Key Points from the Week: Chancellor Rachel Reeves faced rising fiscal headwinds as a projected £30bn productivity-driven shortfall loomed ahead of November’s Budget, sparking debate over potential tax hikes. The Bank of England’s gilt sell-off drew fire from top fund managers for worsening borrowing costs, while construction and services PMIs signalled weakening momentum across the economy.

Meanwhile, the Tories pledged to scrap business rates for high street firms, AstraZeneca’s NYSE move renewed fears over London’s market competitiveness, and UK-EU talks progressed toward a carbon border tax exemption. Despite macro uncertainty, financial services deal activity remained resilient, led by Lloyds acquiring Schroders’ stake in SPW, Shawbrook’s £2bn London IPO plans, and Pulse’s £5 million UK acquisition. SME lending stayed buoyant with Love Finance (£45m) and Howden’s North Wales expansion underlined continued investor confidence.

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

6 October 2025: Top fund managers urge Bank of England to stop selling gilts into rocky debt markets

Leading asset managers overseeing over $1.5 trillion have urged the Bank of England to halt gilt sales, arguing they are worsening market instability and adding tens of billions in costs to taxpayers as UK borrowing costs hit G7 highs
Investors say the BoE’s quantitative tightening (QT) has created a “fiscal feedback loop,” pushing gilt yields higher and increasing government debt costs by around £22 billion annually. They argue the bond sell-off worsens fiscal pressures ahead of Rachel Reeves’ November budget
Critics claim the BoE’s £70 billion annual bond runoff, even after being reduced from £100 billion, is excessive compared to the Fed and ECB, which allow maturities to roll off naturally. Studies estimate BoE’s active sales have raised yields by 70 basis points
Fund managers warn continued QT threatens debt sustainability, with long-dated gilts trading at deep losses. They call for an immediate stop to sales, labelling the policy “madness” and “ruinous for taxpayers,” while the BoE maintains overall taxpayer gains since 2012

6 October 2025: Tories to scrap business rates on high street pubs and shops

The Conservatives pledged to abolish business rates for 250,000 high street shops, pubs, and hospitality businesses if elected. Shadow chancellor Mel Stride announced the £4bn-a-year policy at the party conference in Manchester, promising full 100% rate relief
Stride blamed Labour’s tax increases for harming small businesses and claimed 89,000 hospitality jobs were lost since last year’s Budget. He accused Labour’s fiscal approach of hollowing out high streets and doubling business rates under Rachel Reeves’ government
The Tories said the policy would be financed by £47bn in public spending cuts, targeting welfare reductions, a smaller Civil Service, and reduced foreign aid. Stride framed this as both a financial necessity and a moral duty to reduce dependency on benefits
Labour dismissed the announcement as unfunded and unrealistic, arguing the Conservatives failed to explain how they would cover the multi-billion-pound cost. The policy launch came amid broader Tory pledges on immigration and plans to leave the ECHR

6 October 2025: UK construction gloom persists in September

The UK construction sector contracted for the ninth consecutive month in September, with the S&P Global PMI rising slightly to 46.2 from 45.5 but remaining well below the 50 threshold. Broader private sector activity also declined for the first time since April
S&P’s Tim Moore said firms were delaying major investment decisions until after Chancellor Rachel Reeves’ November 26 Budget, reflecting uncertainty across construction, manufacturing, and services. Business outlook confidence hit one of its lowest levels since late 2022
Despite official data showing 1% construction growth in Q2 2025, economists say the PMI reflects weak sentiment and concern over potential tax hikes or spending cuts as Reeves faces a £30bn fiscal gap. Firms are cautious about short-term recovery prospects
Employment in construction fell for the ninth straight month, marking the longest decline since COVID-19, while cost pressures remained high after easing in August. Some companies remain hopeful for public infrastructure and energy security project orders

