Key Points from the Week:
The Bank of England is set to keep rates unchanged, with a softer labour market and easing wage growth offset by brighter business surveys and stubborn retail price pressures. Mixed PMI signals and sticky shop-price inflation are encouraging a cautious stance, while sterling trades near multi‑year highs and remains highly sensitive to forward guidance, labour data and political signals shaping the UK’s fiscal and monetary credibility.
Geopolitics and structural reform remained centre stage. UK-China engagement has attracted warnings from Washington, underlining the trade‑off between deeper economic ties and national security concerns, while recent academic work from Aston University has highlighted Europe’s vulnerability in a tariff‑driven trade confrontation. At home, FTSE Russell’s proposed cut to free‑float thresholds is intended to enhance London’s appeal as a listing venue, even as regulators turn a sharper spotlight on private credit and the resilience of non‑bank finance in a more volatile macro environment.
Welcome to HSA Advisory’s Financial Services Newsletter, your concise roundup of UK macroeconomic developments and financial services transactions.
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UK Macroeconomics
2 February 2026: UK Treasury offers up to £100,000 exit packages to cut hundreds of jobs
– The Treasury has launched a voluntary exit scheme offering payouts of up to £100,000 as part of plans to reduce staffing levels by around 300 roles by 2030, reflecting a broader government drive to cut administrative costs
– Chancellor Rachel Reeves said the move is aimed at improving efficiency and freeing up resources for priority areas, as departments face pressure to demonstrate value for money amid tight public spending constraints
– Civil service unions warned the cuts could undermine policy capacity and delivery, arguing that experienced staff are critical during a period of complex fiscal, regulatory and economic reform
– Analysts said the scheme signals a tougher stance on Whitehall spending discipline. However, they cautioned that savings may be limited if reduced headcount leads to greater reliance on consultants or external contractors
2 February 2026: Bank of England expected to hold rates amid conflicting signals on UK economy
– The Bank of England is widely expected to keep its policy rate unchanged as policymakers balance evidence of a weakening labour market against firmer business activity following the November Budget, creating uncertainty over the timing and pace of any further interest rate cuts
– Hiring continues to soften, with unemployment at its highest level in several years and payrolled employment falling, while private sector wage growth has eased, offering some reassurance that domestically driven inflation pressures may be gradually moderating
– At the same time, surveys show a pickup in corporate activity, with the latest PMI indicating stronger private-sector momentum, raising concerns among some policymakers that improved growth could slow progress in bringing inflation fully back to target
– Analysts said the Monetary Policy Committee remains divided, with future decisions likely to hinge on whether labour market cooling or business resilience proves more persistent. Markets will focus closely on guidance, as tone and messaging may drive expectations more than the rate decision itself
30 January 2026: Donald Trump warns Keir Starmer against closer business ties with China
– US President Donald Trump cautioned Prime Minister Keir Starmer that pursuing deeper business ties with China is “very dangerous,” highlighting Washington’s growing unease over Western engagement with Beijing amid intensifying geopolitical and economic rivalry
– The warning followed Starmer’s “warm and constructive” talks with Chinese President Xi Jinping in Beijing, where both sides announced agreements to cut Chinese tariffs on UK whisky and introduce visa-free travel for British citizens
– UK officials framed the deals as early signs of a more “sophisticated” relationship with China, aimed at boosting exports and encouraging British firms to expand their presence in Chinese markets
– Analysts said the episode underscores London’s delicate balancing act between strengthening economic links with China and maintaining close strategic alignment with the United States, with trade, security and political considerations increasingly intertwined
30 January 2026: UK services sector holds out hopes for China boost after Starmer visit
– UK finance, banking and professional services firms are seeking to expand their presence in mainland China following Prime Minister Keir Starmer’s visit, hoping renewed diplomatic engagement will ease market access barriers and unlock new commercial opportunities
– Industry leaders said improved government-to-government dialogue could help address longstanding challenges around licensing, regulatory approvals and data-sharing rules that have constrained growth for UK service providers in China
