Majority of Brits think economy is getting worse
A majority of Brits think the economy is getting worse, with sentiment souring significantly amid rising prices and weak growth.
Nearly six in ten Brits believe the UK economy is on a downward spiral, a major jump from 43 per cent at the beginning of the year, marking a significant blow to Chancellor Rachel Reeves and the Labour Party, which has claimed it has restored financial stability since it came to power.
The fresh findings – from KPMG UK’s latest Consumer Pulse survey – also showed half of consumers plan to cut their discretionary spending as a result of the dampening outlook.
“A landscape of consumers adjusting to higher household essential outgoings and spending caution due to perception of a worsening economy is set to continue into 2026,” said Linda Ellett, head of consumer, retail and leisure for KPMG UK.
Consumers’ negative perception towards the economy comes despite the Bank of England chopping interest rates by a whole percentage point over the course of the year in four separate cuts.
Around 15 per cent of respondents to KPMG’s survey blamed their attitudes towards the economy on interest rates not falling as much as expected.
But the most significant contribution to souring economic sentiment was the cost of groceries (81 per cent) and the cost of household utilities (75 per cent).
Inflation has remained sticky throughout the year, despite a surprise drop in December to 3.2 per cent. But this remained well above the Bank of England’s target of two per cent.
Ahead of Rachel Reeves’ second Autumn Budget, the UK’s largest supermarkets wrote to the Chancellor calling for the Treasury to bring “inflation to a heel”.
“Given the costs currently falling on the industry, including from the last Budget, high food inflation is likely to persist into 2026,” bosses from the likes of Tesco, Lidl and Morrisons warned.
Economy stalls in the second half of 2025
Economists sounded the alarm on the state of UK finances after the government’s growth agenda was dealt another hammer blow in December.
Figures published by the Office for National Statistics (ONS) showed production output shrank 0.5 per cent in October, whilst construction contracted 0.3 per cent. The all-important services sector, which is estimated to make up over 80 per cent of the economy, did not grow at all.
This led to a 0.1 per cent contraction despite expectations of a 0.1 per cent expansion.
Weeks later, the ONS downgraded the economy’s second quarter expansion to a sluggish 0.2 per cent from 0.3 per cent, stating it painted a picture of a slowing economy.
Economists have pencilled in more subdued growth for the years ahead. Alex Kerr, UK economist at Capital Economics, said with the economy slowing “significantly” in the second half of 2025 “, we doubt 2026 will be much better”.
Capital Economics expects a 1.4 per cent expansion in 2025, before falling to just one per cent in 2026, with the public sector “the main source of growth”.
The Confederation of British Industry (CBI) has pencilled in a 1.3 per cent expansion in the UK economy for the year ahead after the Chancellor revealed an extra £11bn in state spending plans in her Budget.
Consumers are expected to be more hesitant to spend in 2026, with KPMG data showing 13 per cent believing their discretionary spend in the forthcoming 12 months will be higher than the previous.
“Annual consumer spending growth looks set to sluggish again, with available discretionary budget prioritised,” Ellett said.
Warner Bros slides ahead of takeover deadline
Warner Bros Discovery has been trading lower in the days leading up to the 21 January offer deadline, as investors weigh the chances of a successful deal amid competing bids from Netflix and Paramount Skydance.
Shares slipped 0.04 per cent to $28.79 (£21.30) on Monday, trading around four per cent below Paramount’s $30 cash offer.
This gap reflects the deal’s risks around financing, regulatory scrutiny, and shareholder approval.
Investors have been treating WBD stock as a deal-arbitrage play, trying to price both the likelihood and timing of a resolution.
Paramount Skydance’s $30-per-share cash bid was recently also strengthened by Oracle co-founder Larry Ellison’s personal $40.4bn guarantee and an increased $5.8bn reverse termination fee, designed to reassure shareholders worried about financing.
However, Netflix remains the board-backed preferred route, with an offer of $23.25 in cash and roughly $4.50 in Netflix stock per WBD share, according to WBD. This would value the streaming giant at $27.75.
Warner Bros Discovery has publicly said the Netflix combination seems to deliver “superior, more certain value” to shareholders.
Strategic stakes
The process is far from straightforward, and Netflix has had to refinance part of a $59bn bridge loan, securing a $5bn revolving credit and up to $20bn in delayed loans, with around $34bn still to be syndicated.
