UK Business News Today: 27 July 2026 | Economy, Markets & Insolvencies

The UK private sector returned to growth in July, helped by the World Cup, warm weather, domestic tourism and improving demand across services and manufacturing. However, the recovery remains fragile: oil prices, Middle East tensions, new US tariffs and the prospect of future interest-rate increases continue to raise costs and weaken financial confidence. For SMEs selling on credit, the combination of stronger activity and persistent financial pressure makes disciplined customer checks, close debtor monitoring and early action on overdue invoices especially important.

James Salmon, Operations Director.

Key Developments

• UK private-sector activity rose to a three-month high, with the purchasing managers’ index reaching 52.1 in July.
• Brent crude fell sharply as fighting between the US and Iran paused, easing immediate energy-cost concerns.
• The Bank of England is expected to hold its benchmark rate at 3.75%, although markets anticipate increases later this year.
• New US tariffs of between 10% and 12.5% threaten exporters and businesses exposed to global supply chains.
• The EY Item Club expects UK growth to slow to 0.9% this year and 0.7% next year.

SME & Business Environment

UK private sector returns to growth

Britain’s private sector expanded in July as warm weather, staycations and the FIFA World Cup supported hospitality and consumer activity. The S&P Global purchasing managers’ index rose to a three-month high of 52.1, up sharply from 49.3 in June and well above economists’ expectations of 49.8. Any reading above 50 indicates growth.

New orders increased, input-price inflation eased and confidence in future output improved. Services activity grew at its fastest pace in three months, while the manufacturing output index reached its highest level in almost two years. Employment continued to decline, although at the slowest rate since October.

The improvement may prove vulnerable if Middle East tensions drive oil and gas prices higher again. Businesses also face renewed tariff uncertainty and the possibility that higher energy costs could delay interest-rate relief.

World Cup and staycations support hospitality

Hospitality businesses benefited from good weather, domestic holidays and England’s run to the World Cup semi-finals. Pubs and venues experienced stronger demand as consumers gathered for major matches, while higher travel costs encouraged more people to holiday within the UK.

Some businesses nevertheless reported disruption from excessive heat, and the broader sector continues to face substantial pressure from wages, energy, business rates and supplier costs.

AI adoption surges among UK businesses

The British Chambers of Commerce reports that 54% of UK businesses now actively use artificial intelligence, compared with 23% three years ago. Adoption has grown rapidly as SMEs explore ways to automate administration, analyse data and improve productivity.

However, only 7.5% of SMEs say they feel confident that they fully understand the benefits of AI. Trust, data protection and privacy concerns remain major barriers.

Making Tax Digital deadline approaches

More than 864,000 sole traders and landlords must submit their first quarterly Making Tax Digital update by 7 August. The update covers the first three months of the tax year and must be submitted to HMRC using approved software.

It is not a full tax return, but businesses that are unprepared could face additional administrative pressure close to the deadline.

Economy & Policy

UK growth expected to remain weak

The EY Item Club expects the UK economy to enter a sustained period of weak growth. GDP is forecast to increase by 0.9% this year before slowing further to 0.7% next year.

Higher oil prices and Middle East uncertainty are expected to keep inflation elevated, with inflation forecast to peak at 3.5%. Unemployment could rise to 5.5%, while reduced fiscal headroom may force Chancellor John Healey to consider tax rises or spending cuts.

Bank of England expected to hold rates

The Bank of England is expected to leave its benchmark interest rate unchanged at 3.75% this week. However, movements in the swaps market suggest traders anticipate two rate increases later this year, potentially beginning in September.

The decision comes as policymakers assess whether the recent rise in energy costs will feed into broader inflation. A sustained easing of Middle East tensions could reduce that pressure, while renewed conflict could strengthen the case for tighter monetary policy.

Major central banks prepare for rate decisions

The Federal Reserve, Bank of England and Bank of Japan are all due to hold policy meetings this week. Discussion will centre on whether the current lull in fighting between the US and Iran will continue and whether the recent energy-price shock will prove temporary.

