Key Points from the Week:
The UK market navigated another turbulent week, as weak growth figures and a surprise GDP contraction in September coupled with unemployment edging up to 5% highlighted deepening economic challenges. Despite stabilising gilt yields following recent policy reversals, business sentiment remained cautious ahead of the upcoming Budget.
Still, the financial services sector demonstrated notable resilience: Howden and Jensten continued to drive UK expansion, WH Ireland drew renewed takeover interest, and FinTech/ RegTech funding stayed robust, with Zilch, Vigilant AI, and Auditocity all raising fresh capital to accelerate innovation in payments, compliance automation, and operational efficiency.
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
17 November 2025: Gilts stabilise after tax U-turn sell-off
– UK government bonds steadied after a sharp sell-off triggered by the Treasury’s sudden reversal on several proposed tax measures. Investors, initially startled by the policy uncertainty, returned selectively to gilts as officials signalled a more measured fiscal stance ahead of the Budget, helping yields ease from recent highs
– Market analysts said the stabilisation reflects relief that abrupt tax changes are unlikely to proceed without further consultation. However, they warned that gilt markets remain sensitive to shifting fiscal signals, especially given the fragile macro backdrop of weak growth and stretched public finances. Improved communication from the Treasury played a key role in calming nerves
– Pension funds and insurers – major holders of long-dated gilts, resumed limited buying after liquidity conditions normalised. The rapid rebound underscored the continued demand for safe assets, though institutional investors emphasised that policy predictability is essential to maintain stable financing conditions. Volatility is expected to persist until Budget details are finalised
– Strategists noted that while the gilt curve has partially recovered, risk premiums remain elevated compared with earlier in the year. Markets are now closely watching whether Chancellor Reeves can deliver a credible fiscal framework that balances consolidation with growth, a critical factor for sustaining gilt stability into 2026
16 November 2025: Productivity downgrade deepens fiscal pressures
– The UK’s independent fiscal watchdog has issued a sharper downgrade to productivity growth expectations, warning that weaker output per worker will significantly erode medium-term tax revenues. The revision compounds an already challenging fiscal backdrop shaped by sluggish investment and persistent labour-market strains
– Lower productivity forecasts reduce the economy’s potential growth rate, shrinking the fiscal “head-room” available to Chancellor Rachel Reeves ahead of the upcoming Budget. Analysts say this will likely force the Treasury to weigh tougher tax decisions or spending restraint to prevent borrowing from drifting higher
– Economists caution that the downgrade threatens progress on public-service reform and infrastructure delivery, as slower productivity growth raises the cost of government programmes and undermines long-term fiscal sustainability. This could limit Reeves’ ability to pursue pro-growth investment packages in the near term
– Markets are increasingly attentive to the deteriorating fiscal outlook, with gilt investors pricing in a more challenging borrowing environment. The productivity revision also heightens pressure on the government to accelerate regulatory, planning and workforce-skills reforms aimed at boosting growth and restoring investor confidence
15 November 2025: UK GDP growth remains weak ahead of Budget
– Latest data shows UK GDP expanding only marginally, underscoring a stagnant economic backdrop as Chancellor Rachel Reeves finalises the Budget. While the economy has avoided recession, output remains fragile, with limited momentum from services and ongoing contraction pressures in construction and light manufacturing
– The subdued growth profile is tightening fiscal space, making it harder for the Treasury to balance investment priorities with the need for consolidation. Analysts warn that slow GDP growth will constrain tax receipts, forcing tougher choices on revenue-raising measures and public-spending discipline
– Consumer demand remains uneven, with households still adjusting to higher mortgage costs and weak real-income gains. Retail activity has stabilised but lacks sustained strength, while business surveys continue to show caution on hiring and capital expenditure amid ongoing policy uncertainty
