Key Points from the Week:
UK-listed companies issued 64 profit warnings in Q3 2025, the most in a quarter since 2000, with firms blaming policy uncertainty, tariffs, and faltering consumer confidence for squeezed margins. Pension giants Legal & General, AustralianSuper, and Nest pledged £3 billion to the UK private markets, targeting housing and infrastructure in a bid to lift long-term growth.
Chancellor Rachel Reeves faces pressure to reform the EMI scheme and has signalled potential tax rises to plug a £20-30 billion fiscal gap ahead of next month’s Autumn Budget. Meanwhile, Brexit-related drag and IMF warnings on sticky inflation underscore the fragility of the recovery.
Despite the headwinds, modest August growth was supported by mortgage reforms and sectoral output gains, offering a rare bright spot amid mounting regulatory and market strain
Welcome to HSA Advisory’s Financial Services Newsletter, your concise roundup of the UK macroeconomic developments and financial services transactions.
Sign up to get the newsletter delivered every Tuesday. For insights, M&A support, or advisory discussions, reach out to Himanshu Singh, Founder & Managing Director, at himanshu.singh@hsa-advisory.co.uk
UK Macroeconomics
19 October 2025: UK profit warnings rise as businesses blames trade tariffs and policy shifts
– UK-listed companies issued 64 profit warnings in the third quarter of 2025, up from 59 in the previous quarter. Of these, 47 % cited policy change and geopolitical uncertainty as key drivers – sharply higher than the 17 % a year earlier and the highest rate in more than 25 years of EY‑Parthenon data
– Trade‐tariff impacts featured prominently: around one-third of warnings in prior quarters cited tariff-related issues such as supply‐chain disruption, exchange-rate volatility and weaker export demand
– Weak consumer confidence is also emerging as a significant factor, with 19 % of Q3 warnings pointing to this cause – the highest share since late 2022, and more than half of retailer warnings citing it
– Sectors hit hardest include software & computer services, industrial support services, construction & materials and retail – businesses facing cascading cost pressures from rising wage bills, higher national insurance contributions, tariff headwinds and unpredictable regulatory change
19 October 2025: Pension giants announce £3bn of investment in the UK private markets
– Three major pension providers, Legal & General (L&G), AustralianSuper and National Employment Savings Trust (Nest) – have committed a combined £3 billion into UK private markets, targeting housing, infrastructure and growth-oriented businesses. The breakdown: L&G pledges £2 billion over five years for housing and infrastructure; AustralianSuper commits £500 million within 12 months to UK residential projects including student and co-living; Nest will invest £500 million into its private equity mandate, of which £100 million is earmarked for UK firms
– The timing aligns with forthcoming government-backed investment summits in London and Birmingham, aimed at strengthening collaboration between institutional investors and policymakers to channel capital into UK growth sectors
– This initiative builds on the earlier Mansion House Accord, under which major UK pension funds pledged to invest at least 5 % of their default-fund assets into UK private markets by 2030, signalling a structural shift in pensions’ role in domestic investment
– Analysts caution that while the commitments are substantial, execution risks remain: identifying suitable UK-based investible opportunities at scale, maintaining proper governance given illiquid assets, and ensuring returns for pension savers without increasing risk and cost
18 October 2025: BoE Governor Andrew Bailey warns of long-lasting growth drag from Brexit
– The Bank of England Governor Andrew Bailey warned that Brexit will continue to weigh on UK economic growth for the foreseeable future. He cited persistent trade frictions, regulatory divergence, and disruptions to supply chains as key factors slowing business investment and expansion, even years after the EU trade agreement
– Bailey highlighted a decline in the UK’s potential growth rate from around 2.5% to 1.5% over the past 15 years, linking this slowdown to reduced trade access, an aging population, and stagnating productivity. He stressed that these structural challenges could constrain long-term economic performance
– Speaking at the Group of Thirty meeting in Washington, Bailey emphasized that Brexit illustrates the risks of trade barriers. While businesses can eventually adapt, the short- to medium-term effects limit growth and complicate policymaking, particularly for fiscal and monetary authorities trying to steer the economy
– Economists noted that the immediate economic drag could have lasting implications for investment, trade, and public finances. Although some adjustment may occur over the longer term, Bailey warned that the UK economy faces persistent headwinds from Brexit-related structural changes, adding uncertainty to policy decisions and growth prospects
18 October 2025: Rachel Reeves Hints at Bigger Tax Rises for Fiscal Headroom
– UK Chancellor Rachel Reeves has indicated that the upcoming November 26 budget may include significant tax hikes to bolster the country’s fiscal reserves. She emphasised the necessity of building a larger fiscal buffer to better manage global market volatility, acknowledging that achieving this would require difficult trade-offs between raising taxes and reducing public spending
– Reeves stated that individuals with the “broadest shoulders” should contribute a fair share of taxes. She pointed to past measures, such as VAT on private school fees and changes to non-domicile tax status, as examples of her approach to ensuring that wealthier individuals pay their fair share