4 October 2025: IPOs signal turning point for City as FTSE hits record high

The FTSE 100 surged 0.7% to 9,491.25, marking a new all-time high and extending year-to-date gains to nearly 15%. Analysts predict the index could reach 10,000 by year-end, driven by resilient corporate earnings and investor optimism
UK strategist Neil Wilson (Saxo) said the 9,500 level is “taking shape” and that hitting 10,000 is “entirely doable.” The rally reflects renewed risk appetite and expectations of monetary easing amid easing inflation and steady global equity flows
The FTSE 250 also rose 0.7%, bringing its 2025 gain to 7.6%, though it remains 8% below its 2021 peak. Mid-cap stocks benefited from strong domestic recovery hopes, supported by improved business confidence and corporate restructuring momentum
Investors shrugged off the U.S. government shutdown, which delayed key data like non-farm payrolls. Despite fiscal gridlock in Washington, global risk sentiment stayed strong, with the FTSE up nearly 25% since April lows, reflecting market resilience and liquidity strength

3 October 2025: Private Equity Has a Busy Summer as Deals Rebound

European private equity activity surged in Q3 2025, marking its strongest period since early 2022. PitchBook reported 2,187 deals worth €177.1bn, up 25% in value from the previous quarter, signalling renewed momentum after months of market uncertainty
Exit activity also rebounded sharply, with values jumping 80% quarter-on-quarter and volumes up 23%. Despite muted IPO markets—especially with firms like Klarna favouring U.S. listings—sponsors increasingly relied on GP-led secondaries and sponsor-to-sponsor deals for liquidity
Fundraising remains subdued, totalling €66.5bn so far in 2025 versus €142.1bn in 2024, as fewer megafunds closed. However, mid-market funds are thriving, accounting for two-thirds of all capital raised, underscoring investor preference for diversification and smaller, agile strategies
The UK led European fundraising, contributing over 50% of total capital raised. Analysts attribute the rebound in deal and exit activity to pent-up demand following the impact of Trump’s Liberation Day tariffs, which disrupted markets earlier in the year.

3 October 2025: UK business activity grows at slowest pace in 5 months, PMI shows

The UK’s services PMI fell to 50.8 in September from 54.2 in August, its lowest since April, indicating sluggish growth as businesses and consumers delay spending ahead of possible tax hikes in Rachel Reeves’ November Budget
The composite PMI, including manufacturing data, dropped to 50.1, barely above contraction levels. S&P Global said political and economic uncertainty has dampened confidence, with firms deferring investments and households postponing major purchases
Economists expect third-quarter GDP growth to slow to 0–0.2%, below the Bank of England’s 0.4% forecast. Pantheon Macroeconomics noted that high uncertainty may cause PMI data to understate actual growth, though revisions could improve figures later
S&P data showed service sector job cuts for the twelfth straight month and slower cost increases, signalling easing inflationary pressures. Economists say this supports a more dovish stance from the Bank of England on potential interest rate cuts

2 October 2025: Rachel Reeves braced for huge hole in UK public finances after productivity downgrade

The OBR’s expected downgrade in UK productivity forecasts could create a fiscal hole of up to £30 billion, wiping out Rachel Reeves’ £9.9 billion budget headroom. This threatens her fiscal targets and complicates preparations for the crucial November 26 Budget
Labour attributes the productivity downgrade to Conservative governments’ long-term economic failures, while Tories accuse Reeves of worsening fiscal conditions through poor policy choices. The issue has ignited a major political clash over accountability for the country’s financial instability
Even a small 0.1–0.2% drop in productivity could erase all remaining fiscal headroom. Economists warn additional pressures from welfare reversals, higher government borrowing costs, and weak tax revenues could push the total shortfall beyond £30 billion
Reeves faces mounting pressure to raise taxes despite promising otherwise, as fiscal realities tighten. To mitigate the impact, she plans reforms such as UK-EU youth mobility schemes, trade agreements, and planning changes aimed at stimulating long-term productivity growth

2 October 2025: AstraZeneca’s US listing may pull other firms from London in its wake

AstraZeneca plans to upgrade its U.S. listing by offering shares directly on the NYSE from February 2026 while retaining its London and Stockholm listings. Analysts warn this could shift liquidity away from London and inspire other FTSE firms to follow
The move reflects AstraZeneca’s growing U.S. exposure, where 43% of its revenue originates, expected to rise to 50% by 2030. UK officials welcomed the decision to keep its London base, calling it a sign of continued confidence in the UK economy
Market analysts caution that other UK giants with large U.S. investor bases, such as HSBC, Shell, and Rolls-Royce, might consider similar moves due to London’s lower valuations. The FTSE 100 has grown 58% in a decade, versus 250% for the S&P 500
While AstraZeneca insists it will remain UK-headquartered, investors note the shift could be a step toward a full U.S. listing if liquidity drifts stateside. Experts say this highlights London’s struggle to retain global firms amid valuation and market depth gaps

