Key Points from the Week: The FTSE 100 held firm as investors weighed sticky 4% inflation against easing expectations for 2026 rate cuts. Chancellor Rachel Reeves prepared deeper tax rises and spending cuts to rebuild fiscal headroom, while the IFS urged structural tax reform over short-term revenue grabs. Deloitte’s CFO survey showed competitiveness concerns at decade highs, with firms delaying capex amid rising costs. UK consumer spending remained the weakest in the G7, highlighting fragile household confidence. Meanwhile, Larry Ellison’s £890m expansion of Oxford’s Ellison Institute positioned the UK as a global AI and life sciences hub, reinforcing the government’s mission-led innovation push.
Welcome to HSA Advisory’s Financial Services Newsletter, your concise roundup to the latest developments in the UK macroeconomics and key 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
14 October 2025: Larry Ellison to invest extra £890m in Oxford institute
– Oracle founder Larry Ellison has pledged an additional £890 million to expand the Ellison Institute of Technology (EIT) at Oxford Science Park, growing it to 2 million square feet and creating space for 7,000 researchers. This marks one of Europe’s largest private R&D campuses and underscores the UK’s life sciences and technology ambitions post-pandemic
– The expansion, designed by Norman Foster, positions Oxford as a global hub for AI, health, and sustainability innovation. Despite leadership turbulence, including the resignation of Professor Sir John Bell, Ellison’s vision to tackle food security, health, and climate issues has attracted government and investor backing
– Professor Santa Ono, newly appointed Global President of EIT, described the project as the “most exciting investment in global research,” projecting billions in economic impact through spin-offs and start-ups. The initiative reflects the UK’s strategy to drive growth through science-led innovation and private capital mobilisation
– Internal challenges have emerged, with staff citing friction from rapid scaling and a demanding culture. COO Lisa Flashner acknowledged growing pains but emphasised unity around long-term goals. Government officials view the project as pivotal to the UK’s “mission-led” innovation model, echoing the success of Cambridge’s biotech cluster
13 October 2025: BoE’s Megan Greene signals more cuts are plausible, but warns on sticky inflation
– MPC member Megan Greene said additional rate cuts are likely in time, yet inflation appears to be falling more slowly than hoped, with CPI running well above the 2% target and expected to hover around 4% in September before easing in 2026
– Greene noted policy remains restrictive even after earlier reductions, cautioning that markets might be too optimistic on the disinflation path given weak productivity and persistent service-sector price pressures, factors that complicate timing and scale of future easing
– Her comments reflect a delicate internal BoE debate: lowering rates too fast risks re-accelerating prices and weakening the pound, while moving too slowly could squeeze growth further and prolong a soft patch already visible in PMI readings
– Investors currently pencil in the next move around spring 2026, but Greene emphasised data dependence. The communication aims to temper rate-cut bets while acknowledging that an eventual easing path remains on the table if inflation expectations keep edging down
12 October 2025: Rachel Reeves looks at bigger tax rises and spending cuts to build up UK fiscal buffer
– Chancellor Rachel Reeves plans deeper tax hikes and spending cuts in the November Budget to create a larger fiscal buffer, aiming to increase Treasury “headroom” beyond the current £9.9 billion and strengthen resilience against future economic shocks
– The move follows pressure from major bond investors like Pimco and BlackRock, who warned that thin fiscal margins risk undermining market credibility and lifting gilt yields. Reeves hopes early fiscal tightening will restore investor confidence and lower borrowing costs
– Officials face a fiscal gap of £20–30 billion, triggered by the OBR’s downgrade of productivity forecasts. The Treasury is assessing a mix of tax increases and public sector savings to avoid repeated fiscal corrections later in the Parliament
– Higher taxes risk political backlash, as Reeves had previously promised last year’s £40 billion tax rise was a “one-off.” Still, economists such as Michael Saunders argue a larger buffer would enhance fiscal credibility and potentially ease pressure on long-term gilt yields
