News in brief

18 March 2025: Thames Water's £3bn rescue deal cleared by court; supermarkets’ shares drop amid Asda cuts; 25% of young workers considering quitting the workforce.

A £3bn rescue loan for Thames Water is set to go ahead after an appeal against the deal was dismissed. This extra funding allows the UK's largest water company to continue operating for at least another 12 months giving it time to restructure its nearly £20bn in debt and try to attract new investment. The initial tranche of £1.5bn will be provided in instalments over the coming months, the BBC reported.

More than £3.5bn has been wiped off the value of Tesco, Sainsbury’s and Marks & Spencer’s stock since Friday. This comes amid fears that rival Asda will step up the grocery price war. The UK’s third-biggest supermarket chain said its profits were likely to drop this year as it invested more in cutting prices and putting more staff in shops. Tesco’s share price then fell 10%, Sainsbury’s down 8% and Marks & Spencer’s 7%, the Guardian reported.

A quarter of British 18–24-year-olds have considered leaving the workforce in the last year. The PwC report findings are a sign of the increasing impact of economic inactivity spreading across the UK. Among all UK workers, 10% are currently actively considering leaving work for an extended period, with a further 20% having considered leaving in the last year. The news comes as a staggering 90% of employers state that they are concerned about a rising wave of economic inactivity.

17 March 2025: Reeves announces £2bn defence boost; Nationwide customers get cut of £600m windfall; UK economy shrank unexpectedly in January.

The government has pledged an extra £2bn to support UK defence exporters. This comes in a bid to unlock more orders from international allies. The move increases the lending capacity of the UK Export Finance to £10bn. Last year, it issued £8.8bn in loans, supporting 650 exporters and 41,000 jobs, and provided funds for nations such as Poland, Qatar and Ukraine, City A.M reported.

Nationwide building society will give mini windfalls to more than 12 million members. The giveaway allocates eligible customers a share of more than £600m after the takeover of Virgin Money last autumn. They will each receive £50, and the cash will start to land in people’s accounts from 9 April. Nationwide also hopes to announce its third annual “Fairer Share” payout in May, which would follow payments of £100 that were made in 2023 and 2024, the Guardian reported.

The UK economy shrank unexpectedly in January, in a blow to the government ahead of its Spring Statement later this month. It contracted by 0.1%, which was weaker than forecast, driven mainly by a decline in the manufacturing sector. Economists had predicted 0.1% growth in January after a 0.4% rise in December. It was estimated to have grown by 0.2% over the three months to January, however the overall picture for the UK was one of weak growth. With tax rises coming into force in April, concerns remain that economic growth will remain sluggish for some time, the BBC reported.

14 March 2025: Trump threatens 200% tariff on EU alcohol; UK farmers’ incomes stagnant since the 1970s; John Lewis scraps staff bonus again.

US President Donald Trump has threatened a 200% tariff on any alcohol coming to the US from the EU. He made the threat in response to the EU's plans for a levy on US-produced whiskey, which was in retaliation for US tariffs on all steel and aluminium imports. A European Commission spokesperson said "calls are being prepared" between the US and the EU to discuss the situation, the BBC reported.

Farmers’ incomes have remained stagnant since the 1970s, when accounting for inflation, despite improvements in productivity and a fall in the workforce. Over the past five years, the average income for a farmer has been £32,272. During the same period, the economy has grown and real-terms wages have risen in other sectors. This has been driven by falling prices for farm produce, as the UK has become more reliant on imports, supermarkets have taken over grocery shopping and households are eating more ultra-processed food, the Guardian reported.

The John Lewis Partnership has scrapped its staff bonus for the third year in a row despite a near-tripling in profit. The company, which owns both John Lewis and Waitrose, told markets this morning that profit before tax increased from £42m to £126m over the 52 weeks to 25 January. Overall sales rose 3% year on year, up from £12.4bn to £12.8bn, while the company’s operating profit margin improved 0.9 percentage points to 2%, City A.M reported.

13 March 2025: PWC cuts partners and apprenticeships; City watchdogs drop new diversity and inclusion rules for firms; Starmer responds on US tariffs.

PWC UK has made record cuts to its partner ranks and paused its tech apprenticeship scheme. This moves attempt to sustain annual profits at close to £1m per partner, in the face of a sharp decline in consulting demand. According to corporate filings, 123 partners left the Big Four firm in 2024, more than double the annual average since 2002. Additionally, around 27 of the 91 students who completed the scheme last year weren’t offered permanent roles at the end, leaving them without enough time to apply elsewhere, City A.M reported.

