Business

The City of London is preparing to channel significantly more capital into defence as rising geopolitical tensions, and the growing threat posed by Vladimir Putin’s Russia, force a rethink of long-held investment priorities.

Almost two-thirds of senior financial services leaders expect spending on Britain’s military capabilities to increase over the next year, according to new research from KPMG. More than a quarter of respondents believe defence investment will rise “much more” in the next 12 months.

The findings mark a sharp pivot for the City after years in which environmental, social and governance (ESG) investing dominated boardroom thinking and defence was often treated as an ethical red line. That position is now rapidly eroding as security concerns move to the centre of economic and financial stability planning.

Karim Haji, global and UK head of financial services at KPMG, said growing geopolitical risks had made it increasingly unrealistic for investors to avoid the defence sector.

“These findings point to a growing recognition that national security, geopolitical alignment and market integrity are now inseparable from the stability of the finance sector,” he said.

The shift comes amid increasingly stark warnings from western leaders. Earlier this month, NATO secretary-general Mark Rutte warned that Russia could be in a position to attack a Nato member state within five years, citing Moscow’s escalating covert and cyber activity across Europe.

“Russia is already escalating its covert campaign against our societies,” Rutte said. “We must be prepared for the scale of war our grandparents or great-grandparents endured.”

Putin has denied plans to wage war against Europe, but said Russia was prepared to act “right now” if it felt threatened.

Against this backdrop, City leaders ranked defence investment as their top strategic priority for the year ahead, ahead of preserving central bank independence in the fight against inflation and improving regulatory cooperation between the UK and the US.

Almost four in 10 respondents said increased spending on national security was essential to safeguarding financial stability in 2026, reflecting concerns that prolonged conflict or escalation could have systemic economic consequences.

The survey also highlighted unease about vulnerabilities elsewhere in the financial system. More than a quarter of executives flagged private credit, often described as “shadow banking”, as a growing risk, with trillions of pounds of lending now held outside traditional, highly regulated banks. A further 22 per cent called for tougher scrutiny of non-bank financial institutions.

Haji said the rapid expansion of private credit markets, combined with their limited transparency, could amplify shocks during periods of extreme stress.

“These markets now sit at the heart of corporate funding, yet they are less tested in a crisis than traditional banks,” he said.

Taken together, the findings underline a fundamental change in how the City views defence, security and risk. What was once seen as incompatible with responsible investment is increasingly being reframed as essential to economic resilience — and investors are positioning accordingly.

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City set to pour billions into defence as Russia threat reshapes investment priorities

Sir Jim Ratcliffe is once again fighting for survival at Ineos, as the industrial giant grapples with an £18bn debt mountain and an increasingly hostile debt market.

Nervous bondholders have begun dumping Ineos debt at distressed prices amid a deep downturn in the global chemicals industry, opening the door for aggressive Wall Street hedge funds that specialise in exploiting corporate distress. Around £5bn of Ineos borrowings are now trading at levels that suggest investors are pricing in a serious risk of default.

For Ratcliffe, it is an uncomfortably familiar moment. In the wake of the global financial crisis, Ineos came within hours of collapse after breaching debt covenants, surviving only after a brutal restructuring with its lenders that cost hundreds of millions in fees and higher interest payments. The tycoon later described the experience as being at the mercy of “rapacious” creditors.

This time, the stakes are higher. Borrowings across Ineos Group Holdings and Ineos Quattro Holdings — which together represent around two-thirds of the empire — rose by almost £3bn in the past year alone, taking combined debt beyond £18bn. Annual debt servicing costs have surged to £1.8bn, up £600m year-on-year.

Bond markets have reacted swiftly. Large tranches of Ineos debt that were trading above 90 cents on the dollar in October have since slipped into the low 70s and 80s. According to S&P Global Market Intelligence, short sellers have piled into certain Ineos bonds at an unprecedented pace, signalling bets that prices still have further to fall.

