Key Points from the Week:
UK economic momentum softened further in October, with GDP edging down 0.1%, job vacancies declining for a second consecutive month, and consumer card spending seeing its sharpest fall since 2021. The combination of weaker demand, a cooling labour market, and post Budget tax headwinds is reinforcing expectations that the Bank of England will begin cutting rates in 2025 potentially to 3.75%, even as concerns persist around sticky services inflation and wage growth.
On the policy front, business groups continued to press for clarity on the forthcoming Employment Rights Bill, while the FCA signalled a more growth-oriented stance through proposed pension reforms, relaxed annuity guidance, and tighter controls on leveraged ETPs. Sterling held steady amid shifting global rate expectations, and debate has intensified around investment incentives, including VCT tax relief and pension charge caps.
Despite the broader slowdown, deal activity across wealth management, fintech, and insurance remained notably resilient, supported by strategic consolidation, digital-led business models and ongoing investor interest in recurring-fee platforms.
Welcome to HSA Advisory’s Financial Services Newsletter, your concise roundup of 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
15 December 2025: BoE set to cut rates to 3.75% as economic data eases inflation concerns
– The Bank of England is expected to cut interest rates as softer inflation data and slowing economic momentum reduce pressure to keep policy tight. Recent indicators suggest price growth is easing without triggering a sharp deterioration in financial stability
– Policymakers are reportedly split, with the decision likely to pass by a narrow majority. The outcome is expected to hinge on Governor Andrew Bailey’s assessment of whether inflation risks have moderated sufficiently to justify further easing
– Supporters of a cut argue that fiscal tightening and weakening labour-market conditions warrant monetary support to prevent an unnecessary slowdown. They believe easing policy now could help stabilise demand without reigniting price pressures
– Critics caution that inflation risks have not disappeared, particularly in services and wages. They warn that cutting too soon could undermine credibility, stressing the importance of clear forward guidance to anchor expectations and manage market reactions
15 December 2025: Business groups urge peers to pass UK employment rights bill
– Major business groups urged parliamentarians to approve the employment rights bill, arguing that prolonged uncertainty over labour rules is weighing on investment decisions. They said clarity and stability are preferable to extended debate that leaves employers unsure about future obligations
– Supporters within industry said the bill would modernise workplace standards and provide a clearer framework for managing employment relationships. They stressed that predictable rules help firms plan hiring, compliance and workforce strategies more effectively over the medium term
– Some employers acknowledged concerns about higher compliance costs but argued these are manageable compared with the risks of ongoing policy limbo. They believe early passage would allow businesses to adapt gradually rather than face sudden regulatory changes later
– Critics within the business community remain cautious, warning the bill could reduce labour flexibility and raise costs. However, advocates counter that improved worker protections may support productivity, retention and long-term workforce stability if implemented carefully
15 December 2025: FTSE rises as interest rate cut appears a ‘done deal’
– UK equities advanced as markets increasingly priced in an imminent interest-rate cut by the Bank of England. Softer inflation data and slowing economic momentum reinforced expectations that monetary easing is now effectively assured
– Analysts said rate-cut certainty boosted rate-sensitive sectors, including housebuilders, utilities and consumer stocks. Lower borrowing costs are expected to ease pressure on households and businesses, improving earnings outlooks despite ongoing fiscal tightening
– Investors largely looked past domestic economic weakness, focusing instead on improving financial conditions. Confidence that monetary policy will offset some of the Budget’s drag helped stabilise sentiment across broader UK equity markets
– Strategists cautioned that gains may be capped if growth data continue to deteriorate. While easing supports valuations, sustained equity performance will depend on whether rate cuts translate into stronger demand, investment and corporate profitability
15 December 2025: Job listings fall for second month in a row
– UK job postings declined for a second consecutive month, signalling cooling labour demand as employers respond to slower growth, higher taxes and tighter budgets. Firms are increasingly cautious about expanding payrolls amid economic uncertainty
– Analysts said the fall reflects weakening confidence across services, construction and consumer-facing sectors. Many businesses are prioritising cost control over hiring, particularly as demand softens and post-Budget pressures weigh on margins
– Recruiters noted that vacancies are being withdrawn or delayed rather than cancelled outright, suggesting firms expect conditions to remain challenging in the near term but are reluctant to commit to long-term hiring plans
– Economists warned that sustained declines in job listings could translate into higher unemployment and weaker wage growth. They said labour-market softening may reinforce the case for monetary easing to support demand and stabilise employment conditions
13 December 2025: UK economy contracts by 0.1% in October