The City’s top two regulators have said they will not bring in new diversity and inclusion rules for financial firms. The Prudential Regulation Authority and the Financial Conduct Authority want to avoid imposing extra “regulatory burdens” and costs, in the latest sign of a retreat from efforts to help underrepresented groups. They said they would instead support “voluntary industry initiatives” aimed at boosting diversity and inclusion in the financial sector, the Guardian reported.

UK Prime Minister Sir Keir Starmer says the UK will "keep all options on the table" as US tariffs on imports of steel and aluminium take effect. Politicians are calling for him to have a more robust response. The UK exports hundreds of millions of pounds worth of steel to the US per year, which will be subject to the 25% levy. The EU, facing the same tariffs, said it would impose counter-tariffs on €26bn (£22bn) of US goods. Canada also responded with countermeasures, the BBC reported.

12 March 2025: HMRC to use voice recognition on calls; UK lenders face huge car loan payout bill; Thames Water loan should not have been approved.

Callers to HMRC will be able to use their voice as a password in a bid to speed up calls. The UK tax authority has been heavily criticised for its failure to answer tens of thousands of calls, and for long delays on phonelines. It will now trial a system used by banks to use voice recognition to improve call handling. The system is expected to be introduced across HMRC phonelines during the rest of the year, the BBC reported.

Banks could be forced to proactively tell customers they have been mis-sold car finance. This comes as the Financial Conduct Authority’s plans for a compensation scheme affecting potentially millions of Britons moved “one step closer”. It will announce its decision on such a scheme – which could result in redress totalling billions of pounds – within six weeks of a decision following a landmark supreme court hearing early next month, the Guardian reported.

A £3bn emergency loan that temporarily averted Thames Water’s special administration should not have been approved, a court has been told. The Court of Appeal heard the terms of the agreement were “mispriced and inappropriate.” Thames Water, which serves around 16m customers in the UK, has been battling to stave off collapse amid a £19bn debt pile, City A.M reported.

11 March 2025: Treasury to shelve plans for VAT on funds; more job support for people in ill health may save UK £1bn; Lazarus hackers convert $300m of stolen crypto into cash.

Ministers are looking to block HMRC’s proposal to apply VAT to investment funds, following warnings from City bosses. Currently, third-party fund management operations are free from the 20% consumption tax. Senior finance executives warned City minister Emma Reynolds that the move would exert a £147m hit on the finance sector – most of which would be passed onto investors – and deter foreign investors from ploughing money into the UK, City A.M reported.

Providing more support for people in ill health to stay in work could save the UK government more than £1bn. The number of days lost to work-related ill health has rocketed by a third since 2010 to 34 million days – costing the UK economy more than £400m a week. There are approximately eight million people in Britain with a work-limiting health condition and each year around 300,000 leave the workforce. A report by the Commission for Healthier Working Lives found more job support for them could help at least 100,000 more people to stay in work and save the UK £1.1bn within five years, “with significant ongoing savings beyond that point”.

The Lazarus Group hackers have converted around 20% of the digital tokens they stole from crypto exchange ByBit two weeks ago into cash. The hackers, thought to be working for the North Korean regime, have been working nearly 24 hours a day to funnel the money. So far, they have converted at least $300m (£232m) of their record-breaking $1.5bn crypto heist into unrecoverable funds. ByBit has deployed a Lazarus Bounty programme, encouraging the public to help trace stolen funds. So far 20 people have shared more than $4m in rewards for successfully identifying $40m of the stolen money and alerting crypto firms to block transfers, the BBC reported. 

10 March 2025: investors pulled £3bn from funds in January; UK house prices fall unexpectedly; Boots gets new US owner in multi-billion-dollar deal.  

Investors pulled £3bn out of funds amidst geopolitical and economic instability in January. This marked a sharp reverse from December, when £2.3bn had flowed into funds, according to the Investment Association. Macroeconomic conditions on the home front, namely the reacceleration of inflation, had played a part in the investment outpourings. The lack of GDP growth at the end of 2024 had damaged investor confidence, triggering the outflows.

UK house prices unexpectedly fell last month. This came as concerns over the sluggish economy outweighed an anticipated rush of people trying to complete purchases before stamp duty increases in April. The average property price dipped by 0.1% in February to £298,602, having hit a record high in January, data from Halifax showed. Analysts had forecast a 0.3% increase in month-on-month growth and a 3.1% annual rise, however that fell short of expectations at 2.9%.

The US owner of the Boots pharmacy chain is being taken over by private equity firm Sycamore Partners in a $10bn (£7.8bn) deal. The price being paid for Walgreens Boots Alliance is a fraction of what the company was worth a decade ago, as it struggles with growing debt and shoppers going online for cheaper products. There are now 1,900 Boots stores left in the UK after shops began closing in June 2023. Sycamore Partners is paying $11.45 per share for Walgreens Boots Alliance, which is more than its shares are currently worth on the US stock market, the BBC reported.