Credit ratings agencies have added to the pressure. Moody’s has downgraded Ineos twice since September, citing a sharp deterioration in operating performance. Turnover fell 20 per cent, while pre-tax earnings plunged 55 per cent. The agency warned of “weak debt metrics”, with leverage running at 13.5 times earnings against a backdrop of overcapacity, weak demand and high energy and regulatory costs.

Industry figures say the numbers are stark. One executive described the third-quarter performance as “dreadful”, warning that rising refinancing costs could push the company closer to the edge if markets remain closed.

The slump has drawn the attention of distressed debt specialists, including funds linked to Elliott Management, whose tactics have made it a feared presence in boardrooms. Such investors often seek full repayment through litigation or attempt to engineer debt-for-equity swaps that wrest control from existing owners.

Ratcliffe has blamed Ineos’s predicament on a toxic mix of high European energy costs, global trade disruption and cheap Chinese imports flooding the market. He has been particularly outspoken about Europe’s net zero policies, arguing carbon costs are “killing manufacturing”. In April, Ineos shut Britain’s last oil refinery at Grangemouth, costing 400 jobs, and has since announced plant closures across Germany and the US.

Cost-cutting has followed a familiar Ratcliffe playbook. Operations have been shuttered, hundreds of staff laid off, sponsorships pulled and non-core assets sold. Even the billionaire’s sporting ambitions have been reined in, with Ineos exiting high-profile partnerships and writing off hundreds of millions tied up in its Belstaff acquisition.

Yet cuts alone may not be enough. A flagship new plastics plant under construction in Belgium, Project One, is intended to revitalise European production but will add a further £3bn of debt. Ratcliffe has acknowledged that, with today’s market conditions, the project might never have been approved.

Some advisers warn that completing it risks “throwing good money after bad”. Others argue abandoning it would destroy long-term competitiveness.

Banks are watching closely. Barclays, which once played a pivotal role in rescuing Ineos during the financial crisis, recently warned that Europe’s chemicals groups must prioritise debt reduction or risk becoming “worthless” in the next downturn.

Ineos insists it has learned from the past and says it retains tight control over costs and liquidity. Insiders argue the company is better prepared than it was 15 years ago.

But as bond prices slide and activist creditors circle, the final outcome may no longer rest solely in Ratcliffe’s hands.

Read more:
Ratcliffe battles to keep Ineos afloat as £18bn debt pile draws in vulture funds

A £5 billion tax raid on salary sacrifice pension schemes announced in Rachel Reeves’s Budget has emerged as the single most damaging policy for business confidence, according to new research from the Confederation of British Industry.

Almost three-quarters (73%) of companies surveyed by the CBI said the move to levy national insurance contributions on pension salary sacrifice above a new cap was the most harmful measure in the Budget, warning it risks deterring workers from saving for retirement and disproportionately hitting middle earners.

The survey of more than 100 businesses and trade bodies found the mood across the corporate sector remains bleak following the Chancellor’s fiscal package. Some 84% of respondents said the Budget would not help lower the cost of doing business, while 62% said it would fail to boost confidence to innovate or invest for growth.

Business leaders are particularly concerned about the cumulative impact of policy changes, including higher business rates, above-inflation increases to the minimum wage, and rising employer national insurance costs. Together, they argue, these measures are squeezing margins at a time when firms are already grappling with weak demand and economic uncertainty.

Under the current system, salary sacrifice arrangements allow employees to reduce their taxable income by paying pension contributions directly from their salary, lowering both income tax and national insurance. Employers also benefit by paying national insurance only on the reduced salary, often enabling them to offer more generous pension contributions.

From 2029, however, the Chancellor’s reforms will cap salary sacrifice pension contributions at £2,000 a year. Any contributions above that level will attract employee national insurance at 8% on earnings below £50,268 and 2% above that threshold, while employers will pay full employer NICs at 15%.

The Treasury estimates the measure will raise £4.8 billion in its first year. Its own impact assessment suggests that around 3.3 million people currently sacrifice more than £2,000 a year into their pensions and will therefore face higher national insurance bills.