– The UK economy shrank slightly in October, reflecting weakness across services and construction as higher taxes, elevated interest rates and cautious consumer behaviour weighed on activity. The data reinforce concerns that growth momentum remains fragile heading into winter
– Economists said the contraction highlights the impact of fiscal tightening and softer demand following the Autumn Budget. Business surveys suggest firms are delaying investment and hiring, limiting the economy’s ability to absorb ongoing cost pressures
– Analysts noted that while the decline is modest, it raises the risk of a prolonged period of near-stagnation. Repeated small contractions could undermine confidence and worsen perceptions of the UK’s medium-term growth outlook
– Markets interpreted the data as strengthening the case for monetary easing. A weaker growth backdrop increases pressure on the Bank of England to cut rates to support demand, provided inflation continues to ease as expected
12 December 2025: MPs’ pension scheme makes ‘mockery’ of Rachel Reeves investment push
– Critics argue MPs’ pension scheme allocations undermine the government’s push to channel more capital into UK assets. The scheme reportedly holds a limited share of domestic investments, contradicting calls for institutions to back British companies and infrastructure
– The issue has reignited debate over leadership by example, with analysts saying public-sector schemes should align investment strategies with national growth priorities. Failure to do so risks weakening credibility when urging private funds to increase UK exposure
– Supporters of the scheme counter that trustees must prioritise risk-adjusted returns and diversification. They argue political pressure should not override fiduciary duties, especially given volatile domestic markets and constrained long-term growth prospects
– Economists warn the controversy highlights broader challenges in mobilising long-term capital for UK investment. Without clearer incentives and stronger returns, institutional investors may remain cautious, limiting the effectiveness of the government’s investment-led growth agenda
12 December 2025: Rachel Reeves warns of lost opportunities if UK’s female founders are overlooked
– Rachel Reeves warned that failing to support female entrepreneurs risks significant lost economic potential. She said women-led businesses remain underfunded and underrepresented, limiting innovation, job creation and productivity gains that could strengthen the UK’s long-term growth outlook
– The Chancellor highlighted persistent funding gaps in venture capital and scale-up finance, where female founders receive a disproportionately small share of investment. She argued addressing these imbalances is essential to building a more dynamic and inclusive entrepreneurial ecosystem
– Business groups welcomed the focus, noting that diverse founding teams often deliver stronger returns and resilience. They called for targeted funding initiatives, improved access to networks and reforms to investment decision-making processes across financial institutions
– Economists said unlocking female entrepreneurship could deliver meaningful macroeconomic benefits, boosting participation and innovation. However, they cautioned that progress will require sustained policy commitment, measurable targets and accountability to ensure initiatives translate into real funding outcomes
12 December 2025: FCA to consult on raising pensions charge cap
– The Financial Conduct Authority announced plans to consult on lifting the existing charge cap on workplace pensions, arguing current limits may restrict investment in higher-growth assets and discourage innovation within long-term retirement savings products
– Regulators said revisiting the cap could allow pension schemes to allocate more capital to illiquid assets such as infrastructure, private equity and venture capital, supporting stronger long-term returns while aligning with government goals to boost UK investment
– Pension providers welcomed the consultation, saying greater flexibility could improve outcomes for savers over time. However, they stressed the importance of transparency and governance to ensure higher charges are justified by improved performance
– Consumer groups warned that raising the cap risks eroding pension value if safeguards are weak. They urged the FCA to prioritise value-for-money assessments and protect savers from excessive fees that could outweigh potential long-term investment benefits
11 December 2025: Tax relief cut puts VCTs at risk next year, industry warns
– Venture capital trust managers warned that planned reductions in tax relief could sharply reduce investor appetite, threatening funding flows into early-stage UK businesses. They argue VCTs play a critical role in supporting innovation and high-risk growth companies
– Industry figures cautioned that lower incentives may prompt retail investors to redirect capital toward less risky assets. Reduced inflows could constrain funding availability for start-ups already facing tougher conditions from higher interest rates and weaker venture capital markets
– Analysts noted that VCTs have become an increasingly important channel for patient capital, particularly as traditional bank lending remains cautious. Weakening this mechanism could undermine broader government efforts to boost entrepreneurship and regional economic development
– Critics of the policy said cutting relief risks being counterproductive for growth ambitions. They urged the government to reconsider the changes or provide alternative incentives to ensure early-stage companies continue to access long-term investment support
11 December 2025: FCA eases annuity rules in final targeted support paper
– The Financial Conduct Authority confirmed changes to annuity rules aimed at giving firms more flexibility to provide targeted support. The reforms are designed to help retirees make better-informed decisions without triggering full regulated advice requirements
