Business

Revolut has reported record pre-tax profits of £1.7 billion for 2025, up 57 per cent year-on-year, as the fast-growing fintech prepares to expand further into mainstream banking products, including credit cards in the UK.

The results mark a significant milestone for the London-based group, which recently secured a full UK banking licence from the Bank of England, a development that unlocks a broader range of lending products and signals its transition from a payments platform into a fully-fledged global bank.

Chief financial officer Victor Stinga said the launch of credit cards in the UK is now a “key area of focus” for the business, alongside plans to roll out unsecured personal loans and overdraft facilities to its 13 million UK customers.

The move reflects Revolut’s strategy to deepen relationships with existing users by becoming their primary banking provider, not just a secondary app for payments or foreign exchange.

The company is currently migrating customers from its original payments infrastructure to a more comprehensive banking platform, allowing it to offer a wider suite of financial services.

Revolut’s financial performance highlights the scale of its expansion. Group revenues rose 46 per cent to £4.5 billion, while profit margins increased to 38 per cent, underlining the efficiency of its technology-driven model.

Customer growth remains a central driver. The company now serves more than 70 million users globally, up from 68.3 million at the end of 2025, and operates in over 40 countries.

Business accounts are also becoming an increasingly important segment, with the number of corporate clients rising 33 per cent to 767,000. At the same time, more retail customers are using Revolut as their main bank, paying in salaries and managing day-to-day finances through the platform.

Stinga noted that the company now has 11 different product lines each generating more than £100 million in annual revenue, evidence of a more diversified and resilient business model.

Despite its rapid growth and a valuation of $75 billion following a secondary share sale last year, making it Europe’s most valuable private tech company, Revolut is downplaying speculation about an imminent stock market listing.

Stinga said no decisions had been made on the timing or location of a potential initial public offering, emphasising that management remains focused on product development and international expansion rather than capital markets.

The results also show a shift away from reliance on crypto trading, which was once a key revenue driver. While the wealth division, including crypto, grew revenues by 31 per cent to £663 million, it was the slowest-growing segment of the business.

“Dependency on crypto is now much less,” Stinga said, reflecting a broader industry trend following volatility in digital asset markets.

To sustain its expansion, Revolut significantly increased spending on marketing and brand visibility, with sales and marketing costs rising 47 per cent to £650 million.

The company now has advertising placements in 18 airports across 11 countries and high-profile sponsorship deals with Manchester City and the Audi Formula 1 Team, signalling a shift from organic growth to a more traditional customer acquisition strategy.

Credit losses more than doubled to £61 million as the loan book expanded rapidly to £2.2 billion, up 120 per cent. However, losses as a proportion of lending declined, which the company says demonstrates the strength of its credit assessment systems.

Revolut also reported a “significant reduction” in fraud rates, attributing this to enhanced use of artificial intelligence to detect and prevent fraudulent activity, an area where the company has previously faced scrutiny.

Chief executive Nik Storonsky described 2025 as “another landmark year”, highlighting the company’s ability to achieve profitability at scale while continuing to expand globally.

“We have built a diversified, resilient business that is profitable at scale, providing the foundation for our next phase of growth,” he said.

As Revolut pushes deeper into traditional banking services and continues its global expansion, its challenge will be to maintain growth while navigating regulatory complexity and increasing competition from both established banks and rival fintechs.

With a strengthened balance sheet, a growing customer base and new products on the horizon, the company is positioning itself not just as a disruptor, but as a central player in the future of global banking.

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Revolut posts record £1.7bn profit as it eyes UK credit card launch

The head of the world’s largest asset manager has warned that a sustained surge in oil prices to $150 a barrel could push the global economy into a sharp recession, as geopolitical tensions continue to destabilise energy markets.

Larry Fink, chief executive of BlackRock, said the trajectory of the Middle East conflict, particularly the role of Iran, will determine whether the world faces a temporary disruption or a prolonged economic shock.

“If oil prices stay elevated and Iran remains a threat, that will have profound implications,” he said, warning that a scenario of sustained high prices could lead to “a probably stark and steep recession”.

Fink outlined two contrasting outcomes for global markets.

