UK Business News Today: 3 July 2026 | Economy & Markets

Happy Friday everyone! The main theme for UK SMEs today is cashflow discipline under changing economic conditions. Proposed late payment reforms could give small businesses stronger protection, but rising unsecured loan defaults, weak London business confidence, higher employment costs, tax uncertainty and fragile consumer spending all point to tighter financial behaviour ahead. Lower oil prices and improving global market sentiment may ease some pressure, but businesses selling on credit still need to watch customer risk, payment habits and working capital closely.

James Salmon, Operations Director.

Key Developments

• The UK’s new Commercial Payments Bill could introduce the strictest late payment rules in any major economy.
• Unsecured loan defaults have reached their highest level since the financial crisis, showing growing pressure on household finances.
• London businesses are bracing for weaker economic conditions, with only 7% planning to hire in the next three months.
• Oil has fallen below $72 a barrel as ceasefire hopes build, easing pressure on inflation and interest rate expectations.
• Tax policy debate intensified, with possible bank surcharges, CGT changes and business rates reform all in focus.

SME & Business Environment

UK sets new standard for late payments

A study by the Enterprise Research Centre says the new Commercial Payments Bill would introduce the strictest late payment laws in any major economy. The proposed reforms include a 60-day payment cap, mandatory interest on overdue invoices and enhanced powers for the Small Business Commissioner. The measures are aimed at tackling an estimated £26bn in overdue invoices affecting UK small businesses.

Unsecured loan defaults hit highest level since financial crisis

A Bank of England survey shows a sharp rise in defaults on credit cards and other unsecured loans. The balance of lenders reporting higher default rates rose to 34 percentage points, up from 18 in the first quarter and the highest reading since 2009. Lenders expect unsecured defaults to rise further, while secured loan defaults were little changed.

The data reflects pressure from rising unemployment, elevated borrowing costs and inflation that remains above the Bank of England’s 2% target. KPMG’s Karim Haji said financial pressure is most acute in unsecured lending, with cost-of-living and job security concerns continuing to fuel anxiety. Business default rates were unchanged in the second quarter, but demand for credit among SMEs remained subdued.

Why it matters: When consumers come under pressure, SMEs can feel the effect through weaker demand, slower payments and greater risk when extending credit to customers or trade partners exposed to household spending.

London businesses brace for economic downturn

Research from the London Chamber of Commerce suggests around 60% of London businesses expect the economy to worsen over the next year. The survey of 500 companies also showed weak hiring intentions, with only 7% planning to expand their workforce in the next three months. This points to caution among businesses in the capital as costs, demand and confidence remain under pressure.

Separate consumer research from KPMG UK found that around 63% of people plan to take a holiday this summer, supporting parts of retail and leisure. BDO’s high street sales tracker also showed the World Cup has boosted hospitality but weighed on discretionary retail, with like-for-like discretionary sales rising only 0.6% year on year. Online sales rose 6.9%, while in-store sales grew 1.4%.

Why it matters: London SMEs may face a cautious trading environment, with hospitality benefiting from event-led demand while discretionary retailers continue to compete for stretched consumer spending.

Currys boss urges action on employment and property costs

Currys chief executive Alex Baldock has urged Andy Burnham to reduce rising employment costs. He said Rachel Reeves’ recent Budget added £32m in costs for Currys, with part-time employment costs rising by 13%. Baldock also called for reform of commercial property taxes affecting bricks-and-mortar retailers.

Swift cross-border remittance service goes live with major UK banks

Barclays, HSBC, Lloyds and NatWest have gone live with a new Swift cross-border remittance service. The system is designed to improve international transfers by ensuring the full amount sent arrives without deductions, often within minutes. Customers can also track transfers and see fees upfront.

The service is aimed at improving transparency and efficiency for money moving between countries such as Australia, China, India and Turkey. Faster and clearer payments may help businesses and individuals reduce uncertainty around cross-border transactions.

Economy & Policy

Oil prices fall below $72 as ceasefire hopes build

Brent crude has fallen 1.1% to $71.80, returning to pre-war levels as the US and Iran move closer to a ceasefire agreement. Prices are now nearly 40% below April’s peak of $126, while Gulf flows are reportedly back to around 80% of pre-war levels. Traders are increasingly optimistic that oil supply will improve as tensions ease.

Jefferies economist Mohit Kumar said lower prices may reduce the need for central banks to raise interest rates. For the UK, lower oil prices could also help preserve the Chancellor’s £23.6bn fiscal headroom, giving Andy Burnham a more favourable starting position when he takes office.

European powers accept possible Hormuz transit fees

Some leading European powers reportedly accept that ships transiting the Strait of Hormuz may have to pay fees to Iran and Oman. The US and Gulf Arab countries continue to argue that Iran and Oman cannot impose charges of any kind, citing international maritime law and the risk of setting a precedent.