Paramount’s all-cash offer, on the other hand, requires no stock issuance.
Yet, its high-profile financial backstop and elevated termination fee have been designed to convince shareholders that the offer is credible.
Regulatory scrutiny is also a cause for concern ahead of the deadline, as any deal consolidating Warner Bros’ vast media portfolio, including film studios, HBO, CNN, and Discovery channels, faces antitrust review from both sides of the Atlantic.
Regulators are particularly alert to any consolidations in streaming, distribution, and advertising, with lawmakers monitoring the potential impact on consumer choice and prices.
But the stakes are also high for both bidders. Netflix would gain globally recognised, well-loved franchises like Harry Potter, which would boost its content for its 428 million subscribers.
Meanwhile, Paramount would gain scale across streaming and theatrical distribution.
But both buyers must navigate complex integration risks. And Warner Bros. ’ prior mergers, like AOL-Time Warner, AT&T-Time Warner, and the 2022 Discovery merger, have served as cautionary tales about culture clashes, overleveraged balance sheets, and slow returns on synergies.
WBD still carries over $40bn in debt, a significant factor that shapes all takeover structures.
Market sentiment has been muted. US stocks closed lower on Monday amid holiday-thinned trading, with Netflix down 0.33 per cent to $94.15. and Paramount Skydance slipping 0.66 per cent to $13.50.
Analysts have noted that the thin volume can amplify swings in deal-linked names.
“I doubt many Warner Bros shareholders that are on the fence or planning to vote no were holding out,” said Seth Shafer, principal analyst at S&P Global.
Investors will be closely watching Netflix’s fourth-quarter results on 20 January, which could offer fresh guidance on content spend, margins, and the company’s integration strategy if the deal goes ahead.
This remote part of Patagonia is one of the wildest places on Earth
Get the best of Patagonia by going out into the sticks, says Luke Abrahams
It’s roughly 9am on a blisteringly hot January morning and I find myself in the driest place on earth. My skin is flaking and my lips are so chapped they are bloody painful to touch. The first question I have on my mind is…why the hell do people come here?
I’m visiting The famous Atacama Desert, but there’s no solace in the small sand locked town of San Pedro di Atacama, which is not the isolated and remote hippy nirvana you see splattered all over the glossy magazines. While beautiful, its Mars like craters, geyser valleys and mountain peaks are littered with backpackers and tourists.
I’d always known that Patagonia was going to be busy. The minute you clock a destination on a Lonely Planet guidebook cover at the airport you know you are doomed, so to avoid a repeat of my desert disappointment, I traded in Torres Del Paine (Patagonia’s cover star) for its least known National Park: Parc Nacional Patagonia.
Wildly isolated and cut off from civilisation during the winter months thanks to the razor-sharp glaciers of the Northern Patagonian Ice Sheet, this far-flung stretch of Chilean epidramas gives you what other wildernesses in this part of the world do not: total isolation. You mostly feel this on the drive here. From Balmaceda airport to the park is a seven-hour car transfer along mostly unpaved roads winding through 300km of The Carretera Austral, Chile’s famous Route 7. The mountains are epic and the vistas endless. Four seasons flash by in an hour. Rainbows bounce off the vales; sudden hailstorms slash at the trees; and the sight of godly electric blue lakes and rivers that slither into what looks like the ends of the earth give you the shudders.
The immense grasslands of the Patagonia National Park
I’m in the Chacabuco Valley in the Aysen region of Chile, within the Patagonia National Park. So far, my only company has been a few hikers and baby guanacos. The Explora lodge is a former cattle farm turned chic pad by founder and Chilean entrepreneur Pedro Ibáñez back in 2021. Above giant condors attempt to feast on a half-mutilated guanaco rotting in the distance. Corkscrew hills wind in unison among patches of wildflowers and overgrazed cliffs – a casualty of the cattle farmers who once lived here in the early 1900s.
The lodge is the only inn you will find in the 752,000 acres of this sequestered parkland. The digs themselves are a little lost in translation for the setting: Minimalist British cottage core split across four main buildings, there are 12 comfy rooms and suites, each with small touches like woodcarvings depicting local flora and fauna. The giant windows spy nothing but soulful views of splendid isolation.
