News in brief

14 January 2025: Pound falls further as borrowing costs rise again; UK to 'mainline AI in the veins' under new plans; UK SMEs called to apply for government export awards.

The pound has fallen to its lowest level in over a year, reported the BBC, while UK borrowing costs hit their highest for 16 years. Economists have warned that the rising costs could lead to further tax increases or spending cuts as the government tries to meet its self-imposed rule not to borrow to fund day-to-day spending. In response to an urgent question in the Commons, Treasury minister Darren Jones said there was "no need for an emergency intervention" and markets "continue to function in an orderly way". But shadow chancellor Mel Stride said: "Higher debt and lower growth are understandably now causing real concerns among the public, among businesses and in the markets." The pound fell by 0.9% to $1.226 against the dollar on Thursday, while borrowing costs jumped earlier in the day but calmed by mid-afternoon.

The government will "mainline AI into the veins" of the UK, with plans being unveiled today by Sir Keir Starmer, reported Sky News. The prime minister is set to promise investment, jobs and economic growth due to a boom in the sector. It comes as his government battles against allegations they are mismanaging the economy and stymied growth with the budget last autumn. The government's announcement claims that, if AI is "fully embraced", it could bring £47bn to the economy every year. And it says that £14bn is set to be invested by the private sector, bringing around 13,000 jobs. The majority of those would be construction roles to build new data centres and other infrastructure, with a smaller number of technical jobs once the work is finished.

The Made in the UK, Sold to the World Awards are now open for SME entries until 9 March, The Department for Business and Trade's (DBT) has announced. The awards celebrate the international sales success of SMEs across the UK and provide a stepping stone for further growth and opportunity. This year, two new categories have been added: Digital & Technology, and ‘Export Services’ – the latter aiming to recognise the contribution of logistics and distribution businesses that facilitate UK exports. Lloyds Bank joins the 2025 Export Awards with the Chartered Institute of Export. Winners receive free membership, an export masterclass, photos, a trophy, and promotion on DBT channels. Highly commended entrants also get free membership.

13 January 2025: Lloyds Banking Group brands to share branches; UK debt market sell-off may see mortgage costs rise; L.A wildfire damages set to cost record $135bn.

Lloyds, Halifax, and Bank of Scotland customers will begin sharing branches. Customers will be able to use services in any branch of those brands as part of the group's latest network shake-up. Lloyds Banking Group, the owner of all three brands, said the move would give customers more choice and flexibility. It has not confirmed a date for when the changes will come into effect, the BBC reported.

About 690,000 homeowners are facing an increase in mortgage costs when their fixed-rate deals end this year. This comes as a sell-off in the UK government debt market threatens to push up household borrowing costs. Mortgage rates had been predicted to ease this year, as analysts projected multiple cuts to the Bank of England base interest rate. However, higher interest rates are now expected to add £1.27bn to the annual housing costs for property owners remortgaging in 2025, the Guardian reported.

The Los Angeles wildfires are on track to be among the costliest in US history, with losses already expected to exceed $135bn (£109.7bn). In a preliminary estimate places losses between $135bn and $150bn as the fire damages areas hosting some of the most expensive property in the US. The insurance industry is also bracing for a major hit, with analysts from firms such as Morningstar and JP Morgan forecasting insured losses of more than $8bn, City A.M reported.

10 January 2025: UK surpasses Europe on fintech funding; food growth for public sector to be monitored; Pound falls to lowest in over a year.

The UK’s fintech sector was beaten by only the US on total investment last year. This comes despite a sharp fall in funding on 2023 levels. As global fintech investment fell 20% globally to $43.5bn (£35.2bn), the UK attracted $3.6bn (£2.9bn) of total funding, more than the next five European countries combined, according to Innovate Finance data. Despite the sharp fall in new capital coming into the sector, industry figures are hoping for a resurgence in 2025, City A.M reported.

Food supplied to the public sector will be monitored for the first time to see how much was grown by British farmers. The government is aiming for half of food procured for the public sector to be from British farms, which would be worth £2.5bn a year to farmers. Currently, they are paid just a penny for every loaf of bread or block of cheese sold, the Guardian reported.