Central banks face the difficult task of balancing weaker economic growth against the risk that expensive energy drives inflation higher.

Andy Burnham Government and the credit sector

Credit Services Association Chief Executive Chris Leslie has reflected on what Andy Burnham’s Government could mean for the credit and collections sector. He expects much of the existing Labour policy programme to continue, including the gradual passage of Consumer Credit Act reform through Parliament.

Lucy Rigby has returned to the role of Economic Secretary to the Treasury, overseeing financial-services policy. Leslie said this was positive because the sector already has a constructive working relationship with her. He also described Chancellor John Healey as pragmatic and likely to understand the importance of a well-functioning credit cycle.

However, a shift towards greater public spending and higher taxation could unsettle bond markets if spending is not fully funded. That could increase government borrowing costs and push interest rates higher across the economy. Leslie also warned the financial-services sector to remain alert to the possibility of renewed political pressure on banks and credit providers.

Why it matters: Credit regulation and political attitudes towards lending and collections affect how businesses manage overdue accounts and preserve access to responsible credit.

Prime Minister targets neglected policy issues

Andy Burnham is expected to focus on social care, youth unemployment and devolution during the coming week. Downing Street said the Government intends to tackle difficult issues that have been neglected for too long.

The Prime Minister has already pledged to remove VAT from domestic electricity bills and cut business rates for pubs, clubs and live music venues by 20%. The Resolution Foundation estimates that commitments already announced could cost more than £2 billion in 2029/30, prompting questions about how they will be funded.

Regional mayors to receive income-tax revenue

The Government plans to give England’s regional mayors a share of income-tax revenue and more control over spending on local infrastructure, employment and economic growth.

The proposals would expand fiscal devolution without allowing mayors to set new tax rates. Andy Burnham has argued that the UK remains highly centralised, with only around 5% of tax revenue controlled locally.

Tax & Government

Prime Minister considers personal-allowance increase

Andy Burnham is considering increasing the personal allowance by £500 from its current level of £12,570. The allowance has remained frozen since 2021.

The measure could save a basic-rate taxpayer around £100 a year, but it may cost the Treasury as much as £5 billion annually. AJ Bell noted that the allowance would already exceed £16,000 had it risen in line with inflation.

Government may shift taxation towards assets

Economist Emmanuel Igwe of the Prosperity Institute says the Government may need to raise taxes following the latest Office for Budget Responsibility assessment.

Labour has pledged not to increase VAT, income tax or National Insurance, but Andy Burnham has not ruled out a wealth tax and has suggested the country may need to contribute more to balance the public finances. Possible measures could include higher business rates on warehouses or aligning capital-gains tax rates more closely with income-tax rates.

Labour considers major property-tax reform

The Government is reportedly exploring whether council tax and stamp duty could be replaced with an annual tax equal to 0.48% of a home’s value.

Another option is a land value tax based on the value of the land beneath a property rather than the building itself. More than 100 Labour MPs are said to support substantial reform, although Lord Blunkett has described a land value tax as politically problematic.

Energy suppliers told to pass on VAT reduction

Chancellor John Healey and Energy Secretary Miatta Fahnbulleh have instructed energy suppliers to pass the removal of VAT from electricity bills on to customers.

VAT is currently charged at 5%, and removing it is expected to save a typical household around £45 annually. The measure is forecast to cost £850 million in 2026/27 and will be funded using savings from the abandoned digital ID programme. Officials are working with Ofgem to monitor compliance.

Property & Construction

Five million mortgage holders face higher payments

The Bank of England’s Financial Policy Committee has warned that five million UK homeowners could face increased mortgage repayments by 2028.

The average rate on a two-year fixed mortgage is reported to be 5.59%, compared with 4.85% in February 2022. Middle East tensions, energy-market uncertainty and higher wholesale borrowing costs have contributed to the increase.