12 October 2025: IFS urges Rachel Reeves to reform taxes rather than chase quick revenue
– The Institute for Fiscal Studies warned against a “half-baked dash for revenue,” urging structural reform over blunt rate hikes on income, VAT or NICs to plug a £20–30bn hole. It suggested targeted changes to wealth-related and property taxes to raise funds efficiently
– The IFS floated scrapping stamp duty and shifting local property taxation toward areas with stronger price growth, arguing such changes would be less distortionary and more pro-growth than across-the-board increases that risk dampening investment and labour supply amid weak productivity
– While some in Labour have advocated an annual wealth tax, the IFS pushed back, recommending focus on coherence and fairness rather than headline-grabbing measures, to strengthen fiscal credibility while minimising economic harm during an already fragile expansion
– The think-tank’s intervention raises the stakes for November’s Budget design: a tidy revenue package could reassure gilt markets and business leaders, but piecemeal tax raids risk undermining confidence, complicating the disinflation path and worsening the UK’s competitiveness narrative
12 October 2025: UK CFOs flag competitiveness squeeze and rising costs ahead of Budget
– Deloitte’s survey found CFO concerns about competitiveness and productivity at the highest since 2014, with inflation near 4% and wage growth around 5% amplifying cost burdens. Firms are prioritising cash buffers, debt reduction and cost control while delaying capex and hiring plans
– A net 84% of CFOs expect operating costs to rise over the next year, the highest in more than four years, reflecting persistent input pressures and fiscal uncertainty. This conservative stance threatens to cool investment momentum as Budget speculation intensifies
– Although geopolitical worries eased somewhat, domestic policy risk looms larger, with executives bracing for possible tax measures on investment and higher-income groups to rebuild fiscal headroom. That backdrop could weigh on sterling-sensitive sectors and tilt equity risk premia higher
– The survey underscores a macro dilemma: preserving credibility through tighter fiscal policy may clash with the need to revive productivity and business investment, reinforcing calls for tax reform over broad-based hikes that would erode the UK’s growth potential
12 October 2025: UK security services step up work with business to fight cyber threats
– MI5 and the National Cyber Security Centre (NCSC) are intensifying collaboration with major UK companies amid rising fears of economically damaging cyberattacks on critical sectors. Following the £1.5bn government-backed loan to Jaguar Land Rover after its six-week production shutdown, ministers are reassessing national resilience and the potential unification of cyber and resilience units
– The government aims to empower the NCSC to play a more active role in business defences, moving beyond voluntary reporting. Cooperation has deepened across utilities, telecoms, energy, and financial systems, especially after recent attacks on Southern Water and Marks & Spencer exposed major vulnerabilities in supply chains and data security
– Jon Butterworth of National Gas confirmed enhanced coordination with GCHQ and MI5, stressing constant system upgrades to outwit hackers. The move coincides with growing security concerns over state-linked actors from China, Russia, and Iran, and an increasing frequency of sophisticated, economically disruptive criminal operations targeting UK infrastructure
– The forthcoming Cyber Security and Resilience Bill, expected later this month, will modernise the UK’s 2018 cyber laws. It mandates 24-hour reporting of attacks, tighter supply chain monitoring, and broader regulation of managed service providers. Experts call this a shift toward recognising cyberattacks as “economic warfare,” vital for safeguarding national productivity and business continuity
11 October 2025: UK consumers curb spending more than anywhere else in G7
– UK household spending has risen only 1% in real terms since 2020, the weakest among G7 nations, with per capita consumption down 3%. High interest rates, inflation shocks, and economic uncertainty have driven families to save rather than spend, defying pre-pandemic consumer behaviour that powered two-thirds of GDP growth.