In a more optimistic scenario, a resolution to the conflict and a stabilisation of relations could see oil prices fall back below pre-war levels, easing inflationary pressures and supporting growth.

However, in the more pessimistic case, prolonged instability could drive oil prices above $100, and potentially towards $150, for several years. That would significantly increase costs for businesses and consumers, acting as a drag on economic activity worldwide.

Energy prices have already surged in recent weeks, with Brent crude climbing sharply amid disruptions to supply routes and heightened uncertainty over future production.

Fink emphasised that rising energy prices disproportionately affect lower-income households, describing them as a “very regressive tax”.

“Higher energy costs hit the poorest the hardest,” he said, noting that sustained increases would not only dampen consumer spending but also exacerbate inequality.

The warning comes as governments, including the UK, face growing pressure to shield households and businesses from rising costs, even as public finances remain stretched.

The BlackRock chief urged policymakers to adopt a pragmatic approach to energy policy, combining existing fossil fuel resources with accelerated investment in renewables.

“Use what you have, unquestionably, but also aggressively move towards alternative sources,” he said.

He argued that high oil prices could ultimately accelerate the global transition to cleaner energy, as countries seek to reduce dependence on volatile fossil fuel markets. Solar and wind power, in particular, could see rapid expansion if energy costs remain elevated.

However, he warned that progress has been uneven. While China is investing heavily in solar and nuclear capacity, Europe risks falling behind due to slow implementation and regulatory inertia.

Despite market volatility, Fink dismissed comparisons with the 2007–08 financial crisis, insisting that today’s financial system is far more resilient.

“I don’t see any similarities at all, zero,” he said, arguing that while some stress is emerging in areas such as private credit funds, it represents a small portion of the overall market.

Fink also addressed concerns about a potential bubble in artificial intelligence, rejecting the idea that investment in the sector is overinflated.

“I do not believe we have a bubble at all,” he said, although he acknowledged that some companies may fail as the technology evolves.

He argued that AI is part of a broader race for technological dominance, particularly between the US and China, and that continued investment is essential to remain competitive.

At the same time, he highlighted the transformative impact AI is likely to have on the labour market. While some traditional office roles may decline, he expects significant job creation in skilled trades.

“There will be enormous demand for electricians, welders and plumbers,” he said, suggesting that societies will need to rethink their approach to education and career pathways.

With BlackRock overseeing around $14 trillion in assets, Fink’s outlook carries significant weight among policymakers and investors.

His warning underscores the fragile state of the global economy, where energy markets, geopolitical tensions and technological change are converging to reshape growth prospects.

For now, the key variable remains oil. If prices continue to climb towards the $150 threshold, the risk of recession will rise sharply, forcing governments and central banks to navigate an increasingly complex and volatile economic environment.

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Blackrock chief warns $150 oil could trigger global recession

UK factory costs have surged at their fastest rate since the aftermath of the Black Wednesday, as rising energy prices linked to the Middle East conflict ripple through the economy and threaten to reignite inflation.

Fresh data from S&P Global shows that production costs in British manufacturing accelerated sharply in March, while overall private sector growth slowed to what economists described as “a crawl”.

The figures, drawn from the closely watched Purchasing Managers’ Index (PMI), point to a rapid deterioration in business conditions, driven by soaring oil and gas prices, disrupted supply chains and weakening demand.

The spike in costs has been directly linked to the surge in global energy prices following the escalation of conflict in the Middle East. The effective closure of key shipping routes such as the Strait of Hormuz has constrained supply, pushing up prices for fuel and raw materials used across manufacturing and food production.

The manufacturing input prices index jumped to 70.2 in March from 56 the previous month, its highest level since late 2022 and the steepest increase since October 1992, the month following Black Wednesday, when the pound’s collapse drove up the cost of imports.

Brent crude oil prices have risen by more than 40 per cent since late February, reaching around $100 a barrel, adding significant cost pressure to energy-intensive industries.

At the same time, the broader UK economy is losing momentum. The composite PMI, which measures activity across manufacturing and services, fell to 51 in March, down from 53.7 in February and below analysts’ expectations.