– Financial markets are watching the weak growth signals closely, as they influence expectations for borrowing needs and the Bank of England’s rate path. The sluggish GDP figures deepen concerns about the UK’s medium-term competitiveness, reinforcing calls for supply-side reforms and targeted growth-boosting measures in the Budget
14 November 2025: UK borrowing costs jump as investors lose faith in Rachel Reeves’ Budget
– UK gilt yields rose sharply as investors grew increasingly sceptical about Chancellor Rachel Reeves’ ability to deliver a credible fiscal plan. Reports of inconsistent tax signalling and uncertainty over spending cuts intensified market concerns, pushing up borrowing costs across medium- and long-dated bonds
– Analysts said the sell-off reflects mounting doubts over whether the forthcoming Budget can stabilise public finances amid weak growth and a £20–30 billion fiscal gap. Markets reacted particularly strongly to fears that delayed reforms and fragmented policy communication could undermine confidence in the government’s fiscal discipline
– Higher yields have already begun tightening financial conditions, raising refinancing costs for businesses and households. Economists warned that if sustained, the increase could dampen investment, weaken housing demand, and limit the Bank of England’s monetary flexibility in early 2026. The Treasury has offered reassurances but has yet to calm volatility fully
– Investors are now looking for Reeves to present a clearer, more coherent Budget strategy – one that balances tax measures, spending control, and pro-growth policies. Without a credible path forward, markets may demand a higher risk premium, complicating the government’s ability to fund its priorities at sustainable cost
14 November 2025: UK Chancellor Rachel Reeves drops income tax rise and NI on LLPs in Budget
– Chancellor Rachel Reeves has abandoned plans to raise income tax and scrap National Insurance relief for LLP partners, following weeks of political pushback and concerns about investor sentiment. The decision marks a significant retreat from earlier signalling and narrows her options for closing the £20-30 billion fiscal gap
– Treasury officials said the U-turn reflects a desire to “avoid blunt tax rises on productive workers and professional partnerships,” but analysts note it also highlights the government’s difficulty in balancing revenue needs with competitiveness pressures. The scrapped measures would have raised several billion pounds annually
– With two major tax levers now off the table, Reeves faces intensified pressure to find alternative sources of revenue. Market analysts warn that failure to present credible fiscal plans in the upcoming Budget could risk further volatility in gilts, following recent signs of weakening investor confidence
– Attention now shifts to possible tightening of reliefs, base-broadening measures, and spending restraint. Business groups welcomed the decision, saying higher taxes on LLPs and workers would have been “growth-dampening,” but also urged the government to deliver a stable, investment-friendly Budget that avoids last-minute reversals
13 November 2025: Flash PMI shows tentative stabilisation in services
– The latest flash PMI data indicates early signs of stabilisation in the UK services sector, with activity edging slightly higher after months of softness. Firms reported firmer demand in areas such as professional services and transport, suggesting that parts of the economy may be bottoming out heading into year-end
– Cost pressures continued to ease, helping support margins and limiting the need for further price increases. Softer wage growth and improving supply conditions contributed to a more balanced cost environment, offering cautious optimism for inflation moderation over the coming months
– New business inflows improved modestly, driven by domestic demand rather than exports, which remain under pressure due to weak global conditions. Companies highlighted increased client enquiries and a stabilising sales pipeline, though overall sentiment remains notably restrained
– Despite these early improvements, hiring intentions stayed muted, with firms opting for greater efficiency and selective replacement rather than broad workforce expansion. Economists note that while the stabilisation is encouraging, the PMI levels still point to only modest growth, underscoring the broader fragility of the UK economy ahead of the upcoming Budget
13 November 2025: Weaker UK growth boosts December rate cut chances
– Softer-than-expected UK growth data has increased market bets that the Bank of England could deliver a rate cut as early as December. Investors now see sluggish output and cooling labour-market conditions as clear signs that monetary policy is overly restrictive