Businesses warn that the additional cost burden will inevitably feed through into lower employer pension contributions. The CBI has previously calculated that even a modest reduction in employer contributions could significantly erode retirement savings over time. A 22-year-old man on median earnings, contributing 9% of pay into a pension, could see his retirement pot shrink by nearly £25,000 if employer contributions were cut by just one percentage point.

Respondents to the CBI survey were blunt in their assessments. A professional services firm described the cap as an indirect tax on pensions, while a London-based service company said it would affect a “huge number of middle earners”. A construction business in the North of England warned the policy would almost certainly force firms to scale back employer pension contributions.

Louise Hellem, chief economist at the CBI, said the policy risks storing up long-term problems for both households and the public finances. “People are already saving far too little for retirement,” she said. “While this may boost Treasury revenues in the short term, it risks leaving future governments with retirees less able to fund a comfortable lifestyle or their own care.”

She added that, combined with higher national insurance and wage costs, the measure further penalises employment and reduces firms’ capacity to invest. “At a time when we need economy-wide growth to pick up, this is another headwind holding businesses back.”

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Budget tax raid on salary sacrifice schemes rattles business confidence

There’s a particular sound that stays with you once you’ve lived in the English countryside. Not birdsong, that’s too obvious, but the deeper rhythm of things: the tractor coughing into life at dawn, Chameau boots crunching on gravel, the hooves of the horses going out for a hack, the soft murmur of a village pub where everyone knows exactly why you’re there even if they’ve never seen you before.

I had a house in rural Northamptonshire once. Not a fantasy “weekend retreat”, but a place where life actually happened. One evening, over a pint of ‘landlord’ and slightly judgemental, the village gamekeeper offered to teach me how to shoot. “You get good enough,” he said, “and maybe you can join us on a day at the estate.”

A few sessions at the clays with a beautiful Purdey side-by-side and I was hooked, not just on hitting the target – which I am told my hit rate was very impressive – but on the world around it. The quiet discipline. The sense of responsibility. The unspoken understanding that this was not about bloodlust or bravado, but stewardship. About knowing the land, respecting it, and earning your place within it.

Which is why, as 2025 limps to a close, I find myself deeply uneasy about the future of Britain’s rural economy, and the way of life bound up in it.

We’ve been told, repeatedly, that concerns about farming, shooting, gamekeeping and rural business are either nostalgic indulgences or political dog whistles. Watch a few episodes of Clarkson’s Farm and tell me that again with a straight face. Strip away the jokes and celebrity sheen and what you’re left with is a documentary about a sector living permanently on the brink,  one failed harvest, one policy tweak, one cost spike away from collapse.

That brinkmanship became painfully clear this year when the government set its sights on agricultural inheritance tax relief. What began as a plan to end long-standing protections for family farms triggered outrage across rural Britain. As reported by the Financial Times, the subsequent retreat, raising thresholds and softening the blow, was presented as a compromise. But uncertainty, once introduced, doesn’t politely leave again. It lingers. It freezes investment. It accelerates exits.

Family farms are not tax shelters. They are capital-intensive, low-margin, generational businesses whose value is tied up in land rather than liquidity. Treating them like dormant wealth piles rather than working enterprises is how you dismantle a sector quietly, without ever admitting you meant to.

And it’s not just farmers feeling the squeeze. Gamekeeping, shooting and countryside management support tens of thousands of jobs and underpin rural tourism, hospitality and supply chains. A stark warning was sounded recently in The Telegraph’s analysis of the decline of gamekeeping, which laid bare how rising costs, regulation and political hostility are pushing skilled rural workers out altogether.

This isn’t culture war fluff. It’s economics.

Add to that the sense, increasingly hard to shake, that rural Britain is culturally misunderstood by those writing policy. Labour’s proposals around animal welfare and trail hunting have reignited fears that legislation is being shaped through an urban moral lens, with The Guardian reporting warnings from countryside groups that rural voices are being marginalised rather than engaged.