While still above the 50 threshold that separates growth from contraction, the figure represents a six-month low and signals a marked slowdown.

Both key sectors showed weakening performance. The manufacturing PMI edged down to 51.4, while services activity, a major driver of the UK economy, dropped more sharply to 51.2 from 53.9.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said companies were increasingly attributing lost business directly to the fallout from the Middle East conflict.

“Output growth has slowed to a crawl as firms face heightened risk aversion among customers, rising costs, higher interest rates and ongoing supply chain disruption,” he said.

The rapid increase in input costs is feeding concerns that the UK could face a renewed inflation surge, potentially pushing consumer price growth above 5 per cent later this year if energy prices remain elevated.

Economists warn that the speed of the shift has been particularly striking. Paul Dales of Capital Economics said the scale and pace of the changes had surprised analysts, even given the expected impact of an energy shock.

The PMI data is often seen as an early indicator of official inflation figures, which are produced by the Office for National Statistics. While inflation is expected to remain around 3 per cent in the short term, the Bank of England has already signalled it could rise further in the coming months.

Financial markets have responded by revising expectations for monetary policy, with traders now anticipating multiple interest rate increases this year from the current level of 3.75 per cent.

Higher borrowing costs would place additional strain on businesses and households, further dampening economic activity and complicating the government’s efforts to support growth.

Business sentiment has already weakened, falling to a nine-month low, while companies have continued to cut jobs amid uncertainty.

The UK is not alone in facing these pressures. Similar PMI data shows activity slowing in both the United States and the eurozone, suggesting the energy shock is having a broad global impact.

Pantheon Macroeconomics estimates that the UK economy may grow by just 0.1 per cent in the first quarter of the year, underscoring the fragile state of the recovery.

The combination of rising costs, slowing demand and tightening financial conditions presents a difficult outlook for the UK economy.

With energy prices driving inflation higher and limiting room for fiscal support, policymakers face a narrowing set of options.

For businesses, the immediate challenge is managing cost pressures without eroding competitiveness. For households, the risk is a renewed squeeze on living standards.

And for the economy as a whole, the latest data suggests a familiar and uncomfortable scenario may be emerging, one where weak growth and rising prices collide.

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UK factory costs surge at fastest rate since black wednesday amid energy shock

UK inflation remained unchanged at 3% in the year to February, offering a brief period of stability before economists expect a renewed surge in price pressures driven by the Middle East conflict.

Figures from the Office for National Statistics (ONS) show that annual inflation held steady following months of gradual decline, with rising clothing prices offset by lower fuel and alcohol costs.

However, the data was collected before the escalation of the US-Israel conflict with Iran,  an event that has already triggered sharp increases in global energy prices and is widely expected to feed through into higher inflation in the months ahead.

The main upward pressure on inflation in February came from clothing and footwear, where prices rose by 0.9% over the year. This marked a reversal from the previous month, when clothing prices had shown no increase.

ONS chief economist Grant Fitzner said the rise reflected typical seasonal pricing dynamics, but also highlighted the underlying volatility within the inflation basket.

“At the same time, falling petrol costs and discounted alcohol helped offset some of these increases,” he added, noting that alcohol and tobacco inflation reached its lowest level since early 2022.

While fuel costs helped keep inflation in check in February, that trend has already begun to reverse.

The ONS reported that petrol prices were at their lowest level since June 2021 during the data collection period, with average prices around 131.6p per litre. Since then, wholesale oil prices have surged, pushing pump prices significantly higher.

The price of crude oil has risen sharply following disruptions to global supply chains and shipping routes, particularly through the Strait of Hormuz — a key artery for global energy markets.

This shift is expected to have a cascading effect across the economy, increasing costs not only for transport but also for manufacturing, food production and leisure services as businesses pass on higher input costs.

For many companies, the impact is already being felt.

James Palmer, who runs a bus company in Essex, said fuel costs have risen dramatically in recent weeks, creating uncertainty and forcing difficult decisions.

“Three weeks ago we were paying around £1.21 per litre, now it’s closer to £1.86,” he said, highlighting the speed of the increase. Combined with rising wage costs, he warned that price rises for customers are becoming unavoidable.