– Despite considering tax increases, Reeves ruled out a return to austerity. She emphasised the importance of maintaining a competitive environment for businesses and attracting investment, particularly in sectors like pharmaceuticals
– Reeves has been in discussions with the International Monetary Fund (IMF) regarding potential reforms to the UK’s fiscal rules. She proposed moving to a single annual fiscal event to reduce market speculation, a change that would require adjustments in how the Office for Budget Responsibility reports economic forecasts
18 October 2025: IMF warns UK risks entrenched inflation
– The International Monetary Fund (IMF) has cautioned that the UK faces the highest inflation among G7 nations, projecting consumer prices to rise 3.4% in 2025 and 2.5% in 2026. This persistent inflation is attributed to factors such as rising labour costs and regulated price increases in sectors like energy and transportation
– The IMF advises the Bank of England to be “very cautious” with future interest rate cuts, emphasizing the need to ensure inflation is firmly under control before easing monetary policy. This caution arises from concerns that inflation expectations remain elevated among households and investors
– Despite inflation concerns, the IMF slightly upgraded the UK’s growth forecast to 1.3% for 2025, positioning it as the second-fastest-growing G7 economy. However, this growth is primarily driven by increased immigration rather than per capita gains, and real wage growth remains modest
– The IMF’s warnings underscore the challenges facing UK policymakers, including Chancellor Rachel Reeves, as they navigate the trade-offs between stimulating growth and controlling inflation. The upcoming November budget is expected to address these issues, with potential tax increases and spending adjustments to build fiscal resilience
18 October 2025: UK growth-boosting reform actually working
– Recent adjustments in the UK mortgage market, including relaxed lending criteria and higher loan-to-income ratios, have led to increased mortgage approvals. Major lenders like Lloyds and HSBC are now more willing to lend, benefiting first-time buyers and potentially stimulating consumer spending
– The UK economy expanded by 0.1% in August, following a 0.3% growth in the three months leading up to August. This uptick suggests a recovery from previous contractions and provides a modest boost to Chancellor Rachel Reeves ahead of the upcoming budget
– The services sector, particularly computer programming, health, and vehicle leasing, along with a 1.2% rise in construction output, contributed to the economic growth. Manufacturing also saw a 0.3% increase, indicating a broad-based recovery across various sectors
– Despite the positive growth indicators, the UK faces challenges such as persistent inflation and global trade uncertainties. The International Monetary Fund (IMF) has projected that the UK will experience the highest inflation among G7 countries in 2025, which may impact consumer spending and economic stability
17 October 2025: Ongoing advice provisions reach £423 million across seven firms
– According to the Financial Conduct Authority’s review of 22 of the UK’s largest advice firms, seven have disclosed combined provisions totalling £423 million for redress linked to ongoing advice services
– The firms that have disclosed so far include: St James’s Place (£320 m), Quilter (£76 m), Ascot Lloyd (£17 m), True Potential (£5 m), Schroders Personal Wealth (£3.7 m), Sandringham Financial Partners (MG) (£1 m) and 2Plan (£1 m)
– The provisions reflect estimated remediation costs because clients paid ongoing advice fees but may not have received the fully promised service. The FCA found that approximately 83% of planned suitability reviews were delivered, while 15% of clients either declined to engage and 2% were not contacted
– The scale of these provisions signals significant regulatory and reputational exposure for advice firms. The FCA expects firms to properly evidence service delivery and has warned that further redress may be required if services fall short
17 October 2025: Ferrari cuts supply of cars to the UK after non-dom tax changes
– The luxury carmaker Ferrari has begun reducing the number of vehicles it sells in the UK, citing a drop in demand tied to recent tax changes – particularly the end of the non-dom (non-domicile) tax status for wealthy UK residents
– Chief Executive Benedetto Vigna stated the move was in part a response to declining residual values, for example, the Purosangue model has seen a 12.2 % drop in residual value between January and October 2025
– Ferrari highlighted that UK-specific factors, such as right-hand-drive configuration making resale abroad harder, and customisation trends reducing broader market appeal, compound depreciation risk
– The development underscores a broader theme: tax policy shifts aimed at high-net-worth individuals can have knock-on effects in luxury goods markets. While Chancellor Rachel Reeves dismissed claims of a wealthy exodus as “scaremongering,” Ferrari’s strategy suggests the brand perceives substantial risk
16 October 2025: UK economy expands by 0.1% in August; underlying fragility remains ahead of Budget
– The UK economy grew by 0.1% in August 2025, following a revised 0.1% contraction in July. This slight rebound was driven by a 0.7% increase in manufacturing output, particularly in pharmaceuticals, and a strong performance in the health sector. However, services stagnated, and construction declined by 0.3%, indicating underlying economic fragility
– Consumer-facing services shrank in August, reflecting subdued household spending. Data shows that consumer spending has been nearly stagnant since late 2019, with a 0.1% decline from 2022 to 2025. Factors such as persistent inflation, higher interest rates, frozen tax thresholds, and uncertainty surrounding the upcoming budget have led to cautious consumer behaviour