2 October 2025: UK and EU poised to strike deal sparing British business from carbon border tax

The UK and EU are close to finalising a temporary deal that would exempt British exporters from the EU’s carbon border adjustment mechanism (CBAM), due to take effect in January 2026. Both sides aim to conclude the agreement by late spring
The CBAM targets carbon-intensive imports like steel and fertiliser, raising concerns over higher UK consumer costs and market distortion from cheaper non-EU goods. The UK plans to introduce its own carbon border tax in 2027, aligning with the EU’s system
Officials see the deal as a major boost for UK businesses reliant on EU trade, strengthening cooperation ahead of a May or June UK-EU summit. Talks also include defence collaboration and a youth mobility scheme for young Europeans and Britons
Business leaders and pro-EU campaigners welcomed the progress, saying the agreement would protect jobs, reduce costs, and encourage long-term alignment on carbon policy. The move marks a broader “reset” in UK-EU relations under the Labour government

30 September 2025: UK economic growth slows in second quarter after rapid start to 2025

UK GDP growth slowed to 0.3% in Q2 2025 from 0.7% in Q1, signalling waning momentum after a strong start to the year. The economy still expanded 1.4% year-on-year and remains the fastest-growing among G7 nations in the first half of 2025
Economists warn that speculation over upcoming tax hikes in Rachel Reeves’ November Budget could dampen consumer and business confidence. Household savings rose to 10.7%, reflecting caution, while business investment grew by 3% annually, showing mixed sentiment
Despite modest growth, GDP per head increased by 0.9% after stagnating in 2024, aided by immigration-driven population gains. Analysts expect slower growth in the second half of 2025 due to weaker wage gains and inflation projected to rise to 4%
The UK’s current account deficit widened to £28.9bn, or 3.8% of GDP, the highest in two years, mainly due to higher dividend payments to foreign investors. Economists said the data increases fiscal pressure ahead of Reeves’ likely tax-raising November Budget

UK Financial Services Key Transactions

6 October 2025: Schroders and Lloyds expected to end wealth joint venture

Lloyds Banking Group is set to take full control of Schroders Personal Wealth, acquiring Schroders’ 49.9% stake in the venture. Established in 2019 with £15.7 billion AUM and 300 advisers, the move aligns with Lloyds’ strategy to expand its mass-affluent wealth offering and deepen customer relationships

6 October 2025: Shawbrook plans London IPO

British lender Shawbrook announced plans for a London IPO that could value it at up to £2 billion, marking one of the city’s biggest listings in years. The move, backed by BC Partners and Pollen Street, signals renewed confidence in UK capital markets after a subdued IPO environment

3 October 2025: Howden expands into North Wales with the acquisition of personal and commercial lines broker

Howden acquired Gott & Wynne Limited, a Llandudno-based general insurance broker specializing in personal and commercial lines, including classic cars. This strategic bolt-on provides Howden with its first North Wales branch, significantly growing its presence in the region

3 October 2025: Indian fintech Pulse to acquire UK’s Nucleus for Rs 500 crores

Mumbai-based Pulse acquired UK SME lender Nucleus Commercial Finance for Rs 450–500 crore, strengthening its UK presence ahead of a planned Rs 1,000 crore IPO in 2026. The deal doubles Pulse’s revenues, targets 200% origination growth, and enhances its embedded finance and SaaS lending infrastructure

2 October 2025: More Brokers Rebrand After Acquisition by US-Based Acrisure

US-based Acrisure rebranded two more UK brokers, Hine Chartered Insurance Brokers and CRK Commercial Insurance Services, under its unified identity. The move strengthens Acrisure’s national footprint as it integrates nine UK acquisitions, combining local expertise with global scale and digital innovation for accelerated growth