“It’s the unpredictability that’s worrying,” he added. “We don’t want to let people down, but we may have no choice.”

Economists expect inflation to rise significantly over the course of 2026, with some forecasts suggesting it could peak at around 4.6% if energy prices remain elevated.

This would mark a reversal from the recent trend of easing inflation and could complicate monetary policy decisions for the Bank of England, which had previously been expected to begin cutting interest rates.

Instead, markets are now pricing in the possibility of further rate increases to contain inflation, a move that would place additional pressure on households and businesses.

The inflation data also comes as wage growth shows signs of slowing. Earnings excluding bonuses rose by 3.8% annually,  still ahead of inflation for now, but vulnerable to being overtaken if price growth accelerates.

A renewed squeeze on real incomes could weigh heavily on consumer spending, further slowing economic growth.

Chancellor Rachel Reeves said the government is taking steps to ease the cost of living, including measures to stabilise food prices and improve long-term energy security.

However, economists warn that global factors, particularly energy markets,  may limit the effectiveness of domestic policy interventions.

The February inflation figure represents a moment of calm before what could be another period of turbulence.

With energy prices rising, supply chains under strain and interest rate expectations shifting, the UK economy faces a delicate balancing act,  one where inflation, growth and living standards are all tightly interconnected.

For now, inflation may be stable. But the forces shaping its next move are already in motion.

Read more:
UK inflation holds at 3% ahead of expected post-war price surge

Merlin Entertainments has written down the value of its Madame Tussauds business by £262 million, reflecting ongoing pressure on visitor numbers and shifting consumer behaviour across key global markets.

The impairment comes as the group, which also operates Alton Towers, Legoland and the London Eye, continues to grapple with a challenging macroeconomic environment, particularly in North America and Asia, where demand has remained subdued.

Chief executive Fiona Eastwood said the writedown was an accounting adjustment rather than a reflection of the brand’s long-term viability.

“It is still a very successful brand, it’s just recognising we’ve lost some of the volume we had in its heyday,” she said, emphasising that the move does not affect the company’s cash position.

More than any of Merlin’s other attractions, Madame Tussauds continues to feel the lingering effects of the Covid-19 pandemic. The wax museum chain, which has operated for nearly 190 years, is heavily reliant on international tourism — a segment that has yet to fully recover in key cities such as London, New York and Sydney.

This has contributed to a broader decline in footfall across the group. Merlin reported total visitor numbers of 60.5 million in 2025, down by 2.3 million compared with the previous year.

While spending per visitor increased, helping to offset some of the impact, total revenues still fell 2.8 per cent to £1.99 billion.

Performance varied significantly by region. North America was the weakest market, with underlying sales falling 8 per cent to £577 million, driven by increased competition and aggressive discounting across the attractions sector.

In Europe, revenues rose modestly by 1 per cent, although the UK lagged behind, with sales down 3.5 per cent and visitor numbers dropping 6.5 per cent. Merlin attributed this to weaker demand in London, where fewer international tourists and a shift towards free attractions have weighed on attendance.

By contrast, Asia-Pacific delivered strong growth, with visitor numbers rising 5.3 per cent and revenues increasing 4.5 per cent to £285 million. The region also saw a sharp 120 per cent increase in underlying operating profits, supported by strong performance at Legoland resorts in Japan and Shanghai.

In response to the downturn, Merlin is investing in new concepts to revitalise Madame Tussauds and attract a broader audience. Among the initiatives planned for 2026 is an immersive Jumanji-themed experience, set to launch in major locations including New York, Hollywood, Las Vegas and Sydney.

Eastwood said the strategy builds on Merlin’s track record of developing innovative attractions tied to popular culture and entertainment franchises.

“We are focused on reinvigorating the brand in line with changing consumer trends,” she said, pointing to the success of previous themed experiences across the group’s portfolio.

The writedown comes as part of a wider restructuring programme aimed at improving efficiency and profitability. Over the past year, Merlin has consolidated its operations, bringing together its three divisions, spanning 130 individual attractions, into a more streamlined structure.

