46% Tuesday after rising 1.07% Monday.

Gold remains close to historic highs as investors continue to seek protection against geopolitical and monetary uncertainty.

European natural gas remains another area to watch. Storage levels are significantly below normal seasonal levels, increasing the possibility of renewed energy-cost pressure later in the year.

For UK SMEs, the immediate message is mixed. Lower oil prices provide some relief, but energy security, tariffs, interest rates and geopolitical disruption continue to create cost and supply-chain uncertainty.

Insolvency Watch

Today’s notices underline why businesses selling on credit need to continue monitoring customer circumstances rather than relying purely on historic payment performance.

Administrations (5)

• BULMER & LUMB GROUP LIMITED
• MACHINED PRECISION COMPONENTS LIMITED
• REFLEX FLEET SOLUTIONS LIMITED
• STONE WORLD LIMITED
• SWIMMING NATURE UK LIMITED

Liquidations (7)

• BLAGRAVE NOMINEES LIMITED
• CHIRON RESOURCES (OPERATIONS) LIMITED
• LOGIC MIND LIMITED
• LOVELL JAMES CONSULTING LTD
• MKZ FP2 LIMITED
• NEEDLETAIL DEVELOPMENT LTD
• SIMMONDS PRECISION LIMITED

Winding-up Petitions (2)

• GRAMPIAN CONVENIENCE STORES LTD.
• HOWARD & WARD PROPERTIES LTD

Protecting cashflow when customers are under pressure

Today’s credit card figures provide a useful reminder that payment problems rarely appear overnight.

Financial pressure tends to build gradually. Customers use more credit, repay less, begin missing payments and eventually become unable to meet obligations elsewhere.

The same principle applies in commercial credit.

Regular CreditCare credit reports and debtor monitoring can help businesses identify changes in customer risk before overdue balances become serious problems. Strong internal credit control can then be combined with CPA’s overdue account recovery service when payments begin to slip.

CPA helps Members improve payment performance while maintaining the customer relationships on which future business depends.

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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