– September’s GDP dip and weak business surveys suggest the economy is losing momentum heading into winter. Economists argue that the BoE may have to shift focus from inflation risks to recession risks, especially as consumer spending and corporate investment remain fragile
– Money markets are now pricing in a higher probability of a 25bp cut at the December meeting, with traders citing falling core inflation, easing wage growth, and weakening services activity as evidence that price pressures are continuing to ease
– A near-term rate cut would offer relief for households and businesses facing tight credit conditions, but analysts caution that the BoE will require clearer evidence of sustained disinflation before acting. The government is also closely watching the bank’s decision, as borrowing costs and gilt yields remain critical ahead of the upcoming Budget
13 November 2025: UK economy unexpectedly contracted by 0.1% in September
– The UK economy shrank by 0.1% in September, catching policymakers off guard as services output slipped and industrial production weakened. Economists warn the contraction underscores fragile underlying momentum just weeks before the Chancellor’s high-stakes Budget
– The services sector, responsible for the bulk of UK GDP – saw broad-based softness, particularly in consumer-facing industries. Analysts say persistent cost pressures and weak discretionary spending continue to weigh on activity, despite moderate improvements in inflation earlier in the quarter
– Manufacturing and construction also posted declines, reflecting subdued business investment and ongoing supply-chain frictions. Firms remain cautious ahead of potential tax changes, with many delaying capital expenditure and hiring decisions until after the Budget
– The downturn heightens concerns that the economy could stagnate or dip into a shallow recession over the winter. Markets are now watching the November data closely, as the GDP slip increases the risk that the Office for Budget Responsibility will downgrade near-term growth forecasts, raising further pressure on the government’s already-tight fiscal position
12 November 2025: Business investment and hiring remain subdued
– UK businesses continued to hold back on capital spending in November, with investment intentions weakening further due to uncertainty around the upcoming Budget and persistent cost pressures. Firms cited unclear tax policy, sluggish demand, and tighter financing conditions as key reasons for delaying or scaling down major projects
– Hiring activity also remained muted, with companies opting to freeze recruitment or rely on temporary staff rather than commit to permanent additions. Slower revenue growth and productivity challenges led many firms to prioritise cost control, keeping employment expansion at some of the lowest levels seen this year
– Survey data showed that confidence across both services and manufacturing remains fragile, with businesses reporting limited visibility on future orders. While some sectors saw pockets of resilience, such as tech and logistics – the majority of firms signalled caution in forward planning
– Economists warn that weak investment and hiring could weigh on the UK’s medium-term growth prospects, especially as the government prepares fiscal tightening measures. Without stronger business confidence, analysts fear the economy may struggle to lift productivity or sustain even the modest growth observed in recent quarters
11 November 2025: UK unemployment hits 5%, highest since pandemic
– UK unemployment has risen to 5%, its highest level since the COVID-19 pandemic, as firms scale back hiring amid weak demand and persistent cost pressures. The sharp rise signals further cooling in the labour market following months of subdued economic activity
– Job losses were concentrated in consumer-facing services, manufacturing and construction – sectors hit hardest by slowing orders and squeezed margins. Economists warn that reduced hiring appetite could drag on wage growth and household spending just as the economy enters a fragile winter period
– The increase in unemployment adds pressure on the Bank of England to ease monetary policy sooner rather than later. With vacancies falling and wage growth moderating, markets now view the latest data as further justification for a potential December rate cut
– For the government, the rise complicates Budget planning. Higher unemployment typically weakens tax receipts and increases welfare costs, tightening the fiscal outlook. Analysts say Chancellor Rachel Reeves will face a tougher challenge balancing support for the economy while committing to fiscal discipline
11 November 2025: Fiscal uncertainty and tax speculation weigh on growth