Out in that isolation, once endangered Andean Deer flock. That they still exist is partially thanks to the park’s founders, the late Doug Tompkins and his wife Kristine. in 1994, they set up Conservacion Patagonica (later Tomkins Conservation), a conservation group with a mission to save and restore wildlands across Chile and Argentina. Doug made his fortune with the clothing companies The North Face and Esprit and Kristine was the former CEO of Patagonia. Much of the restoration, rewilding and regeneration projects are their ideas. The couple “saw an incredible opportunity—to recover these immense grasslands for native species, like the guanaco, the Darwin’s rhea, and puma, but also to connect it to existing parklands of lesser status to the north and south, creating one enormous park.”
Despite the park being such a conservation success, it’s still relatively unknown
Depleted forests were rewilded by enriching severely degraded soil and over 500 miles of fencing was removed to create wildlife corridors so animals, including puma, could move between the park and federal lands freely and safely. Despite the park being such a conservation success story, it’s still relatively unknown beyond a few newspaper snippets. The fruits of its success come full circle during all my carefully planned hikes and excursions with Explora. The lodge has a medley on offer, even for hiking novices like me.
There are dozens of options depending on your interests and desires ranging from super technical mountain climbs to slow jaunts around the hotel to spot wildlife. While out on the hunt for Andean deer with my guide Micaela Diaz Rossi we encounter rivers and lakes so clear you could see straight to the bottom, wild strawberries, yarrow and dandelion, liken fungus and old man’s beard, and views of the jagged icy Andes in the distance. But it’s the night sky here that trumps my four days of dizzying walks and overland drives.
It was a cold and crisp night, and the sky turned an electric red. Distant galaxies glowed, ancient stars shone bright, satellites zoomed and Sagittarius A, the Milky Way’s supermassive black hole stared me point blank in the face (Patagonia is a big stargazing destination). As I stared in the pitch black, swarned by insects, I felt a sense of total nothingness. Three hours had passed, and all sense of time was lost to the immense beauty of the universe. It was a sight I thought I’d see back in the Atacama, but here it was, in all its glory in the middle of a National Park I hadn’t even heard of before.
Visit Patagonia yourself
Luke was a guest of cazenove+loyd (cazloyd.com) which offers an 11-night trip to the Atacama Desert and Patagonia National Park, Chile, from £9,665 pp (two sharing) including three nights full board at Explora Atacama, three nights full board at Explora Patagonia National Park, and two nights at Four Seasons Buenos Aires, as well as all excursions, transfers, accommodation in Santiago and domestic flights throughout. International flights extra. British Airways fly direct from London to Santiago from around £800.
UK firms eye AI spending in 2026, but skills gap threatens rollout
A third of British businesses plan to invest in AI in 2026, yet new data suggests the bigger challenge may be readying staff for the technology, rather than rolling it out at speed.
Research from Lloyds Bank’s recent business barometer revealed that 33 per cent of firms intend to invest in AI tools next year, citing a boost in productivity as the main incentive.
However, the research also found that more firms say they are planning to invest in training staff than in the technology itself, which may become cause for concern over skills and capability as AI adoption accelerates.
AI training key to rollout
Among the 1,200 companies surveyed, 35 per cent plan to increase spending on team training in 2026, as firms look to upskill workers and make better use of new technologies.
Improving productivity and strengthening digital skills were cited as top priorities for the year ahead.
Paul Kempster, managing director for commercial banking coverage at Lloyds Business & Commercial Banking, said: “These investment priorities will support businesses’ long-term growth, helping them capitalise on opportunities while building a firm foundation well beyond 2026”.
The emphasis on skills investment comes in the wake of Rachel Reeves’ £1.5bn skills package announced in her Autumn Budget, designed to tackle labour shortages by boosting training across sectors, including digital and AI-related roles.
The reforms, hailed at the time as the biggest shake-up of the skills system in a decade, included reforms to apprenticeships, digital training programmes and incentives to help employers address chronic gaps in tech expertise.
Cautious adoption
Earlier research from Lloyds revealed clear benefits from AI adoption, with 82 per cent of users reporting productivity gains and 76 per cent seeing improved profitability.
Yet, uptake still seems uneven, with retailers reporting the most substantial productivity impact, while manufacturers were most likely to see profit improvements.