– Analysts noted that China remains an attractive but complex market, offering scale and demand for financial and advisory services, while posing geopolitical, compliance and reputational risks for firms expanding their footprint
– Economists said any meaningful boost to exports will depend on sustained policy cooperation and global stability. Without clearer trade frameworks and regulatory certainty, UK services growth in China is likely to remain gradual rather than transformational
29 January 2026: BoE open to accepting more tokenised assets as collateral, Mills says
– The Bank of England is exploring expanding the range of tokenised assets it would accept as collateral in its market operations, reflecting growing interest in using distributed ledger technology within core financial market infrastructure
– Sasha Mills said the central bank wants to ensure innovation does not compromise stability, emphasising that any tokenised instruments would need to meet the same risk, transparency and legal standards as traditional collateral
– Industry participants welcomed the signal as a potential boost for the UK’s digital finance ambitions, arguing it could encourage development of regulated tokenisation platforms and modernise settlement and funding processes
– Analysts cautioned that broader acceptance will require robust legal frameworks and cybersecurity safeguards. They said the BoE’s approach balances innovation with prudence, aiming to support fintech growth without introducing new systemic risks
29 January 2026: Bank of England weekly repo tops £100bn for first time
– The Bank of England allotted more than £100bn to lenders through its weekly short-term repo facility, marking the largest take-up since the programme began in 2022 and signalling heightened demand for central bank liquidity
– Officials said the operation reflects banks’ preference to secure short-term funding amid market uncertainty, tighter liquidity conditions and ongoing adjustments to regulatory and balance-sheet requirements
– Analysts noted the surge does not necessarily indicate financial stress, but highlights cautious liquidity management as markets await clearer signals on interest rate policy and the economic outlook
– Market participants said sustained high usage of the facility will be closely monitored, as it can offer insights into underlying funding pressures and confidence levels within the UK banking system
29 January 2026: Sterling close to multi-year highs vs dollar as focus shifts to BoE and UK politics
– The pound hovered near multi-year highs against a softer US dollar, supported by uncertainty over American policy direction and improved sentiment toward UK assets as investors reassessed relative growth and interest-rate outlooks
– Traders turned their attention to the Bank of England’s upcoming policy decision, with expectations that guidance on the pace of future rate cuts will shape near-term currency moves more than the headline outcome
– Political developments in the UK added another layer of uncertainty, as markets weighed how potential shifts in leadership dynamics or fiscal priorities could influence confidence in the government’s economic strategy
– Analysts said sterling’s strength remains vulnerable to surprises in inflation, labour-market data or central bank messaging. Sustained gains will depend on clear signals that UK policy credibility and economic momentum can be maintained
29 January 2026: Europe and the UK would lose more than the US in a trade war, research finds
– Research from Aston University found that Europe and the UK would suffer greater economic losses than the United States if a trade war escalated, as higher exposure to cross-border trade amplifies the impact of tariffs
– The study suggests matching US tariff threats could hit manufacturing, automotive and export-heavy sectors hardest, raising costs for businesses and consumers while disrupting tightly integrated European and British supply chains
– Analysts said the findings underline the vulnerability of open economies to protectionist policies, particularly those reliant on transatlantic trade and complex regulatory alignment with global partners
– Policymakers are urged to prioritise diplomatic solutions over retaliation, as prolonged tariff disputes could weaken growth, deter investment and undermine competitiveness across both the UK and the European Union
28 January 2026: BoE needs to win the last-mile disinflation battle in 2026
– Analysts from the FT’s Monetary Policy Radar warned that while inflation has eased significantly, the final stage of bringing price growth back sustainably to target will be the most challenging for the Bank of England
– Services inflation and wage growth remain key risks, with domestically generated pressures proving stickier than energy or goods prices, limiting how quickly policymakers can move toward a full easing cycle