– Businesses across the UK reported renewed hesitation in spending and expansion as speculation around upcoming tax rises created uncertainty ahead of the Budget. Many firms delayed investment decisions, citing unclear fiscal direction and concerns that higher corporate or personal taxes could squeeze margins and dampen demand
– Economists noted that the lack of clarity on tax policy is already feeding into weaker short-term growth expectations. Surveys show a slowdown in new orders across both services and manufacturing, with clients postponing contracts until Budget details become clearer. This precautionary behaviour is contributing to softer output momentum
– Consumer confidence also weakened, as households brace for potential tax tightening and higher living costs. Retailers reported more cautious discretionary spending, with buyers focusing on essentials. Analysts warned that any broad-based tax increases could further strain consumption, a key driver of the UK economy
– Policymakers face growing pressure to provide clearer forward guidance. Financial markets have become more volatile, with gilt yields drifting higher on fears of aggressive fiscal measures. Investors say predictable and credible tax policy will be essential to stabilise sentiment and support growth through 2026
11 November 2025: UK banks push for easing of capital rules to counter surge in private credit
– Major UK banks are lobbying regulators to relax capital requirements, arguing they are being undercut by the rapid expansion of private credit funds. Lenders say tougher post-crisis rules leave them at a competitive disadvantage as non-bank financiers increasingly dominate corporate lending
– Banks claim that high risk-weighting on business loans limits their ability to compete on pricing and volume. They warn that unless rules are updated, more mid-sized and leveraged borrowers will migrate to private credit markets, reducing the role of traditional banks in the UK’s financing ecosystem
– Regulators, however, remain cautious. The Prudential Regulation Authority is concerned that easing capital buffers could raise systemic risks – especially at a time of weakening economic growth, rising unemployment, and signs of stress in commercial lending portfolios
– The debate comes as private credit hits record deployment levels in the UK, fuelled by global funds seeking higher yields. Analysts say the government faces a delicate balance: supporting bank competitiveness while avoiding steps that could undermine financial stability ahead of a challenging fiscal and economic period
UK Financial Services Key Transactions
16 November 2025: Blue Owl Private Credit Fund Merger Could Cost UK-Linked Investors c.20%
– Blue Owl is merging its Blue Owl Capital Corporation II fund into its larger OBDC vehicle, but OBDC trades at a 20% discount to its NAV. Retail investors in the former may take a substantial hit -especially since redemptions have been blocked until the deal closes early next year
14 November 2025: Laka Secures £6.5 Million Venture Debt from HSBC Innovation Banking
– UK-based insurtech Laka, specialising in green mobility insurance for cyclists and e-scooter riders, raised a £6.5 million debt facility from HSBC Innovation Banking. The funds will fuel its European expansion and support strategic M&A to consolidate the fragmented micromobility insurance market
14 November 2025: Anzen Raises $16 Million Series A to Expand Commercial Insurance Platform
– AI-powered insurtech Anzen secured $16 million in a Series A round led by Madrona, with participation from Sandbox Industries, SNR, and Andreessen Horowitz. The funding will help Anzen scale its AI-enabled workflows, deepen carrier and AMS integrations, and support the public launch of its “Anzen Pro” workspace
13 November 2025: Zilch Raises $176.7 Million to Accelerate Global Growth
– London-based BNPL fintech Zilch secured $176.7 million in a mixed debt and equity round led by KKCG, with participation from BNF Capital and others. The funding will go toward scaling its AI-powered “Intelligent Commerce” platform, launching Zilch Pay in H1 2026, and supporting brand expansion and potential M&A
13 November 2025: Adclear Raises €2.4 Million Seed to Scale AI Compliance Tools
– London-based regtech Adclear closed an oversubscribed £2.1 million (~€2.4 million) seed round led by Outward VC, with support from Tenity, AFG Partners, Haatch, Force Over Mass and angels including Dan Cobley and Keith Grose. The funding will help scale its AI-driven compliance platform for financial promotions
13 November 2025: Scotland Plans £1.5 Billion “Kilts” Bond Issuance After Credit Rating Upgrade
– After receiving AAA-equivalent credit ratings from Moody’s (Aa3) and S&P (AA), Scotland’s government announced plans to issue £1.5 billion of its own bonds, nicknamed “kilts”-starting in the 2026–27 financial year, to fund capital investment in infrastructure under a new sovereign-style borrowing programme