The changes have already resulted in more than 1,000 job cuts and delivered £37 million in cash savings, with a further £50 million in annualised savings expected.

The company reported signs of improvement in the second half of 2025, with underlying adjusted profits rising 6.5 per cent after a weaker first half. Overall, profits grew marginally on a constant currency basis for the year.

However, the group remains in a loss-making position, posting a pre-tax loss of £426 million, albeit an improvement on the £492 million loss recorded the previous year. Net debt stands at £3.8 billion, much of which dates back to its 2019 take-private transaction.

For Merlin, the challenge now is to balance cost discipline with investment in new experiences that can reignite demand, particularly for legacy brands such as Madame Tussauds.

While the writedown reflects current market realities, the group is betting that innovation, operational efficiencies and a gradual recovery in international tourism will help restore momentum.

As consumer preferences evolve and competition intensifies, the success of that strategy will determine whether Madame Tussauds can reclaim its position as a flagship global attraction, or continue to face pressure in a rapidly changing leisure landscape.

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Merlin writes down Madame Tussauds by £262m as visitor numbers fall

Exceptional women from across the UK technology sector have been honoured at the annual Salesforce everywoman in Technology Awards, recognising innovation, leadership and impact at every stage of the career ladder.

Held at the Westminster Park Plaza Hotel in London, the awards mark the 16th year of the programme, which aims to spotlight female talent in a sector where representation remains a persistent challenge. Women currently account for just 24.8% of the STEM workforce, down from 29.4% in 2020, underlining the need for continued efforts to attract and retain female talent.

Organisers said this year’s winners reflect the breadth of the industry, from apprentices and early-career professionals to senior executives and entrepreneurs driving global change.

Nicole Goodwin and Sophie Catto, joint managing directors of AllBright everywoman, said the awards highlight not only individual achievement but the wider social impact of women in technology.

“Remarkable women across the technology sector are developing innovations that have the power to transform how we live and work,” they said. “By amplifying their stories, we create visible role models who can inspire the next generation to pursue careers in STEM.”

The prestigious Woman of the Year award was presented to Aji Bawo, Head of Commercial Product at Tesco. Bawo was recognised for her leadership in driving large-scale digital transformation in retail, alongside her work supporting girls’ education and empowering future female leaders globally.

Her work has focused on improving efficiency, scalability and customer experience through technology, while also championing diversity and mentoring emerging talent within and beyond her organisation.

Among the category winners, Nausheen Basha of Imperial College London took the AI Champion award for her work combining AI, simulation and engineering design to accelerate scientific discovery, including applications in renewable energy and vaccine manufacturing.

Rebecca Phelps of BAE Systems was recognised in cybersecurity for her work on secure systems and collaboration with national security bodies, while Nicola Emsley of Barclays was named CTO/CIO of the Year for her leadership in digital transformation and generative AI adoption.

In the entrepreneurship category, Fiona Roach Canning, co-founder and CEO of fintech platform Pollinate, was honoured for scaling a global business that supports banks in serving SMEs through data-driven insights.

Other winners included professionals working in digital transformation, software engineering, climate technology and education, alongside individuals recognised for their contributions to mentoring, inclusion and community engagement.

The awards also place a strong emphasis on early talent. Apprentice winner Kelly Howes was recognised for her transition into software engineering and advocacy for neurodiversity, while Nina Kumar received the One to Watch award for inspiring young women to pursue STEM subjects.

Zahra Bahrololoumi, CEO of Salesforce UK & Ireland, said the need for greater diversity in technology is becoming increasingly urgent as AI takes on a more central role in decision-making.

“As AI increasingly powers high-stakes decisions, it is essential that more women enter and advance in the technology industry to prevent perpetuating societal biases,” she said. “We cannot be what we cannot see.”

The awards come at a time when the technology sector is grappling with both rapid innovation and ongoing diversity challenges. While progress has been made in some areas, declining participation rates highlight the risk of widening gaps if action is not sustained.

By recognising role models across the industry, the Salesforce everywoman awards aim to shift perceptions, broaden access and ensure that the future of technology reflects a wider range of voices and experiences.

