Business News Round Up (15/06/2026)
UK economy shrinks as Middle East conflict bites, but quarterly picture holds firm
The UK economy contracted by 0.1% in April, official figures show, as the conflict in the Middle East began to weigh on growth and energy prices climbed following Iran’s closure of the strait of Hormuz. The fall in gross domestic product, which economists had anticipated, followed a 0.3% rise in March, according to the Office for National Statistics. The downturn was led by a 0.2% decline in services output, partly offset by a 0.1% rise in construction. Weakness in services was driven in part by the arts, entertainment and recreation sector, with the ONS citing the cancellation of multiple sporting events in the Middle East. Although construction rose, the increase came solely from repair and maintenance, with new work down 0.3%. Over the three months to April, a less volatile measure, GDP grew 0.7%.
UK small business profits rise as late payments bite
UK small business profits grew by 7.4% in the year to the first quarter, the fastest rate since 2022, according to Sage. Sage’s latest SME Performance Pulse, based on anonymised accounting and payroll data from nearly 150,000 small and medium-sized businesses, painted a mixed picture of stronger profitability alongside persistent payment delays. Real revenues rose by 3.2%, extending growth to a fourth consecutive quarter, while profit growth accelerated from 5.5% in the previous quarter. The figures came as the wider UK economy expanded by 0.6% quarter on quarter in the first three months of the year, according to Office for National Statistics data cited in the report. But the data also showed a sharp slowdown in spending growth. Small business spending growth fell to 1.6% from 4.8%, suggesting firms are becoming more cautious as costs rise and demand softens.
https://itbrief.co.uk/story/uk-small-business-profits-rise-as-late-payments-bite
Quarter of manufacturers looking abroad for cheaper energy
One-in-four British manufacturing companies have moved, or are considering moving, some of their operations abroad due to high energy costs in the UK, according to new research. A survey by Make UK found firms are taking the step due to domestic energy costs making them “uncompetitive”. The data shows 10% of firms have already started outsourcing production overseas, while another 16% are exploring the possibility of doing the same. The Times reports most manufacturers looking to outsource production overseas are targeting Asian countries like China and South Korea where industrial energy prices are lower. Make UK Chief Executive Stephen Phipson said: “We’ve got the highest energy costs in the world. “A year ago, the big trend was onshoring and bringing back supply chains to the UK. Now [companies] can’t use UK suppliers because they’re too expensive so they’re going overseas.”
New UK and Japan tech deal to accelerate growth and jobs
A landmark tech partnership between the UK and Japan has been agreed and backed by businesses in both countries to boost growth, create jobs and strengthen national security. The UK-Japan Frontier Tech Partnership brings together Britain’s strengths in software and research with Japan’s hardware, robotics and manufacturing expertise, creating a powerhouse alliance aimed at driving economic growth and keeping both nations secure. The two countries will work together on sectors including AI, space, quantum and cybersecurity, and have already agreed a formal partnership connecting the UK’s microchip design expertise with Japan’s advanced manufacturing for the first time. This collaboration between the UK Semiconductor Centre and Rapidus, Japan’s state-of-the-art 2nm manufacturing facility, creates a direct pathway for the UK semiconductor sector to manufacture cutting-edge chips.