1 October 2025: AI InsurTech Rehuman secures £1m pre-seed from Fuel Ventures

UK-based AI InsurTech Rehuman raised £1 million in pre-seed funding led by Fuel Ventures to scale its AI-driven “insurance wallet” platform. The funding will enhance Rehuman’s proprietary AI model, boost broker tools, and advance its mission to simplify insurance through automation and customer-centric insights

1 October 2025: JP Morgan Ditches Nutmeg Brand in Digital Wealth Revamp

JP Morgan is retiring its Nutmeg robo-adviser brand, rebranding it as JP Morgan Personal Investing, integrated within the Chase UK app and as a standalone service. The revamp adds relationship managers for clients over £250,000 and launches a DIY investment platform to rival Hargreaves Lansdown

1 October 2025: PE firm Sovereign buys £1.3bn Northwest advice firm

Sovereign Capital Partners acquired a 56% stake in Equilibrium Financial Planning, a Cheshire-based wealth and investment firm managing £1.3bn in assets. The deal marks Sovereign’s re-entry into UK wealth management post-Shackleton sale, with plans for regional expansion and selective acquisitions across Northwest England

1 October 2025: BP Marsh takes £10m stake in £50m broker based in London

Private equity firm BP Marsh acquired a 10% stake in Oneglobal for £10 million, partnering with JC Flowers to drive the broker’s next growth phase. The investment will support international expansion, including the acquisition of a Bermudian specialty broker and entry into Asian markets

1 October 2025: Cullum-Backed Investment Vehicle Invests in Drone MGA

Minority Broker Partnerships (MBP), backed by insurance veteran Peter Cullum, invested in Moonrock Insurance, a drone-focused MGA, for an undisclosed amount. The Series A funding will enhance underwriting, launch new aerial tech products, and expand Moonrock’s automation and proprietary platforms to scale globally

1 October 2025: Bite Investments secures $25m to transform private markets

Bite Investments raised $25 million from NewSpring Growth to expand its private markets technology platform, Bite Stream. The funding will accelerate global scaling, enhance investor access to alternative assets, and advance Bite’s mission to digitise and democratise private market investing through a unified, cloud-based platform

1 October 2025: Love Finance secures £45m to scale SME lending

Birmingham-based SME lender Love Finance raised £45 million in debt financing, £35m from Paragon Bank and £10m from LGB Capital Markets, to support on-balance-sheet lending. The capital will expand its digital SME finance offering and accelerate funding access for UK small businesses amid tightening credit conditions

30 September 2025: JMG Group acquires three brokers as the UK expansion continues

JMG Group expanded its regional footprint with the acquisition of Boston Insurance Brokers, Hayton Insurance Brokers, and Gateway Insurance Services. The deals strengthen JMG’s commercial expertise and presence across the Midlands, Lake District, and Scotland, while allowing each firm to retain its leadership and regional identity

30 September 2025: AI compliance firm Umony secures $15m Series A funding

London-based AI compliance platform Umony raised $15 million in Series A funding led by Notion Capital, with participation from SeedCamp, Crane Venture Partners, and key angels. The funds will expand Umony’s AI research, strengthen global operations, and enhance its real-time misconduct detection tools for financial institutions

A Word from Our Founder & Managing Director

“This week highlights the growing tension between fiscal discipline and economic momentum. With markets questioning the Bank of England’s gilt strategy and Chancellor Rachel Reeves preparing for a challenging November Budget, investor sentiment is cautious, but not closed. Despite fiscal uncertainty, financial services dealmaking remains remarkably resilient, reflecting continued confidence in the UK’s innovation and capital depth.

At HSA Advisory, we see opportunity amid volatility. As fiscal tightening reshapes market dynamics, strategic positioning and clarity of vision become more important than ever. Our goal is to help clients navigate this evolving landscape, identifying value, managing risk, and capturing long-term growth potential.”

Himanshu Singh, Founder & Managing Director

Pulse Check

As fiscal tensions rise and growth stalls, the key question is: can disciplined policymaking and steady deal activity steady the UK’s recovery, or will political and market uncertainty take the upper hand?

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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UK Financial Pulse: Fiscal Tensions Deepen, Markets Brace for Reeves’ November Budget