As the sector continues to evolve, particularly with the rise of AI, initiatives that promote inclusion and visibility are likely to play a critical role in shaping not only who works in technology, but how it is built and applied.

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Tech trailblazers recognised at Salesforce Everywoman Awards

The estate of late tech entrepreneur Mike Lynch is facing the prospect of being effectively wiped out after the High Court ordered it to pay $1.24 billion in damages and interest to Hewlett Packard Enterprise (HPE).

The ruling marks the latest development in one of the UK’s most high-profile corporate fraud cases, stemming from HPE’s $11.7 billion acquisition of Autonomy in 2011.

The court had already awarded HPE approximately £700 million in damages last year. However, the addition of interest, calculated at around $236 million, has pushed the total liability to $1.24 billion.

Mr Justice Hildyard confirmed the additional sum and rejected an application by Lynch’s estate for permission to appeal, although a further appeal could still be sought through the Court of Appeal.

The case dates back more than a decade, with HPE first alleging fraud in 2012. The company argued that Autonomy’s financial position had been misrepresented ahead of the acquisition, a claim upheld by the High Court in 2022.

The judge found that Lynch and his former chief financial officer Sushovan Hussain had misled HPE, although he also concluded that the US firm would likely have proceeded with the deal regardless due to Autonomy’s perceived strategic value.

Hussain, who was convicted in the US and served a prison sentence, reached a separate £77 million settlement with HPE last year.

The scale of the damages raises serious questions about the viability of Lynch’s estate, which is estimated to be worth around £500 million, significantly less than the amount awarded.

However, the ultimate impact may depend on the structure of family assets. Many holdings, including property and investments, are reportedly in the name of his widow, Angela Bacares. These include Loudham Hall in Suffolk and shares in cybersecurity firm Darktrace, which were sold for more than $300 million in 2024.

Legal experts suggest that HPE may seek to pursue those assets if it can demonstrate they were effectively controlled by Lynch, potentially extending the scope of recovery.

The ruling comes in the wake of Lynch’s death in August 2024, when he drowned alongside his daughter and others after a yacht accident off the coast of Sicily. The incident occurred shortly after his acquittal in a US criminal trial related to the same case.

Despite the scale of the damages award, the judge was critical of aspects of HPE’s approach, describing the company’s claimed losses as “exaggerated” and the litigation process as unnecessarily prolonged.

HPE welcomed the decision, stating it brings the company “another step closer to resolution” of the dispute.

For the Lynch estate, however, the focus now shifts to whether an appeal can be mounted, and how much of the remaining assets can be protected.

The case stands as a landmark in UK corporate litigation, not only for the scale of the damages but also for its long-running nature and the complex intersection of civil and criminal proceedings across multiple jurisdictions.

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Mike Lynch estate faces wipeout after $1.24bn HPE damages ruling

In a recent Acas survey, employers and employees were asked which three changes in the Employment Rights Act 2025 would have the biggest impact in their workplace.

Surprisingly, the new rights on Statutory Sick Pay (SSP) topped the list for both groups, named by 43% of employers and 36% of employees. The reduction in the unfair dismissal qualifying period from two years to six months was the second most significant change (31% of employers and 30% of employees). Employers ranked the new paternity leave day-one rights as the third-largest reform, whereas employees said it was easier access to flexible working arrangements.

The SSP reforms take effect from 6 April 2026, aiming to improve financial security, particularly for part-time employees and those in low-paid jobs. While more employees will qualify for SSP, employers will face increased costs and compliance requirements, particularly for small and medium-sized enterprises.

Before looking at the reforms and what employers can do to prepare for them, let’s consider the current arrangements.

What is the current SSP framework?

An employee must be an “eligible employee” and earn at least the Lower Earnings Limit (LEL), which is currently £125 per week. Even if employees are eligible, SSP is payable only from the fourth consecutive day of sickness, as the first three days are unpaid waiting days.

It is estimated that around 1.3 million employees receive no SSP at all, and many lose pay for only short periods when unwell. Some face the choice of working while ill or losing income. This can spread illness in the workplace and reduce productivity.