The pound has fallen to its lowest level in over a year, while UK borrowing costs have surged to their highest for 16 years. The pound fell by 0.9% to $1.226 against the dollar on Thursday and borrowing costs rose further, the BBC reported. Economists have warned that the rising costs could lead to further tax increases or spending cuts as the government tries to meet its self-imposed rule not to borrow to fund day-to-day spending.

9 January 2025: US banks quit net zero alliance; Lloyd’s of London CEO to join Aon; Insolvency Service urges action on debt.

The six biggest banks in the US have all quit the global banking industry’s net zero target-setting group since 1 December. This comes as the imminent inauguration of Donald Trump as US president is expected to bring political backlash against climate action. JP Morgan is the latest to withdraw from the UN-sponsored net zero banking alliance, following Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs, the Guardian reported.

Lloyd’s of London chief executive officer John Neal is set to leave his position this year to join Aon. He has held the role for more than 6 years. Neal is set to join Aon as its global CEO of reinsurance and global chairman of climate solutions, with the leaving date to be confirmed in due course, City A.M reported.

The UK government is encouraging people to seek help on addressing debt early this year. It released a summary of debt-relief services and steps that people can take to improve their financial difficulties. The Insolvency Service CEO Dean Beale said, “many people start the New Year feeling overwhelmed by serious debt. Our key message is that you are not alone, but it is important to address it as soon as possible.”
8 January 2024: majority of voters want inheritance tax cut; UK food price inflation hits 3.7%; four UK regions to get £289m boost in broadband.

8 January 2025: majority of voters want inheritance tax cut; UK food price inflation hits 3.7%; four UK regions to get £289m boost in broadband.

Food price inflation jumped to 3.7% last month, the highest level since March, helping fuel a bumper season for supermarkets. Sales at the big grocery chains were up 2.1% over the four weeks to 29 December compared with a year before. However, that rise was flattered by food price growth, which jumped more than one percentage point from 2.6% in November, the Guardian reported.

The majority of people think that inheritance tax should be lowered, polling conducted for City A.M shows. The Freshwater Strategy research found 54% of voters thought the controversial tax should be set at a lower level. It is currently applied at a flat rate of 40% on estates worth over £325,000. The Office for Budget Responsibility estimates that inheritance tax will raise £7.5bn in 2024/25. While 24% said it should be ‘a little lower’, 30% said it should be ‘a lot lower’. Only 9% thought it should be higher.

The UK Government has progressed a rollout of gigabit connectivity for isolated communities. Upgrades will support around 131,000 homes and businesses across the country. Areas set to benefit include the Dee Valley, Isle of Anglesey, and Shropshire Hills, as four new contracts - worth more than £289m- have been signed by the UK Government and Openreach. Project Gigabit comes as part of the Government’s Plan for Change, which backs actions that kickstart economic growth and break down barriers to opportunity.

7 January 2025: firms to raise prices as confidence slumps; UK regional divide in qualifications triggers skills gaps; services sector sees record decline in jobs.

More than half of companies are planning to raise prices in the next three months as they face a "pressure cooker of rising costs and taxes". The British Chambers of Commerce (BCC) said its survey of nearly 5,000 firms suggested confidence had "slumped", falling to its lowest level for two years. Nearly two-thirds of firms were worried about taxes following the Budget and 55% expected to raise their prices by April, the BBC reported.

Economic growth in the UK risks being held back by a “skills chasm” between regions, a report by the Learning and Work Institute says. The gap between high- and low-skilled areas of the UK is already wider than in many comparable countries and is forecast to widen. If trends continue, 71% of Londoners and 65% of adults in Scotland will have a degree by 2035, compared with 29% in Hull and East Yorkshire, and 39% in Norfolk. While 27% of adults in the West Midlands have qualifications below GCSE level, that figure is only 9% in west London, the Guardian reported.

Weak demand and higher payroll costs have led to the steepest decline in service sector jobs since January 2021. Nearly a quarter of survey respondents reported a fall in workforce levels, while 12% signalled a rise, data from the S&P Global UK Services PMI showed. Overall, the PMI came in at 51.1, revised down from 51.4, City A.M reported.