High asking prices delay property sales

Savills says homes marketed at realistic asking prices typically sell within 28 days. Where one price reduction is required, the average selling period increases to 100 days. Two reductions can extend the process to almost five and a half months.

Around one-third of property sales required at least one price cut, while 11% needed two or more. Each reduction averaged 4.4%, and homes reduced four times eventually sold for an average of 15.4% below their original asking price.

UK office construction hits historic low

Just under 4.5 million square feet of new UK office construction began during the year to June, the lowest level in almost 20 years.

That is roughly half the level recorded after the global financial crisis and far below the 24 million square feet peak reached in 2007. CoStar attributed the decline to economic uncertainty, expensive debt and inflated construction costs.

Retail & Consumer

UK retail sales rise in June

UK retail sales increased by 1% in June following growth of 1.2% in May, according to the Office for National Statistics.

Online shopping reached its highest share of total retail sales since spring 2021, helped by promotions and warm weather. Non-store retail sales rose by 4.4%, while department-store sales fell by 1.7%. Fuel sales declined by 0.8%.

Shein reports first-quarter loss

Shein reported a net loss of $99 million for the first quarter of 2026, compared with net income of $395 million during the same period last year.

The fast-fashion retailer attributed the reversal to a change in accounting practices and tariffs in the US and Europe. The figures were disclosed as the company prepares for a possible initial public offering in Hong Kong later this year.

Beefeater to close all UK restaurants

Beefeater will permanently close all 106 of its UK restaurants on 10 September 2026, ending the steakhouse chain’s 52-year history.

Parent company Whitbread is withdrawing from the branded standalone restaurant market because of unsustainable cost pressures, including higher National Insurance contributions and business rates. Around 3,800 jobs are affected, although Whitbread hopes to redeploy some employees within its hotel operations.

Hotels criticise business-rates exclusion

Hilton and Butlins have criticised the Government’s decision to exclude hotels from planned business-rates reductions for pubs, clubs and live music venues.

Hilton says the average hotel could face a 115% increase in business rates by 2029. Butlins argued that large hospitality businesses should not be excluded from support simply because of their size.

Industry & Investment

Cheap steel imports threaten UK jobs

Tata Steel has warned that an increase in low-cost steel imports from Asia could place employment at its UK operations at risk.

The company says new tariff quotas have expanded import allowances for countries including Vietnam and India. Tata argues that the changes could make it harder for domestic producers to compete.

Banks face bad-loan risk despite stronger profits

Major UK banks are expected to report improved first-half profits as higher interest rates support lending margins. Barclays is forecast to announce £5.9 billion in pre-tax profit, while Lloyds is expected to report £4.1 billion.

However, KPMG has warned that banks may increase provisions for bad loans as higher fuel, food and energy costs affect households and businesses. Investors will focus closely on customer defaults, mortgage demand and impairment charges.

Vodafone revenue exceeds expectations

Vodafone reported first-quarter service-revenue growth of 5.2%, ahead of the 4.6% expected by analysts. Growth was driven by an improvement in Germany, its largest market.

The result provided a positive corporate update during a week dominated by energy, inflation and geopolitical concerns.

SpaceX completes thirteenth Starship flight

SpaceX completed the thirteenth flight of its reusable Starship rocket. The mission was the first major operational test since the rocket and artificial-intelligence group’s initial public offering in June.

The booster completed an unusually gentle ocean splashdown and remained floating rather than exploding, as earlier versions had done. SpaceX described the flight as its best re-entry so far.

Paramount delays Warner Bros Discovery merger

Paramount Skydance has agreed to delay its proposed $111 billion merger with Warner Bros Discovery until June 2027 at the latest.

Twelve US states have launched an antitrust challenge, arguing that the combined group would have increased bargaining power over cinemas and cable distributors. Paramount says the claims cannot withstand scrutiny.