What is changing from 6 April 2026?

Approximately 25% of employees only receive SSP (rather than contractual sick pay), and the SSP changes below will have a significant impact.

Removal of the Lower Earnings Limit, and employees will no longer need to meet the LEL to qualify for SSP.
A new earnings‑linked calculation and SSP will be paid at 80% of normal weekly earnings (NWE) unless the SSP flat rate is lower.
SSP will be payable from day one of sickness absence, as the Employment Rights Act 2025 abolishes the three unpaid waiting days.
SSP will increase from £118.75 to £123.25 a week on 6 April 2026.

It is important to mention atypical workers, such as zero-hours and agency workers, as well as seasonal and irregular-hours staff. Establishing NWE is not always straightforward because of their fluctuating pay and variable working patterns. Employers can determine NWE, for example, by averaging pay over the previous 8-12 weeks or by following the relevant contractual arrangements to ensure SSP reflects actual earning patterns.

What do the SSP changes mean for employers?

The scope of SSP entitlements is significantly widened. As well as administrative adjustments to update policies and payroll processes, the reforms carry a cost implication for organisations of all sizes.

The Government estimates that removing waiting days and abolishing the LEL, combined with introducing the 80% earnings‑linked calculation, will increase employer SSP costs by around £450 million a year. Although a significant sum, it equates to roughly £15 more per employee according to the Government’s impact assessment. Crucially, earlier access to SSP may boost productivity by allowing employees to stay home when unwell without feeling compelled to attend work.

Employer concerns about increased sickness absence could be mitigated through strengthened sickness management. This includes conducting return‑to‑work interviews promptly, even after short periods of illness, which can help to identify underlying issues early and reduce avoidable absences. It can also include structured return-to-work planning, phased returns, and temporary adjustments.

How can employers prepare for the changes?

Update payroll systems for earnings‑linked SSP and day‑one entitlement.
Review and update sickness absence policies, contracts and employee handbooks and communicate these changes to employees.

Budget for increased SSP.
Identify roles or departments most affected by the wider eligibility rules.

Train managers and HR on the new regime.
Strengthen sickness absence management processes.
Establish the number of atypical workers and how their normal weekly earnings are calculated.

Conclusion

The April 2026 SSP reforms represent a major shift in the UK’s approach to sick pay, expanding access and enhancing financial protection for employees. While these changes introduce additional costs and compliance requirements for employers, early preparation will support a compliant and well‑managed transition.

By reviewing systems and policies now, organisations can ensure they are ready for the new SSP regime and are equipped to support staff and manage sickness absence effectively.

Read more:
Imminent changes to Statutory Sick Pay: What employers need to know

Small businesses across the UK are set to receive a major boost from public spending, with the government committing to channel more than £7.4 billion a year directly to SMEs by 2028 as part of a new procurement strategy.

The targets, announced under the government’s Plan for Small Business, mark the first time individual departments have been required to set specific goals for how much they spend with small and medium-sized enterprises, alongside annual reporting requirements to ensure accountability.

Ministers say the move is designed to rebalance procurement away from large multinational suppliers and towards smaller firms, helping to drive regional growth, create jobs and strengthen local economies.

Under the new framework, departments will publish yearly updates on their SME spending performance, with those falling short required to outline corrective action plans.

Spending targets vary across departments, with some of the highest commitments including 40% from the Department for Science, Innovation and Technology, 33% from the Department for Culture, Media and Sport, and 30% from the Cabinet Office. Nearly half of government departments have set targets above 20%.

The figures relate to direct spending, but officials note that billions more will flow to SMEs indirectly through supply chains, meaning the overall economic impact is likely to be significantly higher.

In addition to the £7.4 billion target, SME spending by the Ministry of Defence is set to rise by a further £2.5 billion, reaching £7.5 billion by May 2028.

The funding is expected to support businesses across key growth sectors including cyber, manufacturing, finance and science, areas seen as central to the UK’s long-term economic strategy.

Cabinet Office Minister Chris Ward said the policy reflects a broader commitment to supporting domestic businesses.