Meanwhile, the data tells its own grim story. Farm closures continue to outpace new starts, with thousands of holdings disappearing under the weight of rising costs, labour shortages and unpredictable returns, as highlighted by FarmingUK. When a farm goes, it rarely goes alone. The contractor loses work. The feed supplier closes. The pub shortens its hours. The village hollows out.

What worries me most is that this erosion is happening quietly, politely, without the drama that usually forces political reckoning. There’s no single villain. No obvious cliff edge. Just a steady draining away of viability until one day we look around and wonder where everyone went.

The countryside isn’t a theme park or a television backdrop. It’s an economic ecosystem that feeds us, employs us and anchors communities. Once it’s gone, you don’t rebuild it with grants and slogans.

I learnt to shoot because a gamekeeper trusted me with his craft. That trust, between land and people, tradition and modernity, economy and culture, is what’s really under threat. If policymakers keep treating rural Britain as a sentimental inconvenience rather than a strategic asset, they may wake up one day to find the countryside still looks beautiful… but no longer works. And that, unlike a missed clay, is a mistake you don’t get to take another shot at.

Read more:
I worry for our rural economy – and yes, it’s personal

Hospitals across England are increasingly turning to artificial intelligence to ease pressure on accident and emergency departments, as a new AI-powered forecasting tool is deployed to help predict when demand will be at its highest.

The system, now in use across 50 NHS organisations and available to all trusts, is designed to identify likely surges in A&E attendances days and weeks in advance. By analysing a wide range of data, from historical hospital admissions and seasonal illness trends to Met Office temperature forecasts and day-of-week patterns, the tool helps managers plan staffing levels, bed capacity and resources more effectively.

Ministers say the technology will enable patients to be seen and treated more quickly during peak periods, while reducing last-minute pressure on frontline staff. The rollout comes as emergency departments face heightened winter demand, driven by record flu cases, cold weather injuries and seasonal illness. More than 18 million flu vaccines have already been delivered this autumn, with the AI system continuing to learn from evolving seasonal health data.

For NHS staff, the forecasting tool offers clearer long-term planning and earlier warnings of potential bottlenecks, helping trusts put the right people in the right place before pressures escalate. For patients, the aim is shorter waits and smoother journeys through emergency care during the busiest times of year.

The initiative forms part of the Prime Minister’s AI Exemplars programme, which is applying artificial intelligence across public services, including health, education, justice, tax and planning, to modernise systems and improve outcomes.

Technology Secretary Liz Kendall said AI was already transforming healthcare and that demand forecasting marked the next step in that journey. She said the tool would help hospitals predict pressure points, get patients treated faster and support NHS staff during the most challenging months of the year.

Health Innovation Minister Dr Zubir Ahmed said the technology would help hospitals manage winter pressures more effectively, particularly as flu cases rise. He described the rollout as part of a broader ambition to move the NHS from analogue systems to a digital future under the government’s 10-year health plan.

Early feedback from NHS managers has been positive, with local leaders reporting improved decision-making around staffing and capacity. Integrated care boards in areas including Coventry and Warwickshire, and Bedfordshire, Luton and Milton Keynes, are already using the tool to support operational planning.

The forecasting system is one of several AI initiatives being rolled out under the Exemplars programme. Other projects include AI-assisted diagnostics to help clinicians identify conditions such as lung cancer more quickly, automated discharge summaries to speed up patient flow from wards, and the GOV.UK chatbot, which provides instant, plain-English answers to public queries using official government information.

Ministers say the growing use of AI in healthcare is central to building an NHS that is more resilient, efficient and capable of meeting rising demand — particularly during winter — while improving both patient experience and staff wellbeing.

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AI helps hospitals tackle A&E bottlenecks as NHS rolls out demand-forecasting technology

New anti-fraud rules introduced at Companies House have led to a sharp drop in the number of new companies being registered in the UK, according to early data, as ministers claim the reforms are beginning to bite.

Weekly incorporations have fallen by around 30 per cent since November, when legislation came into force requiring all new company directors and people with significant control to verify their identity. Acting as a director without verification is now a criminal offence.