International & Trade

US imposes tariffs on around 60 trading partners

The United States is introducing tariffs of between 10% and 12.5% on imports from around 60 trading partners, including the UK, China and the European Union.

The measures follow a Supreme Court ruling that previous tariffs were unlawful. The US Trade Representative says the new duties are intended to address forced labour and protect American workers. They are reported to cover 99.4% of US imports.

Economists warn that the tariffs may increase consumer prices, while affected countries may pursue legal challenges or retaliatory duties.

Trump threatens additional EU tariffs

President Donald Trump has threatened to impose substantial additional tariffs on the European Union on top of the global 10% tariffs announced on Friday.

The threat followed a $1 billion EU fine against Google for alleged anti-competitive practices. Trump accused the EU of unfairly targeting American companies.

Gatwick water supply restored after outage

Gatwick Airport’s water supply has largely returned after a power failure at the Bough Beech treatment works left both terminals without running water.

Passengers experienced long toilet queues, while restaurants and bars were forced to close. Gatwick distributed bottled water and deployed additional staff, although no flights were cancelled as a direct result of the outage.

SES Water said the incident was unusually complex and that it would take time for the wider network to return fully to normal.

UK Weather Outlook

Much of the UK is expected to experience a warm and largely dry Monday with sunny spells. Temperatures are forecast to reach approximately 25°C in London, 23°C in Plymouth, 22°C in Birmingham, 21°C in Cardiff, 20°C in Belfast and Liverpool, and around 17°C to 19°C across much of Scotland and northern England.

Warm conditions may continue to support hospitality, tourism and outdoor retail, although businesses should consider heat-related impacts on staff, stock, transport and equipment.

Global Market Summary

Relief rally follows pause in US-Iran fighting

Global markets began Monday in a risk-on mood after the United States paused further strikes against Iran. The development ended almost two weeks of military action and caused a sharp fall in oil prices.

Brent crude fell by more than 7% from Friday’s close, while WTI declined by more than 6.5%. Equities rose, bonds rallied and the US dollar weakened as investors reduced some of the geopolitical and inflation risk previously built into prices.

The improvement remains dependent on whether the pause in fighting holds. Energy markets continue to have limited spare capacity, and renewed hostilities could quickly reverse the fall in oil.

UK and European markets

The FTSE 100 stood at 10,771.11, up 0.33% from Friday’s close.

The STOXX Europe 600 rose 0.61% to 648.44, while the Euro STOXX 50 gained 1.10% to 6,348.71.

Germany’s DAX led European gains, rising 1.42% to 25,455.45. The CAC 40 increased 0.50% to 8,416.21.

Germany’s Ifo business-expectations index rose to 86.7 in July, beating the 84.8 forecast and providing additional support to German shares. Retail and travel companies performed strongly, while energy shares fell as oil prices declined.

European gains were moderated by comments from an ECB policymaker suggesting that at least one further interest-rate increase may be required to control inflation.

United States

US Friday’s closing levels were:

• S&P 500: 7,411.98
• Dow Jones Industrial Average: 51,947.25
• Nasdaq 100: 28,128.34

Futures indicated a significantly higher opening, with the S&P 500 expected to gain approximately 1.4% and the Nasdaq 100 around 2.2%.

Technology shares were positioned for a recovery, although investors remain concerned about whether heavy artificial-intelligence expenditure by major technology companies will generate sufficiently strong profits.

Asian markets

Asian equity markets closed broadly higher:

• Nikkei 225: 64,931.19, up 0.50%
• Hang Seng: 25,207.18, up 0.98%
• Shanghai Composite: 3,858.25, up 1.15%
• KOSPI: 6,755.75, up 0.97%
• ASX 200: 8,893.96, up 1.39%

Lower oil prices supported energy-importing economies and emerging-market currencies.

Market drivers

The principal driver was the pause in US-Iran military action and the corresponding reduction in the geopolitical risk premium attached to oil.