European countries are pressing Iranian and Omani officials not to discriminate against ships based on nationality. They are also pushing for an international maritime coalition to help clear mines in Hormuz.

Morgan McSweeney says Labour was not fully prepared for government

In a BBC interview, Sir Keir Starmer’s former Chief of Staff Morgan McSweeney said Labour was not fully prepared for government when it took office. He also acknowledged errors, including the policy change over winter fuel payments.

Tax & Government

Unions and City clash over proposed bank windfall tax

City bosses and trade unions are arguing over the prospect of a windfall tax on banks. Paul Nowak, leader of the Trades Union Congress, said Andy Burnham should ignore Square Mile lobbyists and raise more from banks to help fund cost-of-living support. The TUC argues that restoring the corporation tax surcharge on banking profits to 8% could raise £8bn.

The TUC says increasing the surcharge to 16% could raise £20bn, while raising it to 35% could raise £50bn over four years. Banking figures and commentators warned that the move could damage UK financial services competitiveness. Jeremy Warner in the Telegraph argued that UK banks are already among the most heavily taxed in Europe.

Entrepreneurs rush to sell ahead of possible CGT reforms

Entrepreneurs and investors are reportedly accelerating business sales and realising gains amid concerns over potential capital gains tax increases under Andy Burnham. Anthony Whatling, managing director at Alvarez & Marsal Tax, said there has been a rise in inquiries from founders worried about the implications of possible reforms.

One proposal could align capital gains tax with income tax at 45%, which would make it the highest rate in the developed world. Supporters argue that the change could generate an additional £14bn for the Exchequer.

Burnham considers higher warehouse rates to fund pub rate cuts

Andy Burnham has indicated that Labour’s manifesto leaves room for manoeuvre on taxes, while maintaining the central pledge not to increase the main rates of income tax, VAT or national insurance. Speaking to LBC, he suggested warehouses could face higher business rates to help fund a 20% rates cut for pubs. He also suggested some high street businesses could be taken out of the rates system altogether.

HMRC app used nearly 100m times as taxpayers check pay digitally

HMRC says its app was used almost 100m times last year. Some 5.6m taxpayers checked their pay through the app an average of 18 times. The app had 7.6m unique users and 2.8m new users in 2025 to 2026.

Retail & Consumer

Pubs allowed to stay open for England World Cup match

UK Prime Minister Keir Starmer says pubs will be able to stay open for England’s 1 a.m. local-time World Cup match on Monday 6 July. The announcement was made in a post on X and gives pubs more flexibility for a fixture that falls late on Sunday night into Monday morning.

England face Mexico after scraping past DR Congo 2-1 with two late Harry Kane goals. Mexico beat Ecuador 2-0 and will have the advantage of playing at the Mexico City Stadium, with altitude and home support adding to the challenge.

Portugal beat Croatia 2-1, Switzerland beat Algeria 2-0, and Spain’s 3-0 win over Austria set up a high-profile Portugal v Spain last-16 tie. Spain’s win was described as their first World Cup knockout victory since their 2010 title run.

For England, the next fixture is awkward but compelling. Mexico v England kicks off at 1:00am UK time on Monday 6 July, making it effectively Sunday night for anyone planning sleep or work. The winner moves into a quarter-final path against Brazil or Norway.

Bosses may need a bit of understanding for football fan employees on Monday morning regardless of the result.

Industry & Investment

Ineos accuses US rivals of dumping low-cost plastics

Ineos has accused US chemical suppliers of dumping low-cost plastics into the UK market. The company says US imports have risen from 16% to 40% of the UK market since 2023. Ineos has filed a complaint with the Trade Remedies Authority and is calling for tariffs on American-made plastics.

The company says tariffs are needed to protect its Grangemouth plant, which employs 500 people. Ineos warned that closure could put up to 50,000 jobs at risk across the wider supply chain.

Tesla deliveries beat expectations but shares fall

Tesla delivered more than 480,000 cars in the second quarter, up from 358,000 in the previous quarter and ahead of market expectations. European demand helped drive the increase, with orders up 57% year on year as high fuel prices pushed consumers towards electric vehicles.

Despite the strong delivery numbers, Tesla shares fell almost 7.5%. The fall followed a 17% rise in the week before the announcement, suggesting investors had already priced in much of the good news.

Google loses EU antitrust appeal

Google has lost its appeal against the EU’s 2018 antitrust decision over Android, Google Search and Google Chrome. The European Court of Justice upheld the ruling that Google had unfairly favoured its own products on smartphones. The decision leaves the tech giant facing a €4.1bn fine.

International & Trade

Merz unveils €10bn German middle-class tax cuts

German Chancellor Friedrich Merz has announced a €10bn tax cut for middle-class families. Families earning €60,000 a year would receive more than €600 in tax relief. The measure is designed to stimulate the German economy and support the coalition government.