Figures show that registrations fell from 18,199 in the final week before the rules were introduced to fewer than 13,000 in each of the five weeks leading up to Christmas.

The changes are part of a broader overhaul of the UK’s company registry aimed at preventing its long-standing misuse for fraud, money laundering and other financial crimes. Over the next year, the same verification requirements will be phased in for existing directors and beneficial owners.

Graham Barrow, a specialist in corporate filings and financial crime, described the fall as “pretty dramatic” and said it suggested the measures were having their intended deterrent effect. “I expected a significant drop, and 30 per cent is certainly that,” he said. “The level of company incorporations has included a lot of rubbish for far too long.”

Anthony Asindi, a senior associate at Ashurst, said the decline pointed to the scale of the problem the reforms were designed to address. “The sharp fall indicates how many sham companies and directors may previously have been entering the register unchecked,” he said.

However, experts warn that while the reforms appear to be curbing casual abuse of the system, they are far from eliminating fraud altogether. Barrow said there were already signs that bad actors were changing tactics, including an increase in the use of paid-for “proxy directors” who sell their verified identities to front companies on behalf of others.

An investigation by The Times last year uncovered networks of such proxy directors being paid to front failing companies so their true controllers could evade scrutiny. Three individuals involved were subsequently banned from acting as company directors.

Barrow also highlighted weaknesses in the system around address verification, arguing that fake or non-existent addresses remain easy to use. He pointed to examples in County Durham where dozens of directors were registered at implausible house numbers on ordinary residential streets.

“I’ve asked repeatedly why address verification hasn’t been included,” he said. “Simply checking whether an address exists would be a basic but important step.”

Under the new regime, registered agents such as solicitors, accountants and company formation firms can verify identities on behalf of clients. Barrow warned that this, too, could become a weak link if oversight is not tightened. “We have companies with unverified directors verifying the identities of others,” he said, adding that regulators were likely to take action against agents failing to carry out proper checks.

As of the end of September, the UK company register held around 5.5 million companies, more than half a million of which were in the process of dissolution or liquidation. While the government insists the reforms are a major step towards cleaning up the register, experts say further measures will be needed to stay ahead of increasingly sophisticated fraudsters.

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Anti-fraud crackdown triggers sharp fall in new company registrations

The government is facing renewed political pressure to disclose whether Jeffrey Epstein played any role in discussions surrounding the sale of a taxpayer-backed commodities business during Labour’s last period in office.

Senior Conservatives have tabled a series of parliamentary questions demanding clarity on the $1.7bn (£1.35bn) sale of parts of Royal Bank of Scotland’s Sempra joint venture to JP Morgan in 2010, when Lord Mandelson was business secretary.

The intervention follows disclosures contained in an internal JP Morgan report from 2019, which was later filed in a New York court. The document included emails in which Epstein claimed to have facilitated meetings between Mandelson and Jes Staley, then chief executive of JP Morgan’s investment banking arm, at a time when the bank was exploring the acquisition of RBS’s commodities assets.

The exchanges took place months after Epstein had been released from prison in the United States following a conviction for soliciting a minor, a fact that has intensified scrutiny of his continued access to senior political and financial figures.

In a written parliamentary question, Kevin Hollinrake, the Conservative Party chairman and former business minister, asked what records the Department for Business and Trade held relating to correspondence involving Mandelson, Epstein and the Sempra transaction. Responding on behalf of the department, business minister Kate Dearden said that “any such information is not readily available and could only be obtained at disproportionate cost”.

That response has been challenged by further answers to parliamentary questions tabled by Mike Wood, a shadow Cabinet Office minister, which confirmed that records from the period are held electronically and can be searched by keyword.

Commenting on the discrepancy, Hollinrake said the government needed to “come clean” about Mandelson’s role in the deal. “It is simply not credible to claim it is too costly to retrieve records when the government admits they are electronic and searchable,” he said, adding that the position “only fuels concerns that Labour ministers have something to hide”.

