UK SMEs brace for a new era of fiscal tightening as global trade realigns
UK SMEs face a difficult and volatile year ahead. Companies must navigate a weakening macroeconomic environment, fragile fiscal policy, and heightened uncertainty over global trade. Although US President Donald Trump announced a 90-day pause on most tariffs – notably excluding China – global markets remain volatile, and concerns over growth, inflation, and disrupted supply chains persist. Rising UK gilt yields have added fresh pressure on public finances and borrowing costs. Collectively, these forces are dampening customer demand, squeezing margins, limiting access to finance, and delaying decisions on investment and hiring.
Bitcoin’s Trump rally gives way to risk asset capitulation on heightened trade war fears
Donald Trump’s “Liberation Day” – the culmination of his efforts to restructure the US economy and global trade – sparked a sharp global market sell-off that engulfed global equity markets and Bitcoin, as bonds rallied, in a fast-escalating trade war crisis. Blanket tariffs were imposed on nearly all US imports, on top of higher “reciprocal tariffs” on around 60 countries amounting to the most sweeping US trade action in a century.
UK mid-market M&A: fiscal pressures and tariff uncertainty shape divergent paths
Shifting fiscal, tariff and geopolitical environments have introduced a range of uncertainties, which has blunted momentum for mid-market M&A activity in the UK. Fiscal tightening, weak productivity and policy uncertainty risk stalling deal flow, as risk-off sentiment, margin pressure, and tighter financing hit SMEs hardest. At the margins, market upheaval may create selective distressed opportunities. Markets are now at an inflection point, with domestic and international forces giving rise to equally plausible – but divergent – outcomes for UK mid-market M&A.
UK mid-market M&A: fiscal pressures and tariff uncertainty shape divergent paths
Shifting fiscal, tariff and geopolitical environments have introduced a range of uncertainties, which has blunted momentum for mid-market M&A activity in the UK. Fiscal tightening, weak productivity and policy uncertainty risk stalling deal flow, as risk-off sentiment, margin pressure, and tighter financing hit SMEs hardest. At the margins, market upheaval may create selective distressed opportunities. Markets are now at an inflection point, with domestic and international forces giving rise to equally plausible – but divergent – outcomes for UK mid-market M&A.
UK Care Homes: The UK’s ageing population is a shared challenge and opportunity
The UK’s care home market is undergoing substantial evolution, presenting opportunities for investors amid growing demand and complex structural headwinds. While an ageing population intensifies pressure on the NHS with rising waiting lists and increased prevalence of chronic health conditions, it also drives significant investment appeal in the care sector.
UK construction: fragile confidence in a sector awash with rising costs and uncertainty
The UK construction sector is grappling with persistent headwinds. Growth in construction business activity has softened to the slowest pace since June 2024, according to the S&P Global UK Construction PMI. Headline construction PMI fell to a six-month low of 53.3 in December. Declining housebuilding, coupled with subdued demand conditions, persistently high interest rates, and fragile consumer confidence, have significantly impacted activity levels. Decreased levels of new construction starts were reported in 2024 outside London, as the construction sector remains less willing to take on risk amid the present economic and geopolitical backdrop.
UK Trade: risks and opportunities in a diverging two-speed economy
The UK’s annual trade deficit narrowed by £14bn to £25.1bn in 2024, according to the latest ONS data. However, this masks a growing divergence between services and goods trade. Services exports remain a bright spot, while goods exports continue to decline, deepening the UK’s two-speed economy.
Retailers eager to optimise operations ahead of labour cost spikes
UK retailers are bracing for the cascading impact of recent Budget measures as rising wage cost pressures and weakening consumer confidence threaten to erode profits, squeeze margins and risk both store closures and possible insolvencies.
UK Care Homes: Nursing a bifurcated industry back to health
The UK’s for-profit care home sector is evolving into a sharply bifurcated industry. Legacy businesses are failing at an increasing rate, as exacting regulatory scrutiny and financial headwinds create a surge in involuntary closures and insolvencies. Simultaneously, capital flows into the sector are rising, spurred by long-term demographic trends, growing demand for specialised care facilities, and improving market conditions.
UK real estate markets head into 2025 in ascendancy
The UK real estate market is gaining momentum, with easing inflation and stabilising monetary policy paving the way for recovery in 2025. Recovering asset values and improving financing conditions are spurring increased investment activity, liquidity and capital raising. Falling interest rates and declining borrowing costs, combined with rising rents for prime assets, are driving asset value recovery. These developments follow nearly four years of elevated borrowing costs and macroeconomic uncertainty that restrained investment activity.
Hospitality and leisure sector faces Budget pressures and changing consumer preferences
Last week’s Budget introduces new cost pressures for low-wage sectors through higher employer National Insurance Contributions (NICs), resulting in a disproportionate tax increase for employers of low-paid workers. Businesses will be unable to fully recoup these costs over time by squeezing wages, due to the coming rise in the National Living Wage (NLW).
UK energy sector and supply chain partners on a bumpy road to clean energy
The transition to clean energy in the UK is a complex process, requiring a shift from fossil fuels like oil and gas to renewable and low-carbon sources such as wind, solar, hydrogen, and carbon capture and storage (CCS). The UK government has announced a series of proposed changes to accelerate this transition, aiming to increase renewable energy generation, reduce reliance on fossil fuels, and implement new regulations and taxes on the oil and gas industry.