– The UK’s saving ratio reached 10.7% in Q2 2025, double its 2016–19 average. Policymakers at the Bank of England, including Catherine Mann, are struggling to explain why Britons continue hoarding cash despite rising disposable incomes. The BoE fears entrenched thrift could weaken growth and disrupt rate path forecast
– Economists note that while higher rates initially encouraged saving through attractive ISA returns and debt repayments, the persistence of this behaviour signals a deeper structural shift. Analysts suggest that households now view precautionary saving as essential protection against volatile prices, job insecurity, and potential tax rises
– Experts such as Michael Saunders and Kallum Pickering argue that weakened wealth effects from stagnant housing and pension assets have further dampened confidence. Combined with lingering inflation “scars,” the trend suggests the UK economy may face a longer period of subdued consumption, even as inflation approaches target levels
9 October 2025: BoE warns AI hype could spark sharp market correction
– The Financial Policy Committee’s October record and subsequent commentary warned that AI-linked valuations look stretched, creating vulnerability to a sharp correction that could propagate via leveraged investors and liquidity mismatches in funds, now core concerns for UK macroprudential policy
– Policymakers are scrutinising how AI hype could amplify cyclicality in risk assets and credit, with spillovers to UK households and corporates through funding costs and pension exposures. The BoE’s messaging sought to cool exuberance without triggering disorderly repricing
– FinTech Global summarised the warning, noting the risk that sentiment can reverse quickly in tightly interlinked markets. Heightened vigilance complements ongoing work on funds’ liquidity tools and margining practices to dampen procyclicality in stress
– The focus on asset-price vulnerabilities sits alongside concern over gilt-market functioning under QT, reinforcing that market plumbing and investor behaviour matter as much as traditional bank-balance-sheet channels for UK financial stability
9 October 2025: UK construction gloom persists in September, PMI data shows
– S&P Global’s construction PMI rose to 46.2 from 45.5 but stayed below 50, marking a ninth consecutive contraction. Firms cited delayed projects as clients await clarity on Reeves’s 26 November Budget and potential tax or spending decisions that could sway demand
– The sector’s employment fell for a ninth month, the longest decline since COVID, pointing to persistent slack that may help cool wage pressures. Despite Q2’s 1% official output rise, survey data imply near-term headwinds and continued caution on private development
– Construction’s weakness echoes softer composite PMI signals and feeds into expectations that BoE policy will stay restrictive but flexible, as investment hesitancy and financing costs interact with planning bottlenecks and a cooling housing outlook
– Some optimism lingers around public infrastructure and energy security projects, but supply-chain resilience, borrowing costs and fiscal choices will determine whether 2026 brings a sustained stabilisation or a prolonged drag on activity and employment
8 October 2025: IMF and BoE warn AI boom risks ‘abrupt’ stock market correction
– The IMF and Bank of England issued sharp warnings that global stock markets are nearing dotcom-era valuation levels, fuelled by investor optimism around artificial intelligence. IMF chief Kristalina Georgieva cautioned that sentiment about AI’s “productivity-enhancing potential” could reverse suddenly, sparking an economic downturn and exposing global financial vulnerabilities
– The BoE’s Financial Policy Committee echoed these concerns, noting US cyclically adjusted P/E ratios are approaching 2000 bubble highs. It warned that overconcentration in AI-focused tech giants, now nearly 30% of the S&P 500’s weight, leaves markets exposed to a sharp correction if AI growth expectations fade
– Georgieva emphasised that while AI enthusiasm has bolstered growth and eased financial conditions, a rapid sell-off could strain emerging markets and undermine global stability. The IMF fears that inflated valuations, combined with geopolitical and fiscal tensions, could amplify market contagion in the event of a reversal
– The BoE also flagged rising defaults in US auto credit markets and “weak underwriting standards” as compounding risks. Despite Federal Reserve officials downplaying bubble fears, analysts warn that political pressures on US monetary policy and uncertainty in France and Japan could trigger a re-pricing of global assets, testing resilience in overleveraged markets
8 October 2025: ONS revises down UK government borrowing by £2bn after VAT error
– The Office for National Statistics (ONS) cut its estimate of UK government borrowing for April–August 2025 by £2 billion to £81.8 billion, following the discovery of VAT receipt errors reported by HMRC. While the revision eases pressure slightly, borrowing still far exceeds the Office for Budget Responsibility’s £72.4 billion forecast for the same period
– The mistake, stemming from omitted VAT payment streams, prompted criticism of data reliability. The ONS blamed HMRC for inaccurate inputs, while HMRC admitted the error but said it did not affect taxpayer accounts. Economists warned that repeated statistical blunders complicate policymaking, particularly ahead of Chancellor Rachel Reeves’s crucial November Budget
– The ONS has faced mounting scrutiny after multiple data mishaps, including overestimating inflation and delaying retail sales reports due to seasonal adjustment issues. Analysts warn these problems could undermine investor confidence and hinder the Bank of England’s and Treasury’s ability to assess fiscal and monetary policy accurately