– Regulators said the move addresses concerns that overly strict rules discouraged guidance for pension savers approaching retirement. By clarifying boundaries, the FCA hopes more consumers will receive practical help when choosing annuities or alternative retirement income options
– Industry groups welcomed the changes, arguing they could improve retirement outcomes and reduce the risk of poor decisions. Providers believe clearer guidance rules will enable more engagement with customers who currently receive limited or generic information
– Consumer advocates urged caution, stressing that safeguards remain essential. They warned that easing rules must not expose vulnerable savers to mis-selling risks, calling for strong oversight and clear disclosures to ensure support genuinely serves consumers’ best interests
10 December 2025: FCA signals crackdown on leveraged ETPs
– The Financial Conduct Authority signalled tougher oversight of leveraged exchange-traded products, citing concerns that complex structures and amplified risks are poorly understood by retail investors, potentially leading to significant losses during periods of market volatility
– Regulators said the review will focus on marketing practices, risk disclosures and distribution channels. The FCA is assessing whether current safeguards are sufficient to ensure leveraged products are sold only to investors with appropriate knowledge and risk tolerance
– Market participants noted that leveraged ETPs have grown rapidly in popularity, particularly among short-term traders. Analysts warn that increased volatility and leverage can magnify losses, raising broader consumer-protection and market-stability concerns
– Industry groups cautioned that tighter rules could reduce product availability and liquidity. However, consumer advocates welcomed the move, arguing stronger protections are needed to prevent mis-selling and ensure retail investors fully understand the risks involved
10 December 2025: FCA boss promises more pro-growth measures in letter to Starmer
– The head of the Financial Conduct Authority pledged to pursue more pro-growth regulation, signalling a shift toward supporting economic expansion alongside consumer protection. The regulator aims to better balance safeguarding standards with enabling productive risk-taking across financial markets
– Nikhil Rathi said encouraging greater lending to small and medium-sized businesses is a key priority. He argued that improving access to finance for growing firms is essential to boosting productivity, innovation and long-term economic resilience across the UK
– The letter outlined plans to simplify rules, reduce unnecessary frictions and improve regulatory responsiveness. Officials believe clearer, more proportionate oversight can unlock private capital without undermining financial stability or consumer confidence
– Analysts welcomed the tone but cautioned that delivery will matter. They stressed that meaningful impact depends on concrete rule changes, coordination with the Treasury and ensuring banks and lenders feel confident deploying capital to higher-risk but growth-oriented businesses
10 December 2025: Tighter visa rules will cost UK up to £10.8bn
– Economists warned that stricter visa rules could significantly reduce economic output, as limits on overseas workers and students weigh on labour supply, consumption and tax revenues. Sectors reliant on international talent face heightened risks of skills shortages
– Analysts said the impact will be felt most acutely in higher education, healthcare, hospitality and technology, where foreign workers play a critical role. Reduced migration may constrain growth, worsen productivity challenges and raise operating costs for employers
– Business groups cautioned that lower inflows of skilled workers could deter investment and encourage firms to relocate expansion plans abroad. They argue predictable and flexible visa frameworks are essential for maintaining the UK’s competitiveness
– Policymakers acknowledged the fiscal trade-offs but defended tighter controls as necessary for public confidence. Critics countered that the long-term economic costs may outweigh short-term political gains, undermining growth at a time of already fragile momentum
9 December 2025: UK employers less likely to disclose salary or offer perks amid hiring slump
– UK employers are increasingly withholding salary details and cutting back on additional perks as hiring activity weakens. Firms say reduced transparency reflects tighter budgets and a shift in bargaining power as labour demand softens across multiple sectors
– Recruiters report that companies are prioritising cost control over talent attraction, reversing trends seen during the tight labour market. Benefits such as bonuses, flexible working incentives and enhanced packages are being scaled back or removed altogether
– Analysts note that lower pay transparency may further dampen job mobility and wage growth. Candidates face greater uncertainty, while employers risk longer hiring processes and weaker matches between roles and applicants
– Economists warn the trend could reinforce labour-market cooling, reducing consumer confidence and spending. They argue sustained opacity and fewer incentives may weigh on productivity and limit the labour market’s ability to adjust efficiently as economic conditions evolve
9 December 2025: Bank of England sees Budget cutting inflation by around 0.4 – 0.5 percentage points
– The Bank of England said the recent Budget is expected to reduce inflation from mid next year, as higher taxes and tighter fiscal settings dampen demand. Officials view the measures as adding meaningful disinflationary pressure to the economy