– Unemployment has risen to 4.8%, the highest level since 2021, influenced by weak graduate hiring and possible impacts from technology and tax hikes. Bank of England Governor Andrew Bailey noted that the jobs market is “softening,” with private sector wage growth slowing, suggesting that the UK’s post-pandemic recovery is encountering headwinds
– Chancellor Rachel Reeves faces a £20-£30 billion fiscal gap as she prepares for the November 26 budget. Analysts expect tax increases to address the deficit, but concerns remain about potential negative impacts on growth. The Office for Budget Responsibility is also likely to downgrade productivity forecasts, complicating efforts to balance fiscal commitments
16 October 2025: FTSE 100 defies concerns over “cockroaches” in the economy
– Despite warnings about hidden risks in the financial system, such as private‐credit losses and corporate failures labelled as “cockroaches” by Jamie Dimon – the FTSE 100 rose, supported by gains in industrials and mining stocks, and easing trade-tension fears
– One reason for the resilience: many large UK-listed companies in the index are global commodity, defence or overseas-earnings businesses, which benefit from a weak pound and global demand, making the index less exposed to domestic UK economic fragility
– Nevertheless, underlying “cockroach” risks remain: the International Monetary Fund (IMF) has flagged the UK for high inflation and structural weakness, and analysts caution the market may be under‐estimating domestic headwinds
– For investors, the takeaway is a mixed one: while the FTSE’s composition gives it a buffer against domestic troubles, the heavy weighting towards a few strong sectors means any surprise shock to global commodities or defence budgets could still prompt a sharp reversal
15 October 2025: FCA accused of “deep lack of clarity” over car-loan scheme
– The FCA’s proposed compensation scheme for mis-sold car loans has come under fire for being unclear and overly complex, following a scrutiny session with the House of Lords Financial Services Regulation Committee. Peers criticised the regulator for allowing claims on loans dating back 18 years and questioned why action on the motor-finance market was not taken earlier
– Under the scheme, lenders may be required to compensate borrowers across some 14.2 million motor-finance agreements made between April 2007 and November 2024, with an estimated £8.2 billion in payouts and £2.8 billion in administrative costs
– Industry bodies and lenders such as Close Brothers have criticised the FCA’s methodology, arguing the regulator’s criteria over-reach recent court rulings and risk placing unmanageable burdens on firms
– The FCA acknowledges the complexity of the issue and is consulting on the scheme, but critics say the regulator’s delay and opaque guidance have sown uncertainty – both for consumers seeking redress and firms assessing their liabilities
15 October 2025: IMF urges UK to stick with two official forecasts every year
– The IMF recommended that the UK continue to publish two comprehensive economic and fiscal forecasts annually through the Office for Budget Responsibility (OBR), rejecting Chancellor Rachel Reeves’ proposals to reduce the frequency to a single forecast aligned with the autumn Budget
– In a press conference, IMF fiscal-affairs director Vítor Gaspar stated that while assessments of compliance with fiscal rules can remain annual, forecasting should remain bi-annual “in accordance with international best practice
– The proposal to drop the spring forecast comes amid deployment of ambitious tax and spending plans by Reeves, which the IMF and OBR warn could create transparency risks and reduce fiscal-policy credibility if fewer checkpoints are used
– The IMF welcomed the UK’s overall fiscal strategy, noting that while public debt remains elevated, the economy benefits from strong institutional frameworks and a diversified investor base – but emphasised that cutting back forecasts could undermine these strengths
14 October 2025: BoE’s Alan Taylor fears “bumpy landing”
– Bank of England policymaker Alan Taylor warned of an increased likelihood of a “bumpy landing” for the UK economy, characterised by inflation falling below the 2% target by late 2026. He attributed this risk to the potential adverse effects of U.S. President Donald Trump’s trade tariffs, which could divert trade flows and negatively impact UK exports, leading to weaker economic growth rather than higher prices
– Taylor expressed concern that the Bank of England may have “braked too hard” by maintaining restrictive interest rates, potentially hindering a smooth return to the inflation target. He suggested that the current policy stance could lead to a prolonged period of economic weakness, with output and employment remaining below potential levels
– While Taylor advocates for a more dovish approach, other members of the Monetary Policy Committee (MPC), such as Megan Greene and Catherine Mann, have expressed caution regarding rapid rate cuts due to concerns over persistent inflation. This divergence highlights the ongoing debate within the BoE about the appropriate pace of monetary easing
– In response to Taylor’s comments and recent economic data, traders have adjusted their expectations, pricing in a higher likelihood of interest rate cuts in the near term. However, the BoE faces a delicate balancing act between supporting economic growth and ensuring inflation remains under control
14 October 2025: Unemployment rises to 4.8%, wage growth cools
– The UK’s unemployment rate rose to 4.8% in the three months to August 2025, marking the highest level since mid-2021. A single-month estimate for August alone peaked at 5.3%, the steepest rise since October 2020.