– Markets expect cautious, incremental rate cuts rather than aggressive loosening, as the Bank seeks to balance supporting growth against preserving credibility on inflation control
– Economists said success in the “last mile” will depend on continued cooling in the labour market and stable inflation expectations, arguing that communication clarity will be critical to anchoring confidence through 2026
27 January 2026: BoE’s Bailey sees ‘urgent need’ to boost resilience of market-based finance
– Bank of England Governor Andrew Bailey warned that rapidly growing areas of market-based finance, including private credit and non-bank lending, pose increasing risks to financial stability if not better protected against economic and market shocks
– Bailey said these sectors lack the same capital and liquidity safeguards as traditional banks, making them more vulnerable during periods of stress and potentially capable of amplifying volatility across the wider financial system
– Regulators are pushing for stronger international coordination to improve transparency, data sharing and oversight of non-bank institutions, many of which operate across borders and outside existing prudential frameworks
– Analysts said the comments reflect rising concern among central banks about the scale of private credit and shadow banking. Strengthening resilience, they argue, will be critical to preventing future crises from spreading beyond regulated banking channels
27 January 2026: UK’s FTSE 100 rises as HSBC leads bank stocks rally
– London’s FTSE 100 advanced as heavyweight banking shares, led by HSBC, climbed ahead of a busy week of corporate earnings and the US Federal Reserve’s interest-rate decision, boosting risk appetite across the index
– Investors rotated into financial stocks on expectations that stable interest rates and resilient credit conditions will support bank profitability, even as broader economic growth remains subdued in the UK and Europe
– Analysts said the rally reflects confidence in large banks’ capital positions and dividend outlooks, with international exposure helping cushion domestic headwinds from weaker consumer demand and tighter fiscal policy
– Strategists cautioned that gains could be tested by guidance from upcoming earnings and signals from the Federal Reserve. Market direction will hinge on global rate expectations, currency moves and the tone of corporate outlook statements
27 January 2026: UK shop price inflation rises to highest level in nearly two years
– Industry data showed shop price inflation accelerated in January, driven by higher business energy costs and the continued impact of national insurance rises filtering through to retail prices, challenging expectations that consumer price pressures had already peaked
– The British Retail Consortium said food categories such as meat, fish and fruit saw particularly strong price growth, reflecting tighter supply conditions and firmer demand, adding to household cost-of-living pressures at the start of the year
– The figures contrast with official inflation data that include services, which also showed a sharper-than-expected rise in December, reinforcing concerns that domestically driven price pressures remain more persistent than policymakers had hoped
– Analysts said the pickup complicates the Bank of England’s easing outlook, as sustained retail inflation could slow progress toward the two per cent target and keep pressure on borrowing costs, wages and consumer spending in the coming months
27 January 2026: ‘Very deep poverty’ in Britain hits record high, new report finds
– A new report found that around 6.8 million people in Britain are now living in “very deep poverty,” marking the highest level recorded in three decades and highlighting worsening conditions for households facing persistent income and cost-of-living pressures
– Researchers said rising housing, energy and food costs have outpaced wage growth and benefit support, pushing more families into severe financial hardship despite easing headline inflation in recent months
– Charities warned that deep poverty is increasingly affecting working households, not just those out of employment, underscoring the strain of low pay, insecure work and limited access to affordable housing
– Analysts said the findings raise challenges for policymakers balancing fiscal discipline with social support. Addressing entrenched poverty, they argue, will require targeted welfare measures, improved job quality and sustained investment in housing and skills
27 January 2026: FTSE Russell proposes cutting free-float bar to lure foreign firms
– FTSE Russell is considering lowering the minimum free-float requirement for foreign-incorporated companies listed in London to ten per cent, aiming to make it easier for international groups to qualify for inclusion in major UK equity benchmarks