– Senior policymakers noted that fiscal tightening should reinforce the impact of restrictive monetary policy. Lower consumer spending and softer investment are expected to slow price growth, particularly in domestically driven sectors such as services
– Analysts said the estimate strengthens the case for future interest-rate cuts, as fiscal policy may do some of the work previously carried by monetary tightening. Markets are reassessing the balance between growth risks and inflation control
– Economists cautioned that the impact depends on implementation and behavioural responses. If households or firms adjust spending differently than expected, the inflation effect could be weaker, leaving the Bank reliant on rates to maintain price stability
9 December 2025: Sterling steadies, with focus on Fed and UK retail sales
– Sterling traded in a narrow range as currency markets awaited signals from the U.S. Federal Reserve, with expectations of an interest-rate cut influencing global risk sentiment and limiting near-term directional moves in the pound
– Traders also focused on upcoming UK retail sales and GDP data, looking for confirmation on domestic economic momentum. The figures are expected to shape expectations around the Bank of England’s next policy steps
– Analysts said sterling’s calm reflects a balance between softer global dollar dynamics and lingering concerns about UK growth following recent fiscal tightening. Neither bulls nor bears appear willing to take large positions ahead of key data releases
– Market participants warned that volatility could rise sharply once fresh economic signals emerge. Sterling remains sensitive to shifts in rate expectations, consumer demand trends and broader confidence in the UK’s post-Budget economic outlook
9 December 2025: UK consumer card spending falls by most since 2021, says Barclays
– UK consumer card spending recorded its sharpest decline in several years, signalling a notable slowdown in household demand. Barclays said higher taxes, persistent cost pressures and weaker confidence are prompting consumers to rein in discretionary purchases
– The data showed spending falling across categories such as retail, hospitality and travel, highlighting broad-based caution. Analysts said households appear increasingly focused on essentials, reflecting concerns about income prospects and tighter financial conditions
– Economists noted the drop reinforces signs of cooling momentum in the UK economy following the Autumn Budget. Reduced consumer activity could weigh on growth, particularly in services, which remain a key driver of overall economic performance
– Market participants warned that sustained weakness in consumer spending may intensify pressure on policymakers. Softer demand strengthens the case for monetary easing, though officials remain cautious given lingering inflation risks and fragile business confidence
UK Financial Services Key Transactions
15 December 2025: Wakam UK overhauls claims fund management in partnership with Vitesse
– Wakam UK has partnered with infrastructure specialist Vitesse to modernise how claims funds are managed and paid across its UK and European network, replacing manual processes with centralised, real-time controls that reduce leakage, unlock tied-up capital and accelerate settlements – enhancing operational efficiency and supporting broader growth ambitions
15 December 2025: £10bn advice and DFM group sounds out potential buyers
– Hurst Point, the private equity–backed advice and discretionary fund management group overseeing around £10 billion of assets, has appointed Rothschild to explore a potential sale. The process signals continued consolidation in UK wealth management as scaled platforms attract buyer interest amid margin pressure and demand for diversified revenue streams
15 December 2025: Mercer to invest £350m in Schroders LTAF
– Mercer has committed £350 million to Schroders’ Long-Term Asset Fund, which will become the main vehicle for its private market exposure across UK workplace pension schemes. The move reflects rising institutional demand for diversified private assets, enabled by the LTAF structure, as pension providers seek enhanced long-term returns while maintaining appropriate liquidity and governance standards
12 December 2025: Pen Underwriting secures new multiyear fleet capacity deal with Zurich
– Managing general agent Pen Underwriting has extended its longstanding UK partnership with Zurich under a newly expanded multi-year fleet capacity agreement that will support underwriting of more than £350 million in premiums over the next five years, broaden coverage into passenger and specialist fleet segments, and boost delegated underwriting and claims authority
12 December 2025: UK’s Aberdeen to acquire £1.5bn of US closed-end fund assets
– Aberdeen has agreed to acquire the management of nine US-based closed-end funds with assets totalling around £1.5 billion, as part of its strategy to deepen its footprint in the US market. The transaction strengthens Aberdeen’s presence in closed-end strategies, broadens its US client base and supports long-term growth ambitions in the world’s largest asset-management market
11 December 2025: CapRelease raises $36m to expand embedded finance offering
– CapRelease has secured $36 million in funding to accelerate the expansion of its embedded finance platform, enabling fintechs and digital-native businesses to integrate banking services such as deposits, lending and payments more seamlessly. The capital will support product development, regulatory scaling and go-to-market initiatives as demand for turnkey embedded financial infrastructure grows globally
11 December 2025: Barclays backs United Fintech with strategic investment
