Key Points from the Week:
The UK entered a critical policy week as the Bank of England signaled a pause in its rate-cut cycle, balancing stubborn 3.8% inflation against cooling labour-market data. Investor nerves intensified ahead of November’s Budget, weighed by downgraded productivity forecasts, higher debt-servicing costs, and slumping business confidence.
Markets steadied overall, though sterling softened on expectations of tax increases and tighter fiscal measures. EY ITEM Club projected a short-term growth lift from public spending but cautioned of a sharp economic slowdown in 2026.
Meanwhile, UK financial services dealmaking remained robust, spotlighted by State Street’s stake in Coller Capital and Shawbrook’s strong IPO debut underscoring resilience in the sector despite broader macro pressures.
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
3 November 2025: Bank of England likely to slow rate-cut cycle this week
– The Bank of England (BoE) is expected to keep its Bank Rate at 4% when it meets on Thursday, rather than proceeding with the rate cut it has delivered roughly every quarter since August 2024. Market expectations for a cut this week stand at around one-in-three, up to two-in-three by year-end
– Inflation remains at 3.8% in the UK, the highest among major advanced economies, driven in part by one-off factors such as the rise in employer national insurance contributions. At the same time, wage growth has softened and unemployment has edged up, creating a complex picture for monetary-policy judgement
– Policymakers on the BoE’s Monetary Policy Committee (MPC) are divided: some fear that inflation could rebound toward 4% and undermine public confidence in the BoE’s 2% inflation target, while others see signs that labour-market pressures are easing, lessening the urgency to cut rates
– The BoE will this week begin implementing governance changes recommended by former Ben Bernanke: MPC members will for the first time publicly state their individual policy views, and the committee will place more emphasis on assessing alternative economic scenarios rather than relying solely on central-case inflation forecasts
3 November 2025: FCA warns advice consolidators on investment incentives and debt plans
– The Financial Conduct Authority (FCA) has signalled that consolidators in the financial-advice and wealth-management sector must tighten rules around adviser incentives and stress-test debt arrangements, after a review found some firms were offering investment-linked incentives to clients and advisers, raising risks of conflicts of interest
– The regulator specifically flagged the use of “double-leverage” structures, where regulated entities guarantee debt of parent companies or acquire firms with debt reliant on the cash flows of regulated firms. These arrangements could undermine financial resilience if the holding group experiences strain
– Governance and integration weaknesses were also highlighted: some consolidators expanded rapidly without scaling systems, controls, boards or management information, leaving regulated firms vulnerable. The FCA cautioned that firms must ensure regulated subsidiaries are insulated from parent-company risk, with independent oversight
– Although no new rules were announced, the FCA warned that firms will be expected to benchmark their capital, governance and integration practices against its findings. The regulator emphasised that consolidation can support sustainable growth, but only when appropriately managed to protect clients and the wider system
3 November 2025: Public spending to fuel faster growth of 1.5%, says EY Item Club
– The EY ITEM Club has upgraded its forecast for the UK economy in 2025 to 1.5 % growth, up from an earlier estimate of around 1 %. The reason: government spending is expected to exceed £1 trillion over the current two-year fiscal window, creating a boost to demand and output
– In the first half of the year, UK output rose by 0.7 %, marking the strongest pace among G7 economies. The EY ITEM Club attributes this momentum largely to the surge in public expenditure, about £100 billion more than in 2023-24, raising total planned spending to about £1.3 trillion
– However, the forecast signals a sharp slowdown in 2026: growth is projected to decline to 0.9 %, before recovering to about 1.3 % in 2027. The deceleration is tied to expected tighter public-spending growth, possible tax rises up to £40 billion, and weaker productivity
– The think-tank also warns of wider headwinds: global trade is fragile, elevated interest rates will weigh, and uncertainty around fiscal policy remains high. These factors combine to limit upside to growth and mean the positive effect of the current stimulus may be transient
3 November 2025: UK’s FTSE 100 up slightly at start of earnings-heavy, BoE rate verdict week
– The UK’s blue-chip FTSE 100 rose 0.1% to 9,730.1 points on Monday, marking a modest gain at the beginning of a major corporate-earnings week and ahead of the Bank of England’s interest-rate decision. The mid-cap FTSE 250 dipped by 0.1%
– Several heavyweight UK-listed companies, including AstraZeneca, BP, Diageo and IAG, are scheduled to report results this week, placing additional focus on earnings momentum and investor sentiment in London
– The Bank of England is expected to hold interest rates steady on Thursday, pausing its rate-cut cycle for the first time since easing began. Despite softer inflation and wage data, internal committee divisions make clear forward guidance uncertain
– Sector-wise, financial stocks outperformed, Prudential plc rose ~2% and HSBC Holdings ~0.4%, while industrial-metal miners underperformed, with Rio Tinto Group and Glencore plc each losing over 1%. The pound slipped slightly and UK government-bond yields climbed modestly
2 November 2025: UK small businesses struggling to take advantage of trade deals
– Many UK small and medium-sized enterprises (SMEs) report little or no benefit from the government’s recent trade agreements, with over half saying they expect no new sales from the deals in the next year. Issues include complexity of regulations, lack of awareness and limited export infrastructure