– Regular pay growth, excluding bonuses, slowed to 4.7% – the weakest increase since early 2022. Total pay growth, including bonuses, edged up to 5%. Private sector wage growth was at a near four-year low of 4.4%, while public sector pay saw a rise due to early award decisions
– Job vacancies fell to 717,000, the lowest since 2021, indicating a cooling labour market. Payroll numbers declined by 10,000 in September, suggesting a softening in hiring activity
– The weakened labour market and cooling wage pressures may ease inflation concerns at the Bank of England, potentially prompting interest rate cuts in 2026. However, inflation remains elevated at 3.8% and is expected to rise to 4%
14 October 2025: IMF nudges up UK 2025 growth outlook, sees more inflation
– The International Monetary Fund (IMF) has slightly increased its 2025 UK economic growth forecast to 1.3%, up from 1.2% previously. This adjustment reflects a stronger-than-expected performance in the first half of the year, positioning the UK as the second-fastest-growing economy in the G7, behind only the United States
– Despite the growth revision, the IMF projects UK inflation to average 3.4% in 2025, the highest among G7 nations. Factors contributing to this include rising labour costs and increases in regulated prices such as energy and transportation. The IMF anticipates inflation to remain elevated in 2026 at 2.5%, with a gradual return to target levels by late 2026
– On a per capita basis, UK GDP growth is projected at 0.4% in 2025 and 0.5% in 2026. These figures are among the lowest in the G7, indicating that the overall economic expansion may not significantly improve average living standards
– The IMF’s revised growth forecast comes amid ongoing fiscal challenges, including a projected £22 billion budget shortfall. Chancellor Rachel Reeves has proposed tax increases and public spending cuts to address the deficit. Concurrently, the Bank of England faces pressure to manage inflation without stifling economic growth, with interest rate cuts potentially considered in 2026 if inflation trends downward
14 October 2025: UK employers cut graduate hiring for second consecutive year, survey finds
– According to the Institute of Student Employers (ISE), UK employers reduced graduate hiring by 8 % in the 2024-25 academic year and expect a further 7 % drop in the current cycle, marking the second consecutive year of decline
– The survey covered 155 major employers recruiting around 30,000 graduates and entry-level trainees. On average, firms received 140 applications per graduate vacancy, up from 86 in 2022-23, underscoring intensifying competition
– Employers reported the retreat from graduate programmes is driven by cost pressures and economic uncertainty, rather than disruption from artificial intelligence. Many are retaining existing staff and delaying new graduate hires
– In contrast, hiring for apprenticeships grew by around 8 %, and the overall entry-level market (graduates + school/leaver roles) shrank by about 5 %, as firms pivot towards lower-cost or alternative talent intake routes
UK Financial Services Key Transactions
21 October 2025: SRG Acquires Wholesale Team from Lockton
– Specialist Risk Group (SRG) has acquired a new wholesale insurance team from Lockton, expanding its commercial and specialty insurance capabilities in the UK. The team brings extensive client relationships and sector expertise, strengthening SRG’s service offerings and supporting its strategic growth in high-value insurance segments
20 October 2025: Nest Invests Additional £500 million in Schroders Capital Private Equity Mandate
– UK’s largest defined contribution pension plan, Nest, has committed a further £500 million to Schroders Capital’s private equity strategy, bringing its total allocation to £1.5 billion. This capital will target innovative growth sectors including AI, healthcare and technology across Europe, North America and Asia
20 October 2025: JMG Group Acquires Glasgow-Based Taveo Broker
– JMG Group has acquired the insurance broking trade and assets of Glasgow-headquartered Taveo Group Ltd., enhancing its commercial insurance operations and expanding its presence in Scotland and the South of England. This acquisition aligns with JMG Group’s strategy of acquiring high-performing independent brokers with strong client relationships and technical expertise
17 October 2025: Theodosian Secures $1.3M Pre-Seed Funding to Launch Enterprise Cybersecurity Platform