12 November 2025: FNZ secures $650 Million in new equity funding to accelerate global growth
– Global wealth-management platform FNZ raised $650 million from existing institutional investors such as CPP Investments, La Caisse, Generation Investment Management, and Motive Partners — plus FNZ clients like Aberdeen, Aviva and Nucleus – to strengthen its credit profile and drive growth through technology, talent, and product development
12 November 2025: Auditocity raises US$2 Million seed to scale HR compliance automation in the UK
– HR-tech startup Auditocity secured a $2 million seed round led by Halogen Ventures, Techstars, Innovate Alabama, and angel investors. The funding will help the company scale its intelligent HR compliance auditing platform, enabling real-time risk detection, automation of audits, and educational tools for companies to stay regulatory-safe
12 November 2025: WH Ireland in talks on all-share merger with Team after previous sale deal collapses
– Following the rejection of Oberon’s £1m bid for its wealth-management arm, WH Ireland is now reportedly in advanced discussions to merge with fellow UK-listed wealth firm Team in an all-share transaction, potentially valuing WH Ireland more highly than the previous under-whelming offer
12 November 2025: Macquarie launches Longbrook Insurance to pursue UK M&A and energy risks
– Macquarie Insurance Facility (part of Macquarie Asset Management) is launching Longbrook Insurance, a multi-line underwriting business in London. Longbrook will offer transaction liability insurance (M&A-related, like warranty & indemnity and tax liability) and energy insurance covering construction and operation of energy assets, especially in the energy-transition space
11 November 2025: FALKIN raises US$2 Million to develop UK-focused AI scam-prevention tools
– London-based digital safety startup FALKIN secured $2 million (approx. €1.7 m) in a pre-seed round led by TriplePoint Ventures, with participation from Notion Capital, Aviva/Founders Factory, Haatch, BackFuture Ventures, and other investors. The funds will fuel development of its AI-powered platform that detects deception in messages and payments to stop scams before transactions happen
11 November 2025: Vigilant AI.ai Secures £585K Pre-Seed for UK RegTech Automation
– Derby-based RegTech startup Vigilant AI.ai raised £585,000 in a pre-seed round led by Haatch, with participation from East Midlands Combined County Authority and the British Business Bank. The funds will be used to hire engineering and GTM talent, productise its AI-teammate platform, and convert pilots into live revenue with real-time compliance and audit trails
11 November 2025: Jensten completes UK broker acquisition in post-Bain Capital expansion
– Jensten Group has acquired the commercial broker Northern Counties, which has offices in Gateshead and Glasgow, adding a 20-person team and decades of regional expertise. This is Jensten’s first deal since partnering with Bain Capital, reinforcing its strategy of building scale through regional M&A
11 November 2025: Howden Acquires Evelyn Partners’ Employee Benefits Consultancy
– Howden announced the purchase of Evelyn Partners Financial Services (EPFS), a 38-person employee-benefits advisory team covering group risk, healthcare, engagement, and wellbeing. The deal, subject to regulatory approval with completion expected in Q1 2026, reinforces Howden’s growth strategy in the UK benefits and pensions market
A Word from Our Founder & Managing Director
As the UK heads into a pivotal Budget, economic signals are nuanced yet critical. While inflationary pressures are gradually easing and markets have shown resilience, confidence remains muted, with many businesses adopting a wait-and-see approach until there is greater policy clarity. Nevertheless, capital continues to find its way into high-growth sectors, underscoring the importance of agility and informed decision-making. At HSA Advisory, our priority is to empower clients with clear, senior-led insight and actionable strategies whether the focus is on raising capital, executing acquisitions, or refining market positioning. We are committed to guiding you through uncertainty, uncovering opportunities, and equipping you with the confidence to make informed, forward-looking decisions.
Himanshu Singh, Founder & Managing DirectorPulse Check
Can the Chancellor deliver a credible plan that supports growth without tightening the financial strain already felt across households and businesses?
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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