The tax cut will be funded by raising the top tax rate from 45% to 47%. Merz’s coalition has also agreed labour market reforms, including longer Sunday opening hours for cafés and easier hiring practices.

Global Market Summary

Global markets ended the week with a more positive tone, helped by weaker US jobs data, lower oil prices and renewed hopes that central banks may not need to tighten policy as aggressively. European equities had a strong Thursday session, Asian markets rebounded sharply overnight, and US markets were mixed in a holiday-shortened session before the Independence Day closure.

The FTSE 100 was supported by stronger UK futures, which rose 1.8% by Thursday’s close, while the FTSE 250 gained 0.4%. The STOXX Europe 600 rose 1.6% on Thursday and was heading for back-to-back record highs in early Friday trade, up around 0.2%. The STOXX Europe 50 was also supported by the wider European risk-on move,. The German DAX surged 2.3% to 25,609, closing at its first record high since January, helped by Germany’s reform package and improved sentiment. The French CAC 40 rose 1.8%.

In the US, the Dow Jones Industrial Average rose 594.83 points, or 1.14%, to close at a record 52,900.07. The S&P 500 was little changed at 7,483.24, while the Nasdaq Composite fell 207.36 points, or 0.80%, to 25,832.67. The split reflected a rotation away from chip and AI-related shares and into more defensive and rate-sensitive sectors. US markets are closed today for Independence Day.

Asian markets rebounded strongly overnight. The Nikkei 225 rose 1.5% to 69,744.07, while the Hang Seng rose 1.3% to 23,350.03. South Korea’s Kospi surged 5.8% after Samsung Electronics and SK Hynix rebounded on reports of potential AI chip work with Anthropic. The Shanghai Composite rose 0.4% to 4,043.64, while Australia’s ASX 200 gained 1.4% to 8,844.30.

The main market driver was weaker-than-expected US payrolls data. Investors interpreted the jobs report as reducing the likelihood of further Federal Reserve rate increases, which weakened the dollar, supported bonds and lifted gold. The second major driver was the rebound in Asian technology stocks after two days of AI-driven selling. The German reform package also helped European sentiment, while oil markets were shaped by the normalisation of flows through the Strait of Hormuz.

Sterling strengthened against a weaker dollar. GBP/USD rose 0.4% to $1.3333 in the UK market update, while the wider market briefing showed sterling up 0.7% during Thursday’s London session. GBP also rose against the euro, with EUR/GBP down 0.2% to 0.8553, near a one-year low. The move suggests traders are reassessing the bullish euro-pound narrative as sterling benefits from broad dollar weakness and shifting rate expectations.

Bond markets showed a steeper UK gilt curve. UK 10-year gilt yields rose 3bps to 4.78%, while the UK five-to-30-year yield spread widened 2bps to 121bps. German 10-year yields also rose 3bps to 2.91%. Lloyds Bank strategists warned that the near-term cost of defence spending is not the biggest issue; the greater challenge is funding a rise from 2.7% of GDP in 2029-30 to the NATO target of 3.5% by 2035.

In commodities, Brent crude traded around $72 a barrel, with WTI near $69, after falling back to pre-war levels. The fall reflects improving oil flows through Hormuz, with Saudi crude exports reportedly around 90% of pre-war levels and supply through the strait exceeding 10 million barrels a day. Lower energy prices are positive for many SMEs because they can reduce fuel, transport and input cost pressure.

Gold rose strongly to around $4,180 an ounce, up 1.4% on Friday after a 2.3% gain on Thursday. The move was driven by weaker US jobs data and reduced expectations of further Fed tightening. Gold’s rise also lifted Australian gold miners and broader commodity-linked shares.

For business owners, the market message is mixed but broadly less stressful than earlier in the week. Lower oil prices and softer rate-hike expectations may ease some cost pressure, but volatile technology shares, political uncertainty around central banks and weak consumer credit data show that risk has not disappeared.

Why stronger payment protection matters today

Today’s news is a reminder that cashflow pressure can come from several directions at once. Late-paying customers, cautious consumers, higher employment costs, tax uncertainty and weaker confidence can all leave otherwise healthy businesses waiting too long for money they have already earned.

The proposed Commercial Payments Bill is encouraging, especially if it makes long payment terms and overdue invoices harder to ignore. But legislation alone will not protect every business. SMEs still need clear credit checks, disciplined terms, regular debtor monitoring and a calm, professional process for dealing with overdue accounts before they become serious losses.

CPA helps businesses protect cashflow while preserving customer relationships. Our support includes CreditCare credit reports, debtor monitoring, overdue account recovery, credit control support and practical help to improve payment performance. The aim is simple: help businesses get paid more quickly, reduce internal pressure and maintain goodwill wherever possible.

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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