– Economists such as Rob Wood and fund manager Gordon Shannon said the revision offers only marginal fiscal relief and does not alter the UK’s strained public finance outlook. The episode underscores the “shaky ground” on which Reeves must base tax and spending decisions, with an expected £20–30 billion fiscal gap and looming OBR productivity downgrades threatening her fiscal targets
UK Financial Services Key Transactions
13 October 2025: Shawbrook Announces £50m Share Issue for London IPO
– 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
13 October 2025: InsurTech ClaimSorted Secures $13.3m Seed Round
– London/NYC InsurTech ClaimSorted raised a $13.3 million Seed round led by Atomico to expand its AI-powered claims management platform. The capital will accelerate global operations, enabling insurers to achieve faster, more consistent claims settlement and significant operational cost reduction
10 October 2025: LSEG Executes £1 Billion Share Buyback to Reduce Capital
– The London Stock Exchange Group (LSEG) launched a £1 billion share buyback program via Goldman Sachs. The financial transaction is designed to reduce the number of outstanding shares by holding them in treasury, effectively returning capital to the company’s remaining shareholders
10 October 2025: WH Ireland Shareholders Veto Oberon Acquisition and Delisting
– WH Ireland shareholders overwhelmingly vetoed Oberon Investments’ £1 million acquisition of its wealth management business and rejected its delisting. Despite the vote, both firms are mandated to pursue the asset purchase until year-end, leading to the immediate resignation of two WHI directors
10 October 2025: Manchester & London in Merger Talks to Thwart Saba Capital
– Manchester & London (MNL) is holding merger discussions with several investment trusts targeted by activist shareholder Saba Capital. The consolidation aims to create a larger entity (up to £850 million) to dilute Saba’s influence and safeguard MNL’s investment trust status
10 October 2025: Sitehop Raises £7.5m to Boost Quantum-Safe Encryption
– Sheffield cybersecurity firm Sitehop secured £7.5 million in a funding round led by Northern Gritstone to scale its quantum-safe, hardware-based encryption technology. The investment will accelerate its growth, international expansion, and strengthen the UK’s sovereign security capabilities
8 October 2025: RBC Emerges as Frontrunner to Buy Evelyn Partners
– Royal Bank of Canada (RBC) is the leading candidate to acquire UK wealth manager Evelyn Partners for a reported valuation of up to £2.5 billion. RBC’s interest follows its 2022 purchase of Brewin Dolphin and Evelyn’s recent effort to shed non-core assets to simplify its business
7 October 2025: US Consolidator Buys London-Based MGA Avid Insurance
– Bishop Street Underwriters, backed by Private Equity firm RedBird Capital Partners, acquired London-based MGA Avid Insurance to execute its second UK expansion. The deal adds Avid’s expertise in niche and complex insurance schemes (like social housing and construction) to Bishop Street’s multi-boutique platform
7 October 2025: Brown and Brown Acquires Digital Broker for Medical Professionals
– Brown and Brown acquired the Swindon-based digital broker All Medical Professionals (AMP), which trades as All Med Pro Dental. The acquisition enhances Brown and Brown’s digital division by adding specialist capabilities and deepening its support for the UK medical and dental community
7 October 2025: Targeted Support Could Spark Lloyds £3bn Bid for Quilter, Says Broker
– RBC Capital Markets published a research note suggesting Lloyds Banking Group should acquire Quilter for an estimated £3.1 billion. The strategic rationale is driven by Quilter’s simplified structure and the imminent Targeted Support regulatory regime, which would help Lloyds scale its wealth offering
7 October 2025: Oneglobal Acquires Bermuda-based Life and Annuity Services
– Oneglobal Broking (backed by JC Flowers) is acquiring Bermuda-based Life and Annuity Services to strategically expand its service offerings. This move integrates specialist expertise in life insurance and annuity planning, enabling Oneglobal to diversify its financial protection solutions for global clients
7 October 2025: Digital Asset Rater Agio Ratings Raises $6m from AlbionVC
– London FinTech Agio Ratings secured $6 million from AlbionVC to accelerate its growth. The funding is earmarked for expanding research and broadening its quantitative digital asset risk ratings, helping major financial institutions to safely manage counterparty risk within the crypto ecosystem
A Word from Our Founder & Managing Director
This week highlights the growing gap between policy ambition and real-economy reality. With inflation stuck near 4% and household spending falling faster than any other G7 nation, SMEs face rising costs, weak demand, and tighter credit. As the Chancellor hints at further tax rises ahead of the November Budget, liquidity pressures are building even as confidence in the UK innovation endures, underscored by Larry Ellison’s Oxford expansion.
Himanshu Singh, Founder & Managing Director
Pulse Check
With inflation stubbornly near 4%, consumers tightening their belts, and the Chancellor preparing deeper tax rises, can the UK strike a balance between fiscal credibility and growth?
We’d love to hear your view.
Source: Financial Times, Reuters, The Times, Insurance Times, Insurance Business UK, The Guardian, Insurance Age, CityWire, FinTech Global.
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