– The proposal is part of a broader effort to revive the City’s competitiveness as a global listing venue, following years of subdued IPO activity and increased competition from US and European exchanges
– Investment banks and advisers welcomed the move, saying more flexible rules could attract high-growth and founder-led companies that are reluctant to release large stakes into public markets
– Critics cautioned that lower free-float thresholds could reduce liquidity and increase volatility for some stocks, urging regulators and index users to balance market accessibility with transparency and investor protection
UK Financial Services Key Transactions
2 February 2026: Incard bags $10m to expand its fintech platform
– London-based fintech Incard has raised $10 million in funding from angel investors to accelerate development of its card-issuing and payments platform. The capital will support product enhancement, customer acquisition and broader rollout of its embedded finance solutions as demand grows for programmable payment infrastructures among digital businesses and banks
2 February 2026: Private equity group’s £1bn sale of UK accounting firm collapses
– Exponent’s attempt to sell UK top-20 accounting firm Xeinadin has fallen through after failing to secure a bidder willing to meet its expected £1 billion valuation. The collapse highlights tougher pricing conditions in professional-services M&A, as buyers grow more cautious on leverage, integration risk and growth assumptions amid a shifting macro and financing environment
2 February 2026: Insurance law firm acquires loss adjusters’ legal services arm
– A specialist insurance law firm has acquired the legal services division of a loss-adjusting business, enhancing its end-to-end claims support capabilities and expanding its service offering within the market. The move strengthens its technical expertise in claims litigation and advisory work, while broadening its client base among insurers, brokers and corporate risk owners
30 January 2026: Wren Sterling buys £265m Gloucester IFA
– Wren Sterling has agreed to acquire Gloucester-based financial adviser Brunsdon Financial, adding around £265 million of assets to its platform. Ahead of completion, approximately £130 million of client assets were migrated to Wren Sterling’s in-house investment arm, Magnus, underscoring the buyer’s strategy to integrate advice and discretionary management while building scale in the UK wealth market
29 January 2026: Mattioli Woods signs major JP Morgan AM tie-up
– Mattioli Woods has agreed a strategic partnership with JP Morgan Asset Management to broaden its investment platform and give advisers and clients enhanced access to global asset-management solutions, strengthening its proposition in discretionary and advised portfolios while supporting long-term growth in its wealth-management business
29 January 2026: Activist Saba doubles its stake in Henderson Smaller Companies
– Activist investor Saba Capital has increased its holding in Janus Henderson’s Smaller Companies investment trust, signalling confidence in the strategy’s long-term prospects and pressing for changes that could unlock value. The move reflects continued activist engagement in UK investment trusts as shareholders push for improved performance and strategic clarity
29 January 2026: WealthAI raises $800k to launch AI-first OS for wealth managers
– WealthAI has secured $800,000 in seed funding to develop an AI-first operating system designed for wealth managers, aiming to streamline portfolio workflows, automate research and enhance client engagement with machine-assisted insights. The capital will support product build-out, early customer integration and commercial expansion as demand grows for next-generation AI tools in wealth and investment management
29 January 2026: Business payments firm Sokin secures $100m debt facility
– UK-based global business payments fintech Sokin has secured a $100 million long-term debt facility from Oxford Finance to accelerate its international expansion, support regional licences and banking partnerships, and deepen embedded payments and treasury-infrastructure capabilities as it scales across North America, Asia, the Middle East and South America
29 January 2026: Schroders explores private capital tie-ups to accelerate growth
– Schroders has held high-level discussions about potential partnerships to scale its private capital business, according to sources, as the 222-year-old asset manager looks to expand its presence in higher-margin private markets. The talks signal strategic intent to gain scale, broaden product offerings and compete more effectively with global rivals amid rising investor demand for alternative assets
28 January 2026: Aegon UK review attracts reported buyer interest from insurers and investors