– Firms say that tariff reductions and border-facilitation measures have been overshadowed by persistent customs, logistics and documentation hurdles, particularly for smaller exporters without specialist compliance resources. The mismatch is slowing the intended boost from new trade partnerships
– Government and trade-body data show fewer than one in five SMEs has updated its supply-chain or export strategy since the trade deals were announced, indicating a gap between policy intent and business readiness. Many cite cost and time constraints as key barriers
– Business groups are calling on ministers to simplify post-deal frameworks and deliver practical support, such as one-stop advice hubs and bespoke assistance for SMEs, to translate large-scale trade pacts into meaningful growth for smaller firms
2 November 2025: City bosses warn on pay as minimum wage closes in on graduate salaries
– Corporate leaders in the City of London are expressing concern that the planned increase of the UK national minimum wage to £12.70 per hour (approximately £26,416 per annum for a 40-hour week) brings it into the same range as some graduate entry salaries at professional-services firms
– Data from the Institute of Student Employers indicate that starting salaries for graduates in finance, accounting and law often begin at around £25,726, with a median of £33,000, meaning the minimum-wage increase may narrow the gap for unskilled versus graduate roles
– Executives warn this convergence could undermine the incentive to pursue university and professional training: one CEO asked “why would young people take on £45,000 of student debt if they can earn the same stacking shelves?” The concern is that social mobility could be adversely affected if wage differentials narrow
– Employers also highlight operational risks: as minimum wage rises, firms say they must monitor salary-sacrifice schemes (bikes, company cars, healthcare) to avoid falling below the legal threshold, and they fear reputational damage from inadvertent under-payment. At the same time, automation and off-shoring are flagged as potential responses to rising labour-cost pressures
2 November 2025: UK’s national debt grows at fastest rate of any advanced economy
– An analysis by Oxford Economics reveals that the UK’s national debt has approximately tripled between 2005 and 2025, outpacing every other advanced economy. This rapid expansion highlights a unique accumulation of public-sector net debt in Britain, raising significant concerns about fiscal sustainability
– The UK’s total public debt currently approaches £2.9 trillion, equating to close to 100 % of GDP, and annual interest payments exceed £100 billion. The scale of borrowing is particularly striking given lower debt levels compared to some peers, yet higher borrowing costs have resulted from investor concerns about fiscal credibility and growth-prospects
– Economists warn the UK could enter a “doom loop” scenario, wherein high debt servicing costs coupled with weak economic growth force the government into large tax rises or spending cuts, which then depress growth further and increase the debt burden in a self-reinforcing cycle
– The timing of this debt surge compounds pressure on Rachel Reeves ahead of November’s Budget, as she faces a significant financing gap and shrinking fiscal headroom. With yields on long-dated gilts at near 27-year highs, the government’s borrowing platform and investor sentiment are increasingly fragile
1 November 2025: Bosses’ confidence hits ‘rock bottom’ as businesses brace for Budget
– A survey conducted by the Institute of Directors (IoD) revealed that business confidence in the UK economy dropped to a score of 73 in October, the lowest reading on record, reflecting widespread anxiety ahead of the upcoming Budget and anticipated tax rises
– Directors’ confidence in their own organisations reached a neutral reading of 0, while firms reported negative expectations for investment, hiring and planning horizons, with many placing discretionary spending and expansion plans on hold
– Executives cited multiple headwinds: rumours of capital-gains tax hikes, higher employer levies, inflation and energy-cost pressures. The combination of rising cost uncertainty and potential tax burdens is dampening corporate growth ambitions ahead of the autumn financial statements
– Business groups called on the government to provide greater clarity and avoid heavy tax burdens on firms, emphasising that structural issues, such as skills shortages, energy bills and competitiveness, must be addressed if corporate investment and hiring are to revive
30 October 2025: UK must fix ‘systemic R&D weakness’ or lose big projects, report warns
– A new report warns that the UK faces a systemic weakness in its research & development ecosystem, noting that despite ambition around science-led growth, the country risks losing major investment projects to rivals unless it addresses gaps in commercialisation, workforce and infrastructure
– The report highlights that while the UK punches above its weight in academic research, it lags in translating ideas into commercial success; the gap between invention and investment leaves technology firms relocating to the US, Germany or Asia for scale, raising concerns over lost economic opportunity
– Key weaknesses identified include inconsistent long-term funding, slow regulatory approval for innovative technologies, shortages in skilled engineering and quantum personnel, and fragmentation between government departments, all of which hinder the UK’s ability to attract large-scale global R&D projects
– The report urges decisive action: policymakers should commit to multi-decade R&D funding, align incentives for private-sector investment, streamline innovation regulation, and build clusters that integrate academia, industry and capital, or risk falling behind as global winners emerge.