Attention now turns to central-bank meetings in the US, UK and Japan. Policymakers must decide whether the recent energy shock will keep inflation high or whether the fall in crude prices will provide enough relief to avoid further tightening.

The European Central Bank also remains concerned about inflation, while the Monetary Authority of Singapore surprised markets with a modest policy tightening.

Currencies

Sterling was slightly stronger against the US dollar but weaker against the euro:

• GBP/USD: 1.3335, compared with 1.3325 on Friday
• GBP/EUR: 1.1700, compared with 1.1717 on Friday

The US dollar weakened as investors moved back into riskier assets and concerns about oil-driven inflation eased. The euro strengthened modestly, helped partly by expectations that the ECB may raise rates again.

Commodities

• Brent crude: $89.65 a barrel, down 7.37%
• WTI crude: $83.40 a barrel, down 6.62%
• Gold: $4,091.72 an ounce, up 0.96%
• Silver: $59.33 an ounce, up 1.98%

Oil’s sharp weekend fall was the most important market move. Brent had recently traded above $100 a barrel before the pause in fighting reduced immediate supply concerns.

Gold remained elevated because geopolitical uncertainty has not disappeared, while silver outperformed amid improved industrial sentiment.

What this means for UK SMEs

Lower oil prices may eventually reduce transport, fuel and production costs, but the benefit will not be immediate or guaranteed. Businesses should continue to budget conservatively and monitor supplier price changes closely.

The possibility of further interest-rate increases remains a major concern. Higher borrowing costs can affect customers’ ability to pay, while tariffs and exchange-rate movements may make imported stock more expensive.

Insolvency Watch

Administrations (2)

• CYF MANAGEMENT LTD
• JUST PERFECT CATERING LIMITED

Liquidations (24)

• ABODIAL LTD
• BALGORES FLEET MANAGEMENT LIMITED
• BROOKS ASSET BACKED SECURITISATION 1 LIMITED
• CDG (SCOTLAND) LIMITED
• CHEADLE UK LIMITED
• DONALD STEEL PUBLIC RELATIONS LONDON LIMITED
• EAST FIFE HOLIDAY HOMES LIMITED
• EMGAS SOLUTIONS LTD
• FIRESTOKE GROUP LIMITED
• GLOBE NOMINEES LIMITED
• ISTUSGRAND DEVELOPMENTS LIMITED
• JAMES KEAN & PARTNERS LIMITED
• LANGOLD FINANCE (UK) LIMITED
• LES NAYLOR LIMITED
• LLOYDS INDEPENDENT FINANCIAL PLANNING LTD
• MIKE O’SULLIVAN GARAGE SERVICES LIMITED
• PENSION SCHEME MANAGEMENT LIMITED
• PET RESOLVE LIMITED
• SMITH MCDONALD & CO. LIMITED
• STILL WATERS PROPERTIES LIMITED
• THE LITTLEWOODS PENSIONS TRUST LIMITED
• THRUMS ENGINEERING SERVICES LIMITED
• TOGETHER ASSET BACKED SECURITISATION 2022-2ND1 PLC
• WALT DISNEY EMEA PRODUCTIONS LIMITED

Winding-up Petitions (2)

• CAPE DELIVERY SOLUTIONS LTD
• TOTAL PEST SOLUTIONS LTD

Protecting cashflow as the recovery remains fragile

July’s return to private-sector growth is encouraging, but today’s figures also underline how quickly conditions can change. Oil prices, tariffs, interest rates, taxation and weaker long-term growth could all affect customers’ ability or willingness to pay on time.

Businesses that sell on credit should review credit limits regularly, monitor changes in customer circumstances and investigate warning signs before balances become unmanageable. Early, respectful contact is more effective than allowing overdue invoices to age without action.

CPA helps Members protect their cashflow through CreditCare credit reports, ongoing debtor monitoring, structured credit-control support and the recovery of overdue accounts. Our considerate approach is designed to improve payment performance while preserving valuable 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/Growth is welcome. Cashflow still needs protection.

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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