But practical barriers continue to slow adoption, including high upfront costs, a lack of tech-specific skills, data privacy concerns and soaring energy demands.
Meanwhile, over half of businesses surveyed also said they plan to make some form of AI investment over the next year, though only a quarter of those yet to adopt the technology said they expect to start using it.
This cautious approach comes as business confidence shows signs of stabilising, with the report revealing that confidence rose to 47 per cent in December, up ten points since the start of 2025, while optimism about the wider economy reached a four-month high.
Still, softer consumer demand remains a bottleneck, as expectations of falling prices weighed on spending, with data from Sensormatic Solutions showing UK in-store footfall fell nearly seven per cent year on year on the final Saturday before Christmas.
Private equity firms sell assets to themselves at a record rate in 2025
Private equity firms sold companies to themselves at an unprecedented rate this year, using a controversial tactic to hold on to assets as managers struggled to find buyers or list their investments.
First reported in the Financial Times, roughly a fifth of all private equity (PE) sales in 2025 involved groups raising money from new investors to acquire businesses from their older funds.
This was up from 12 to 13 per cent the prior year, according to Sinha Haldea, global head of private capital advisory at Raymond James.
These transactions sell assets already owned by a PE group to so-called continuation vehicles, which are newer funds also managed by the firm.
The tactic allows PE firms to return cash to investors in older funds, but has also prompted concerns around potential conflicts of interest.
Haldea noted this year is set “to break all records”, predicting the final figures for the year to show $107bn (£79.2bn) in such sales, up from $70bn in 2024.
Valuation struggle
The use of this tactic has surged in recent years as buyout firms have struggled to secure the valuations they want from either external buyers or public markets, choosing instead to hold on to investments, in hopes of getting higher offers in the future.
European private equity house PAI Partners sold part of its stake in ice cream group Froneri, which owns the popular Haagen-Dazs brand, to a continuation vehicle for the second time, in a deal valuing the company at £13bn.
Others firms including Vista Equity Partners, New Mountain Capital and Inflexion also used multi-billion dollar continuation funds to sell down some of their larger investments.
Haldea added such transactions had become a “popular and effective win-win-win liquidity solution in a stressed exit environment” due to exit values “still recovering from 2024 lows”.
The structure is also attractive to firms because the deals generate extra management fees and potentially lucrative future performance fees from companies in ageing funds.
Backers concerns
Despite PE firms use of the methods, some backers of funds, including pension funds, are concerned that in these transactions the same buyout firm in on both sides of the deal as the buyer and the seller.
Investors fear firms could downplay the value of assets being transferred, creating a disadvantage for original fund backers being offered an exit.
PE managers however argue they offer their original backers the chance to roll their stakes into the new fund and that new investors help set the price at which assets are transferred.
But investors which are used to backing funds on the strength and reputation of its managers rather than analysing assets may lack the skills or capacity to assess companies, potentially putting them at a loss.
Greg Jackson spins off Octopus’ tech arm Kraken after $1bn injection
Octopus Energy Group has spun off its technology arm, Kraken, following its first standalone investment round.
The fresh funding round for Kraken was led by global investment giant D1 Capital Partners, with new investors including Fidelity International, Durable Capital Partners and Ontario Teachers’ Pension Plan Board.
Kraken – which is an AI-powered platform now contracted to serve over 70m household and business accounts worldwide – was valued at $8.65bn (£6.4bn) following the new round, with investors taking a $1bn slice of the firm.
The cash generated from the investment round will be used to fund both Octopus and Kraken, but the majority is expected to be funnelled into Octopus Energy.
Greg Jackson’s energy giant will maintain a 13.7 per cent stake in Kraken following the demerger.
Meanwhile, investors led by Octopus Capital have pumped an additional $320m (£237m) into Octopus to drive innovation and growth.
Kraken will ‘grow even faster’ after Octopus split
Greg Jackson, founder of Octopus Energy Group, said: “Kraken is in a class of its own, in terms of technology, capability, and scale.
“As an independent company with world-class backers and outstanding leadership, it will be free to grow even faster and is set to be a true UK-founded success story.”
Kraken has notched $500m in committed annual revenue through licensing deals with the likes of EDF, E.ON Next, National Grid US, Origin Energy, Plenitude and Tokyo Gas.