The Treasury, responding separately to questions on the matter, said it had carried out a “proportionate search” of its archives and found no evidence of correspondence or meetings between Epstein and Treasury ministers or officials in relation to the sale. It stressed that oversight of RBS following its bailout was a Treasury responsibility.

A source close to Mandelson dismissed the allegations, describing them as “nonsense” and insisting that there were no meetings involving Epstein and that the business department had no role in the transaction. “It was a Treasury matter and he had absolutely no involvement whatsoever,” the source said.

RBS, which was bailed out by the government during the 2008 financial crisis, was required to divest a number of assets under EU competition rules, including its stake in the Sempra commodities venture.

Mandelson was dismissed as UK ambassador to the United States by Sir Keir Starmer earlier this year following revelations about his association with Epstein. Meanwhile, Jes Staley was banned by the Financial Conduct Authority in July from holding senior roles in UK financial services due to his links to Epstein.

Epstein died in a New York jail in 2019 while awaiting trial on further charges of sex trafficking minors. Recent releases of documents by the US Department of Justice detailing his network of associates have reignited scrutiny of his relationships with politicians and financiers on both sides of the Atlantic.

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Tories press Labour over Jeffrey Epstein’s alleged role in RBS commodities sale

Let’s be absolutely candid: the siren song of easing off climate commitments is tempting the corporate class and it stinks.

If 2025 was indeed the year business quietly began retreating from net zero, watering down pledges or scrapping them outright, then 2026 must be the year UK firms rediscover backbone and purpose. After all, the alternative isn’t merely inconvenient; it is recklessly self-defeating.

The Guardian’s recent investigation suggests that, from retailers to banks, carmakers to councils, pledges once trumpeted from press release rooftops are being softened or shelved. The rhetoric of carbon-neutral economies now reads, all too often, like a relic of corporate virtue signalling rather than a serious business strategy.

Yet here’s the part no executive memo seems to state with enough clarity: net zero isn’t a fad. It is the defining economic transformation of our era, as seismic as electrification or the internet. Treat it as a mere box-ticking exercise and you will wake up in a world where markets and reputations have passed you by.

Let’s dismantle the fearmongering for a moment. There’s a narrative circulating among the financially cautious that climate action is a cost rather than an investment. That delivering net-zero targets detracts from near-term profits. That shareholders want dividends, not decarbonisation. And then there’s the grumbling about regulation: “not now, not yet, don’t you see we have bills to pay?”

Balderdash. Yes, there are genuine short-term costs to decarbonisation. But those are far outweighed by long-term economic opportunity. Research by credible bodies such as the British Chambers of Commerce and McKinsey shows the net-zero transition could be worth over £1 trillion to UK business by 2030, through innovation, exports and first-mover advantage. That’s not greenwash: that’s maths.

Indeed, if British business becomes the laggard rather than the leader, it won’t just cede moral high ground, it will cede market share. Markets today are global, and buyers increasingly demand sustainability from their suppliers. Investors are doing the same. Lenders, insurers and big pension funds are incorporating climate risk into pricing and capital allocation in ways that will only intensify. To flinch now is to risk being uninvestable in the very near future.

Some might counter that regulatory uncertainty, especially post-Brexit policy shifts or political swings, makes sustained net-zero commitments precarious. And yes, the political landscape has been fractious. But that’s exactly why business leadership matters. When politicians waver, when policy is debated, corporate resolve can act as the stable anchor for long-term strategy. Step back and someone else will fill the vacuum — and it won’t be challengers with sustainability at their core.

Let’s touch on those sectors where back-tracking has been most glaring in 2025. Finance, for instance, saw cracks in its climate alliance frameworks with departures from net-zero banking coalitions. Banks such as HSBC delayed parts of their climate goals, drawing sharp criticism.

The logical leap here, that commitments can be postponed when the going gets tough, is exactly where the sceptics win. But imagine the message it sends if UK banks, the very institutions underwriting corporate growth, say they will only play ball when profits are guaranteed. It instantly undermines trust in the entire system of environmental, social and governance (ESG) integration in corporate strategy.