– Aegon’s strategic review of its UK business has drawn interest from multiple insurers and financial investors, with parties understood to be evaluating bids for the pensions, savings and platform operations. The process highlights strong buyer appetite for UK retirement and wealth assets, as acquirers seek scale, recurring revenue streams and synergies in an increasingly competitive pensions and savings market
28 January 2026: Howden acquires broker to expand in Channel Islands
– Howden Group has acquired a local insurance broker in the Channel Islands, strengthening its presence in the region and expanding its commercial and personal lines distribution capabilities. The transaction supports Howden’s strategy to grow strategically in key offshore markets and enhance service offerings for domestic and international clients
28 January 2026: Goldman Sachs Alternatives buys stake in £3bn advice firm The Private Office
– The Private Office (TPO) has sold a minority stake to Goldman Sachs Alternatives following a strategic review, valuing the UK advice firm at around £3 billion of assets. The investment is expected to support TPO’s growth ambitions, including platform development and potential acquisitions, while giving Goldman exposure to the expanding UK wealth-management and advisory market
28 January 2026: W1M could pay up to £50m for Vermeer and its loyal followers
– W1M is understood to be considering a deal of up to £50 million to acquire discretionary fund manager Vermeer, with the purchase price heavily weighted toward equity rather than cash. The structure underscores the strategic importance of retaining key investment talent and client relationships, as W1M looks to align incentives, preserve cultural continuity and drive long-term value creation through its growing wealth management platform
28 January 2026: Clear Group-owned Brokerbility acquires Gauntlet AR Network and Gauntlet Retail Brokers
– Brokerbility, part of the Clear Group, has acquired Gauntlet AR Network and Gauntlet Retail Brokers, expanding its UK commercial and retail brokerage footprint. The transaction broadens Brokerbility’s distribution reach, adds specialist expertise and reinforces Clear Group’s strategy of building scale through targeted acquisitions in key regional markets
27 January 2026: AUB Group agrees to acquire UK insurance platform
– Australia’s AUB Group has agreed to acquire a majority stake – roughly 95.9%, in UK-based insurance broking and underwriting platform Prestige Insurance Holdings, giving it a substantial retail broking, specialty MGA and insurtech footprint in the UK and Ireland. The transaction, expected to complete by June 30, 2026, accelerates AUB’s expansion in one of the world’s largest insurance markets
27 January 2026: UK launches £20m fund for military tech start-ups
– The UK government has unveiled a £20 million fund to fast-track defence contracts for British military technology start-ups, targeting AI, robotics and precision weapons. The initiative aims to diversify procurement away from major contractors, reward innovation and streamline SME access to Ministry of Defence projects as part of wider reforms to improve efficiency and reduce cost overruns in defence spending
27 January 2026: UK banks commit $15bn lending package to help firms expand abroad
– Britain’s five leading banks – NatWest, HSBC, Barclays, Lloyds and Santander, have pledged a combined £11 billion in new lending to support UK companies investing and expanding into international markets. The government-backed initiative aims to boost exports, strengthen global competitiveness and provide long-term financing for growth projects amid tighter credit conditions and heightened global trade competition
A Word from Our Founder & Managing Director
This week underlines how critical it is to strike the right balance between innovation and stability, growth and discipline, rather than chasing momentum for its own sake. As policy signals shift and geopolitical dynamics evolve, founders are being asked to make faster, higher‑stakes decisions in a more complex environment. Our role is to cut through that noise, help you see the structural trends that matter, and support you in building resilient, long‑term value in an increasingly interconnected financial system. At HSA Advisory, we remain focused on giving founders clear, actionable and senior‑led perspective on this new landscape. Whether you are weighing cross‑border expansion, assessing strategic acquisitions, or positioning your business for its next phase of capital raising, we are here to help you convert uncertainty into an edge and turn strategic intent into execution.
Himanshu Singh, Founder & Managing DirectorPulse Check
With sterling strong but growth signals mixed, will UK dealmaking in financial services accelerate further, or pause as buyers reassess valuations and financing conditions in the months ahead?
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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