29 October 2025: Pound sinks against euro and dollar as tax rises loom and growth slows
– The British pound dropped to around €1.13 against the euro and US $1.32 against the dollar, marking its weakest levels in more than two and a half years and since early August respectively. The fall followed markets’ concerns about a tougher upcoming UK budget and weaker growth prospects
– Traders and analysts attributed sterling’s slide to the expectation of tax rises and spending cuts as Rachel Reeves prepares for the 26 November budget, which is expected to fill a larger-than-anticipated hole in the public finances after a downgrade to the UK’s productivity outlook
– With the pound weakening, markets brought forward expectations for a rate cut by the Bank of England from 4 % to 3.75 % on its next meeting. The outlook of tighter fiscal policy and looser monetary policy was widely seen as weighing on sterling
– Analysts noted that the move wasn’t about a loss of confidence in the Chancellor or Treasury but rather a repositioning reflecting the combination of expected tax hikes, subdued growth, and weaker labour- and productivity-data. The shift has implications for borrowing costs, exchange-rate risk and investor sentiment towards UK assets remain cautious, especially ahead of the upcoming budget and in an environment of elevated costs and weak export demand
– Despite the uptick, the pace remains modest: S&P Global estimates the PMI reading is consistent with only about 0.1% quarterly GDP growth. The recovery is fragile, with momentum potentially vulnerable to shocks from trade, policy or global demand
28 October 2025: Trade’s contribution to UK GDP ‘stagnated’ since Brexit, warns WTO
– The World Trade Organization (WTO) reported that the UK’s trade share in GDP has stagnated since its departure from the EU. Data suggest exports and imports combined have not regained pre-Brexit momentum, limiting the trade sector’s growth contribution
– The analysis finds that the UK’s goods-trade recovery lagged behind comparable advanced economies: while global trade rebounded, the UK’s exports of goods and services remained broadly flat, indicating structural drag from regulatory, labour-market and supply-chain disruptions
– A particular concern is the weaker performance of services exports, where the UK traditionally held strength. The WTO highlights that many service sectors have not fully captured the promised gains from post-Brexit trade deals, pointing to missed opportunities and competitive erosion
– The report calls on UK policymakers to prioritise trade facilitation, supply-chain resilience and regulatory alignment. Without reforms to boost export capacity and streamline trade flows, the UK risks under-utilising global demand and weighing on long-term growth prospects
27 October 2025: UK trade deal with Gulf states ‘almost done’ after Reeves visit
– Rachel Reeves, the UK finance minister, said after meetings in Riyadh with Gulf states that she was “really confident we can get that deal over the line” when referring to a trade agreement with the Gulf Cooperation Council (GCC), signalling strong momentum in talks
– Reeves noted that this visit was the first by a British finance minister to the region in six years, aimed at advancing trade talks with Bahrain, Kuwait, Qatar and other GCC states. Officials described discussions as productive, with a deal potentially adding about £1.6 billion a year to the UK economy (roughly 0.06% of GDP)
– The UK government emphasised that the broader strategy involves deepening economic ties with Gulf nations, including securing investment and trade flows such as the Public Investment Fund (PIF) stake in Heathrow Airport, and the inaugural flight of Riyadh Air to the UK, underscoring growing bilateral engagement
UK Financial Services Key Transactions
3 November 2025: State Street takes minority stake in Coller Capital for secondaries push
– State Street Investment Management acquired a minority equity stake in Coller Capital, a leading private-markets secondary manager. The transaction also includes a collaboration agreement across client segments. The move expands State Street’s alternatives offering while supporting Coller’s long-term growth without changing its day-to-day operations
3 November 2025: Lincoln International completes acquisition of MarshBerry
– Lincoln International closed its purchase of MarshBerry, a prolific adviser to UK/EU insurance brokers and wealth firms. The deal adds deep sector benches, recurring valuation/consulting revenues and a strong mid-market origination engine, reinforcing Lincoln’s UK coverage of broker roll-ups and distribution platforms as consolidation accelerates
3 November 2025: Saba Capital builds 6.2% stake in Premier Miton Diverse Income Trust
– Event-driven hedge fund Saba disclosed a 6.2% holding in the UK-listed Diverse Income Trust, stepping into a widening discount and signalling potential engagement on capital allocation. The stake-building highlights active investor interest in UK investment trusts amid discount volatility and corporate-action optionality
3 November 2025: Court hearing on Hansa-Ocean Wilsons merger delayed by Hurricane Melissa