Retailers, too, have delayed ambitions. Supply-chain complexities and cost pressures are cited as reasons. But shoving targets back a decade or more does not solve those issues; it merely kicks the problem into the future.

And let’s not pretend automotive and aviation are immune, areas where clear net-zero pathways have, in places, ground to a halt. Travelling for Business recently highlighted how even policy support has become ambivalent.

So, where do we go from here? First: reaffirmation, not revision, of net-zero commitments. Ambition must translate into actionable, transparent transition plans rooted in science — not adjustable targets that bend in the breeze of short-term pressures.

Second: collaboration over retreat. Businesses big and small should lean into frameworks like the Science Based Targets initiative, which offers rigorous, scientifically grounded pathways to emission reductions. These are not gimmicks; they are industry-agnostic roadmaps to resilience.

Third: innovate, don’t abdicate. Let’s double down on electrification, circular economy models, and zero emissions supply chains. And let’s bring SMEs along for the ride. Data from the latest UK Net Zero Business Census shows that a majority of larger firms still regard net zero as strategic — a sign of encouragement if acted upon.

Finally, let’s call out the folly of short-termism. I am no romantic, nor a climate activist by trade. But business is nothing without its reputational capital. The choice is simple: be remembered as the generation that met the challenge of our age with grit and ingenuity, or the one that blinked.

UK business must not water down its net-zero pledges in 2026. Not because it’s easy, but because it is the only credible path to sustainable growth, investor confidence and competitive advantage in a rapidly reshaping global economy.

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Net zero isn’t a luxury: why UK business must keep its nerve in 2026

For many music fans, 2025 will be remembered as the year Oasis returned. Their long-awaited reunion tour dominated the summer, reviving bucket hats, Britpop nostalgia and generating more than £300 million in ticket sales alone.

Yet beneath the headlines and stadium sell-outs, a far less celebratory story is unfolding across the UK’s live music ecosystem. Just 11 of the 34 grassroots venues that hosted Oasis during their first tour in 1994 are still operating today — a stark illustration of how unevenly success is now distributed across the sector.

While the biggest artists fill arenas and stadiums with ease, small venues and emerging acts are being squeezed by a combination of rising costs, changing consumer behaviour and government policy. Industry figures warn that the pipeline for discovering and developing new talent is at risk of collapse.

Julia Rowan, head of policy and public affairs at PRS for Music, says the UK’s position as a global music powerhouse can no longer be taken for granted. She argues that while live music revenues are growing overall, the benefits are increasingly concentrated at the top end of the market, leaving smaller venues exposed.

Streaming has played a central role in reshaping the industry. Platforms such as Spotify have made it easier than ever to release music, but they have also concentrated revenues among a small number of global stars. For many artists, touring has become the primary way to make a living, reversing the traditional model where live shows promoted recorded music.

That shift has helped fuel the rise of the “supertour”. Taylor Swift’s Eras tour, for example, grossed more than $2 billion globally, while legacy acts such as Paul McCartney and Bruce Springsteen continue to draw huge crowds. In the UK alone, live music generated £6.7 billion in spending last year and attracted 23.5 million music tourists.

However, the success of mega-tours is having unintended consequences. High ticket prices — often exceeding £100 or more — are absorbing fans’ disposable income, leaving less money for smaller gigs. Mark Davyd, chief executive of the Music Venue Trust, says there is a natural limit to how much audiences can spend on music in a year.

“If you’re paying £150 or £200 for a stadium ticket, that inevitably eats into the budget you have to see new or emerging artists,” he says.

At the same time, grassroots venues are battling a sharp rise in operating costs. Energy bills, rents, staffing costs and travel expenses have all increased. Labour’s rise in employers’ National Insurance contributions and the higher minimum wage have added further pressure. Even large venues have felt the impact: James Ainscough, chief executive of the Royal Albert Hall, says the NI increase alone has added £375,000 a year to the venue’s costs.