– Barclays has made a strategic investment in United Fintech – joining BNP Paribas, Citi, Danske Bank and Standard Chartered as a global bank investor, taking a minority stake and a board seat to deepen collaboration, accelerate digital transformation and broaden structured access to fintech solutions across banking, asset management and capital-markets infrastructure
11 December 2025: Starling eyes UK acquisition to boost corporate lending
– Starling Bank is exploring a UK acquisition to deploy its roughly £12 billion deposit base more profitably by accelerating growth in corporate lending. The neobank is seeking to diversify income beyond retail banking, improve returns on excess liquidity and strengthen its competitive position in business banking amid margin pressure across the sector
11 December 2025: Aegon puts UK business up for sale as Lloyds and Phoenix tipped to bid
– Aegon has formally put its UK business up for sale, including its pensions and platform operations, with Lloyds Banking Group and Phoenix Group among those tipped as potential bidders. The process, reportedly operating to a February deadline, highlights intensifying consolidation across the UK pensions, savings and wealth platforms market as firms seek scale and capital efficiency
10 December 2025: Rathbones could attract bid interest from global bank, says RBC
– Rathbones may draw takeover interest from a global banking group, according to RBC analysts, who point to its scale, high-quality client base and recurring fee revenues as attractive features. Any potential bid would reflect ongoing consolidation in global wealth management as banks seek to strengthen UK presence and diversify earnings through capital-light advisory and investment platforms
10 December 2025: Jupiter launches active small-cap ETF for former Origin team
– Jupiter has launched an active UK small-cap ETF managed by the former Origin Asset Management team, marking its second entry into the active ETF market after February’s government bond ETF. The launch reflects growing demand for active strategies in an ETF wrapper and signals Jupiter’s intent to expand product innovation while leveraging established specialist investment talent
10 December 2025: Quilter Cheviot to enter private markets via KKR PE fund
– Quilter Cheviot will begin allocating client capital to KKR’s K-Prime private equity fund from January through its discretionary portfolio service, marking its entry into private markets. The move broadens return drivers for eligible clients but will exclude SIPP and ISA wrappers, reflecting liquidity and suitability constraints associated with private equity exposure
9 December 2025: PIB Group to end 2025 with record number of acquisitions across UK and Europe
– PIB Group is on track to close 2025 having completed a record 27 acquisitions – spanning the UK, Italy, France, Poland, Ireland, the Channel Islands and Iberia, bolstering its specialty, benefits and underwriting capabilities while generating substantial revenue and EBITDA growth and positioning the business for continued targeted M&A in 2026
9 December 2025: Cinven agrees £190m deal to buy firm co-founded by former Blair adviser
– Private equity firm Cinven has agreed a £190 million acquisition of Flint Global, the advisory and professional services firm co-founded by former Tony Blair adviser Sir John Sawers. The transaction highlights sustained PE appetite for specialist consultancy platforms with strong geopolitical, regulatory and policy expertise, as demand grows from corporates navigating complex global operating environments
9 December 2025: British Business Bank will make bigger VC investments to put pensions at ease
– The British Business Bank has announced plans to increase its venture-capital investments to reassure pension funds and institutional investors about access to growth-stage opportunities. By scaling its VC commitments, the bank aims to deepen the domestic innovation ecosystem, improve long-term return prospects for UK institutional capital and support broader participation in early-stage technology financing
9 December 2025: Mission to launch ninth UK MGA in 2026
– Mission Underwriters plans to launch its ninth UK managing general agent in 2026, continuing its disciplined build-and-back strategy. The move underscores sustained appetite for specialist underwriting platforms, leveraging delegated authority, niche expertise and scalable infrastructure to capture profitable growth opportunities across targeted insurance lines
A Word from Our Founder & Managing Director
This week reinforces a familiar but important theme: the direction of policy is now as significant as individual policy moves themselves. While the prospect of rate cuts offers some relief, markets remain highly attuned to credibility, execution and consistency from both the Bank of England and the Treasury. At the same time, capital continues to back scalable platforms in FinTech, Wealth, Insurance and Private Markets, signalling sustained investor confidence in high-quality assets. In this context, true resilience will hinge on disciplined strategy, robust governance and the ability to adapt quickly as macro conditions evolve. At HSA Advisory, the focus remains on helping clients navigate this shifting landscape with clarity, agility and senior-led judgement. Whether the priority is cross-border growth, strategic acquisitions or preparing for capital raising, the team works alongside clients to convert uncertainty into a tangible strategic edge.
Himanshu Singh, Founder & Managing DirectorPulse Check
With growth contracting, hiring and consumer spending weakening, and markets increasingly pricing a Bank of England rate cut, can monetary easing meaningfully offset fiscal tightening and regulatory change to stabilise UK confidence in 2026?
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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