“These ambitious spending targets will help ensure more government contracts go to SMEs, keeping more money, jobs and opportunities in local communities,” he said.

Business groups have broadly welcomed the announcement, though some have urged the government to go further.

Federation of Small Businesses policy chair Tina McKenzie said the introduction of clear targets was essential to reversing a recent decline in SME procurement.

She described the policy as a “starting point” for more ambitious commitments, particularly as overall government spending is expected to rise in areas such as health, defence and education.

Small Business Minister Blair McDougall said the changes would open up new opportunities for thousands of firms.

“These new targets will ensure smaller businesses have greater opportunity to win lucrative government contracts and grow their businesses,” he said.

For many SMEs, access to public procurement has historically been limited by complexity, cost and administrative barriers.

Industry leaders say the new approach could help address those challenges. Rob Levene, chair of Constellia, said the reforms could mark a turning point for smaller firms that have felt excluded from government contracts.

“More collaboration with SMEs will ensure better value, less waste and meaningful returns for communities,” he said.

Nicki Clark, chief executive of UMi, added that enabling SMEs to access publicly funded opportunities is widely recognised as a key driver of economic growth and innovation.

The government argues that increasing SME participation in procurement is one of the most effective ways to stimulate economic activity at a local level, ensuring that public spending translates directly into jobs, investment and business expansion.

The policy builds on earlier measures within the Small Business Plan, including legislation to tackle late payments and a £4 billion finance package aimed at improving access to funding.

As departments begin implementing their targets, the focus will shift to delivery, and whether the new system can meaningfully increase the share of government spending flowing to smaller businesses.

If successful, the initiative could reshape the UK’s procurement landscape, placing SMEs at the centre of public sector supply chains and reinforcing their role as a cornerstone of economic growth.

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Government sets £7.4bn target to boost SME contracts across UK

Large UK companies that repeatedly delay paying suppliers will face multimillion-pound fines under sweeping new legislation aimed at tackling late payment practices and protecting small businesses.

The reforms, announced by the Department for Business and Trade, will grant enhanced enforcement powers to the Small Business Commissioner, enabling it to investigate poor payment behaviour and penalise persistent offenders.

At the centre of the new rules is a mandatory 60-day payment window for all commercial contracts involving companies with annual revenues above £54 million.

Suppliers will also gain the right to charge statutory interest on overdue invoices at a rate of 8 percentage points above the Bank of England base rate, significantly increasing the cost of late payments for larger firms.

Companies found to be consistently breaching payment standards will be required to publicly disclose their practices in annual reports, including explanations and steps taken to improve.

Business Secretary Peter Kyle said the measures represent the most significant overhaul of payment laws in a generation.

“It is simply unacceptable that so many businesses are forced to shut due to late payments,” he said. “These are the strongest, most robust changes to payment laws in over a generation.”

The government also confirmed it will consult on reforms to retention payments in the construction sector, a long-standing issue where funds are withheld and sometimes lost if a contractor becomes insolvent.

Industry bodies have broadly welcomed the reforms, describing them as a long-overdue intervention in a problem that has plagued SMEs for decades.

Federation of Small Businesses policy chair Tina McKenzie said the measures would help prevent large companies from using smaller suppliers as a source of “free credit”.

However, she cautioned that a 60-day payment window still falls short of best practice, arguing that a 30-day standard should remain the long-term goal.

Late payments are widely seen as one of the biggest barriers to SME growth, affecting cash flow, investment and hiring decisions. Government research suggests that dozens of businesses close each year as a direct result of delayed payments.

Emma Jones, the Small Business Commissioner, said the new powers would help reduce the administrative burden on smaller firms.

“Less time chasing debt means more time focused on growth,” she said, adding that stronger enforcement will help shift behaviour across the market.

The legislation is expected to be introduced when parliamentary time allows, with ministers indicating they will assess the readiness of businesses before mandating contractual changes.

The reforms mark a clear shift towards a more interventionist approach to payment practices, as policymakers seek to rebalance relationships between large corporations and their smaller suppliers.

For big businesses, the message is increasingly clear: late payment is no longer just a commercial issue, it is becoming a regulatory and reputational risk.

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