– A planned hearing into objections around Hansa Investment Company’s proposed merger with Ocean Wilsons was postponed due to Hurricane Melissa. The delay extends an already closely watched UK closed-end fund deal process, prolonging uncertainty for investors awaiting clarity on structure, cost synergies and governance
1 November 2025: Allianz UK signs five-year capacity and claims partnership with telematics MGA Ticker
– Allianz UK entered a multi-year underwriting and claims arrangement with Ticker to support telematics-driven motor products. While not M&A, it is a strategically significant UK transaction in insurance distribution and capacity provision, deepening insurer-MGA ties and enabling product scaling and data-led pricing
31 October 2025: Shawbrook prices and debuts in London’s largest UK IPO for two years
– Specialist lender Shawbrook returned to the LSE at 370p, c.£1.92bn valuation, with shares rising up to ~8% on day one. The IPO mixes primary growth capital and PE sell-down; management flagged disciplined bolt-on acquisitions post-listing, a constructive signal for UK ECM in financials
31 October 2025: EC Pohl & Co buys UK Buffettology manager Sanford DeLand
– Australian boutique EC Pohl & Co acquired Sanford DeLand, manager of the UK Buffettology fund. The cross-border deal brings a recognised UK franchise, brand equity and product track record, while SDL gains a parent with distribution reach and resources to support growth and product development
31 October 2025: IP Group conducts on-market share buyback as part of capital return
– Deep-tech investor IP Group repurchased 345,000 shares on 31 Oct, continuing its authorised buyback. The action underscores ongoing UK listed-fund capital discipline, with distributions and buybacks aiming to narrow discounts, enhance NAV per share and optimise balance-sheet flexibility for future opportunities
31 October 2025: Molten Ventures executes programme purchases of ordinary shares
– Venture investor Molten Ventures reported buybacks executed on 31 Oct via its broker under an existing mandate. Though routine, these transactions matter for UK capital markets sentiment in listed venture vehicles, signalling commitment to per-share value and potential discount management
30 October 2025: Starr to acquire IQUW Group
– Starr Insurance Holdings has agreed to acquire London-and-Bermuda-based insurer IQUW Group, owner of UK motor specialist ERS (UK), in a move that will make Starr the ninth-largest managing agency at Lloyd’s. The acquisition strengthens Starr’s underwriting classes and global market segmentation
29 October 2025: Apax joins race to buy Amber River
– Apax Partners has formally entered a competitive auction to acquire UK wealth- and advice-platform consolidator Amber River. The first round of bids is expected soon, reflecting heightened consolidation activity in the UK financial-advice sector and signalling strong interest from private-equity buyers for build-out platforms
28 October 2025: Generali, Natixis owner likely to drop asset management
– Assicurazioni Generali and Natixis Investment Managers’ parent firm are reportedly set to abandon their planned joint asset-management venture. The deal was intended to combine significant European asset-management scale, but strong opposition from Generali’s shareholders and the Italian government, plus governance complications, have stalled the process
27 October 2025: Nelson Peltz, General Catalyst launch $7.2bn bid for Janus Henderson
– Activist investor Nelson Peltz’s Trian Fund Management and venture-capital firm General Catalyst have made a takeover offer for asset-manager Janus Henderson Group valued at around $7.2 billion (-/£- equivalent). The proposed deal would take the firm private and follows years of activist pressure on performance, strategy and market positioning
27 October 2025: Robinhood launches futures trading in the UK
– Robinhood has launched futures-trading capabilities for UK retail customers, offering access to over 40 products from CME Group including indices, energy and metals futures. The service introduction strengthens its UK expansion strategy and opens new derivative markets to UK retail investors
A Word from Our Founder & Managing Director
This week has highlighted the fine balance the UK must maintain between fiscal discipline and economic momentum. With the Bank of England signalling caution and policymakers facing tough tax and spending choices, restoring confidence will depend on clear strategy and credible execution. Amid the uncertainty, one truth stands out: the UK’s financial services sector continues to demonstrate resilience, with sustained deal flow and strong investor engagement across credit, wealth management, and specialty insurance. At HSA Advisory, we believe moments like these call for strategic clarity, adaptability, and long-term vision. Our focus remains on guiding clients through shifting market dynamics to capture opportunity and create lasting value.
Himanshu Singh, Founder & Managing Director
Pulse Check
With rate-cut expectations cooling, debt pressures mounting, and business confidence hitting record lows ahead of the November Budget, the UK finds itself at a critical juncture. Can disciplined policy and private-sector momentum support recovery, or will uncertainty continue to weigh on confidence and investment?
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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