For smaller venues, the situation is more precarious. The Music Venue Trust estimates that average profit margins across grassroots venues are just 0.5 per cent. More than a third of operators are no longer paying themselves at all, with many relying on second jobs to keep venues open.

Davyd describes these venues as the industry’s “research and development labs” — essential spaces where artists learn their craft and audiences discover new music. Without them, he warns, Britain risks losing its ability to nurture future global stars. That concern is already reflected in the data: no British artist appeared in the global top 10 singles or albums in 2024 for the first time in more than 20 years, according to IFPI figures.

There are signs of collective action. A voluntary ticket levy has been introduced, allowing arenas and stadiums to add a small contribution to tickets to support grassroots venues. The Royal Albert Hall was the first major venue to adopt the levy, while the O2 Arena has agreed to share revenues when new artists perform there.

The government has voiced support for the levy and moved to cap ticket resale prices, but critics argue that recent tax and business-rates changes are undermining those efforts. As Ainscough puts it, the sector is facing a “perfect storm” of challenges.

Industry leaders stress that creativity in Britain remains abundant. What is missing, they argue, is a financial and policy environment that allows that creativity to flourish beyond the biggest stages. Without intervention, they warn, the next Oasis may never get the chance to be heard.

Read more:
Rise of the supertour leaves Britain’s grassroots music venues fighting for survival

British businesses are right to be concerned about the rise of Reform UK and should demand far tougher scrutiny of the party’s economic plans, according to Liam Byrne, the Labour chairman of the House of Commons business and trade select committee.

In an interview with The Times, Byrne said that if Reform were to become the dominant force on the political right, companies would need to take a much closer look at its policies and credibility. He warned that the business community could not afford complacency when dealing with a party whose economic approach remains unclear.

“If Reform is set to become the predominant party of the right, then businesses absolutely are going to need to understand where they’re coming from,” Byrne said. “Particularly when the economic evidence says that populist, interventionist administrations are pretty catastrophic for the economy. The next year or two are going to be quite important for the business community in really getting their head around the reality of Reform.”

His comments come at a time when Reform UK is polling strongly and stepping up its engagement with corporate Britain, even as both Labour and the Conservatives seek to rebuild trust with investors after years of economic turbulence.

Reform, led by Nigel Farage, has begun courting business leaders more actively, though some executives remain cautious. In November, the party’s head of policy, Zia Yusuf, took part in a high-profile question-and-answer session at the annual conference of the Confederation of British Industry, an appearance widely seen as an attempt to demonstrate openness to scrutiny from corporate leaders.

The party’s deputy leader, Richard Tice, is due to address a City investor event in January hosted by VSA Capital, where he is expected to outline Reform’s thinking on financial policy and the wider economy. The event has been billed as an opportunity for investors, businesses and policymakers to engage at a “crucial time” for the UK economy.

Byrne said many business leaders he speaks to are already uneasy. He described them as “fairly terrified” by the prospect of Reform gaining power, arguing that the global economic environment is already fragile without the added uncertainty of a party whose spending plans remain opaque.

“A new party like Reform has got spending plans which are so unclear,” he said. “There are so many questions about whether this would ultimately be Liz Truss mark two.”

Reform rejected that characterisation. Tice said in a statement that both Labour and the Conservatives had “wrecked the public finances” and left the economy in a far worse state than before the 2024 general election. He argued that Reform’s approach would restore discipline to public spending, lower borrowing costs and strip away what he described as unnecessary regulation.

“Only Reform will get public spending under control so that the nation’s borrowing costs come down,” Tice said. “We will also cut huge swathes of unnecessary regulation that slow growth and increase the cost of living. Then, and only then, will we cut taxes to stimulate growth.”

For Byrne, however, the message to business leaders is clear. With Reform’s influence growing, he believes companies must press the party harder on the detail behind its promises, rather than accepting broad slogans at face value.

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Business is ‘right to be worried’ by Reform UK, warns Labour’s Liam Byrne