Business News Round Up (16/07/2026)
Reeves unveils banking shake-up, but critics say investment reforms don’t go far enough
Chancellor Rachel Reeves used her annual Mansion House speech to set out a new Financial Services Growth and Competitiveness Strategy, pledging to move the UK away from “risk-averse regulation” and towards what she called “regulating for growth”. The centrepiece of the announcement was a shift in approach to bank ring-fencing rules. Reeves confirmed the government will consult on a new “Growth Allowance” that would let ring-fenced retail banks take on more flexible, higher-risk lending and complex corporate finance activity, a significant loosening of the post-financial-crisis rules that kept everyday banking separate from riskier investment arms. The Chancellor also confirmed targeted adjustments to Basel 3.1 capital rules, aimed at freeing up bank lending and investment while insisting financial stability would be maintained. Elsewhere, Reeves announced a major SME lending package designed to unlock billions of pounds in finance for scale-up businesses as a way to drive productivity and boost regional economies.
Public finance institutions invested £50bn in UK businesses since 2024
Public finance institutions UK Export Finance (UKEF), British Business Bank, National Wealth Fund and Innovate UK have made at least £50bn of investments over the last two years, supporting or sustaining around 802,000 jobs. Since July 2024, the government says it has unlocked an additional £80bn of financial capacity across the four organisations, increasing their combined firepower to £193bn to support long-term investment and economic growth. Public finance institutions work to provide businesses with a complementary package of support throughout their growth journey. By combining expertise and capabilities across innovation, access to finance, investment and exports, they help businesses start, scale, invest, innovate and reach international markets. “The UK is one of the best places in the world to innovate, and the increased capacity across the public financial institutions creates a significant opportunity for ambitious businesses,” says Tom Adeyoola, CEO at Innovate UK.
UK economy loses momentum despite stronger than expected quarterly growth
The UK economy grew by 0.7% in the three months to May, although the pace of expansion slowed as the latest monthly figures pointed to weakening activity. The rolling three-month increase follows revised growth of 0.8% in the three months to April. Services, production and construction all recorded growth over the period, with construction leading the way at 1.6%. However, the latest monthly data showed a weaker picture, suggesting the economy has lost momentum since the start of the year. Liz McKeown, the Office for National Statistics’ director of economic statistics, said: “The economy recorded robust growth in the three-months to May, though the pace eased slightly as the latest two-months showed a weaker picture.” Weaker manufacturing output and oil and gas extraction were among the biggest drags on growth, adding: “This was only partially offset by another weak period for power generation, while architectural and engineering firms also contracted.”
Azets expert calls for pro-business tax reforms as new Prime Minister arrives
After weeks of speculation, Andy Burnham has secured leadership of the Labour Party and is set to assume the office of Prime Minister. Ahead of the change in management at 10 Downing Street, Praveen Gupta, UK head of tax at professional services firm Azets, argues changes and clarity in the tax system are now needed to create and keep the next generation of Bransons, Dysons and Bartletts in Britain. As the former Prime Minister Keir Starmer departs, there has been a great deal of discussion as to how a reformed tax system might better propel the nation forward to meet future challenges. While several experts have called for overhauling taxation to bring in more revenue from the country’s wealthiest people, another has argued that Britain’s tax system is “crushing entrepreneurs” and needs to be changed if the government wants more people to start, scale and sell a business.