– UK-based cybersecurity startup Theodosian has raised $1.3 million in a pre-seed funding round led by Fuel Ventures, with participation from D11Z Ventures, 1818 Venture Capital, Heartfelt, Startup Wise Guys, and several angel investors. The funding will support the launch of Version 1 of their platform and help scale operations to meet the growing demand for enterprise data protection solutions
17 October 2025: Asymmetric Capital Partners Raises $137 Million for Second Fund
– Asymmetric Capital Partners has secured $137 million for its second fund, surpassing its initial $125 million target. The fund aims to capitalize on the growing demand for AI and enterprise software investments, positioning itself as a significant player in the venture capital landscape
16 October 2025: SRG Acquires Elite Sports Specialist Health Partners Europe
– Specialist Risk Group (SRG) has acquired Health Partners Europe (HPE) and its subsidiary SEMPRIS. The acquisition enhances SRG’s capabilities in elite sports healthcare and insurance
16 October 2025: Canaccord Genuity Explores Sale of UK Wealth Management Unit
– Canadian financial services firm Canaccord Genuity is in early talks with private equity firms, including CVC and Advent, regarding the potential sale of its UK wealth management division, Canaccord Wealth. The unit, which manages £38.3 billion in assets and reported an EBITDA of £78.6 million for the year ending March, could be valued at over £1 billion. Fenchurch Advisory is advising on the potential sale, with a formal process expected to begin later this quarter
15 October 2025: Clove Raises $14M to Reinvent Financial Advice
– UK-based fintech startup Clove has secured $14 million in a pre-seed funding round led by Accel, with participation from Kindred Capital, Air Street Capital, and angel investors including Barney Hussey-Yeo and Patrick Pichette. Founded by Christian Owens (former CEO of Paddle) and Alex Loizou (co-founder of Trouva), Clove aims to democratize access to financial advice by combining AI technology with human expertise. The platform automates administrative tasks, allowing advisers to focus on personalized guidance, making financial advice more accessible and scalable for clients underserved by traditional financial services
15 October 2025: Calculus Capital Invests £1.5m in Tipping Platform Grateful
– UK-based fintech Grateful raised £1.5 million in seed funding from Calculus Capital to enhance its AI-powered tip pooling and tronc management platform. The funds will support product development, compliance upgrades, and market expansion as Grateful modernises tipping transparency and fairness across the hospitality and service industries
13 October 2025: Bentley Launches UK Insurance Service in Partnership with Chubb and Carbon Insurance Brokers
– Bentley Motors has introduced its first bespoke insurance service for UK customers, offering comprehensive coverage for all new and used Bentley models from its 106-year history. The program is managed by Bentley Financial Services in partnership with Chubb European Group SA as the underwriter and Carbon Insurance Brokers, part of the Connexus group, as the administrator and claims manager.
A Word from Our Founder & Managing Director
As UK companies face a volatile landscape shaped by a surge in profit warnings reaching their highest level in a quarter-century, boardrooms must contend with intersecting forces: heightened tariffs, regulatory change, and mounting cost pressures. While these challenges add complexity, the commitment of leading pension funds to private markets signals underlying confidence in the UK’s long-term prospects. With the November budget approaching, the environment demands disciplined fiscal management alongside forward-thinking stimulus as firms navigate a “new normal” defined by persistent risk and selective sectoral opportunity. At HSA Advisory, the prevailing volatility is seen not only as a source of challenge, but also as fertile ground for innovation and value creation. In times of fiscal tightening and regulatory recalibration, a strategic approach is essential. HSA Advisory partners with clients to help them find clarity amid uncertainty identifying real value, managing evolving risks, and unlocking sustainable growth as market forces reshape the competitive landscape.
Himanshu Singh, Founder & Managing Director
Pulse Check
Can Chancellor Rachel Reeves’ upcoming budget deliver the policy clarity, fiscal balance, and confidence needed to steer the UK economy toward sustainable recovery amid lingering inflation, Brexit constraints, and fragile consumer sentiment?
We’d love to hear your thoughts.
Source: Financial Times, Reuters, The Times, Insurance Times, Insurance Business UK, The Guardian, Insurance Age, CityWire, FinTech Global.
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