The demerger will permit Kraken to operate as a fully independent technology platform for utilities worldwide.
Octopus said the sale will accelerate global adoption and deepen partnerships, allowing the wider group to focus on scaling its consumer, generation, and clean technology businesses.
Amir Orad, chief executive of Kraken, said: “Becoming an independent company gives Kraken the focus and freedom to scale as a neutral, global operating system for utilities, with Octopus Energy remaining a key innovation partner and forward-thinking global customer.
“I’m excited to welcome our new investors, led by D1. With their backing, we can accelerate our impact on the energy transition, deepen partnerships with utilities worldwide, and help modernise the energy system at global scale – our goal being to positively impact a billion lives within a decade.”
House prices plunge around London with Brighton, Crawley hit hardest
Patches of London’s ‘stockbroker belt’ suffered the most significant decline in house prices this year, as both the capital and the South East fell behind northern regions.
The West Sussex town of Crawley suffered an 8.9 per cent drop of £36,317, while High Wycombe saw a 7.4 per cent drop, with £34,994 wiped off house valuations, according to Lloyds Bank.
Meanwhile, Brighton, another popular town for London commuters, recorded a 4.8 per cent fall, with prices tumbling by £20,000.
House price growth divide
The figures reveal the divide in house price growth between areas located in and around London and the rest of the country.
Britain’s housing market has had a subdued year, after an increase in stamp duty in April, uncertainty caused by Budget speculation and ongoing elevated mortgage rates weighed on buyer sentiment.
Despite remaining the most expensive location in the UK, the London market has suffered in particular, with prices falling 2.4 per cent year on year to £547,000 according to the latest government data.
The capital has been hit by a combination of rising unaffordability and increased supply, with sellers struggling to strike deals while buyers are increasingly able to negotiate prices down.
Tax clampdowns on landlords and overseas buyers have also rocked the market, hitting the capital’s most expensive boroughs, including Kensington and Chelsea, which international buyers have typically favoured.
At the same time, the introduction of a ‘mansion tax’ in Labour’s November Budget is also expected to affect the upper end of the market.
The tax will see properties valued over £2m be slapped with a higher council tax charge from April 2028.
Amanda Bryden, head of mortgages at Lloyds, noted the South East “dominates the list of towns where the value of homes fell or grew most slowly in the last year”.
North boosts growth
Outside of London and the capital’s commuter belt, buyers were still pushing prices higher.
Plymouth and Stafford topped the list, reporting increases of 12.6 per cent and 12 per cent respectively.
Wigan, Wakefield, Liverpool and Hull also reported a rise in prices, while Woking, a Surrey commuter town, shrugged off its region’s lacklustre performance with prices up 8.1 per cent.
Bryden said: “If you’re open to exploring, you might find places where your money goes further.
“Northern regions and Scotland are still generally more affordable than the south of England.”
Valuations across the UK rose by an average of 3.7 per cent, to roughly £13,000.
Exclusive: O2 Arena open to hosting NBA Europe after record-breaking year
The owners of London’s O2 Arena have insisted they have enough days in their calendar to host a NBA Europe franchise in the capital should the league launch in 2027.
The US basketball league is exploring the possibility of setting up a European equivalent, tapping into major football club brands this side of the pond. Both London and Manchester have been cited as franchise hubs, with each city also hosting US NBA matches over the next two years.
Comments from O2 Arena owner AEG Europe’s Gael Caselli came as the 20,000-capacity venue revealed a record-breaking year, with nearly 3m tickets sold for events at the Greenwich Peninsula site.
2025 saw a total of around 11m visitors to the arena, with 239 performances across the year. And it means there’s 126 spare days to exploit going forward.
O2 Arena for NBA Europe?
“[NBA back in London] been a pretty long negotiation in the making but the idea now is a three-year plan in Europe, where they’re going to be playing two games a year in 2027 and 2028 across three different countries – the UK, France and Germany,” Caselli said.
“We’ve been at the epicenter of that negotiation for quite a while now and the O2 is going to get a game in January. But the Uber Arena in Berlin, which is an AEG venue, and Accor Arena in Paris, which is an AEG affiliated venue, are getting games.
“[NBA Europe] is a very exciting project. We’ll have to monitor the situation and see who’s actually getting the London franchise but [being booked for] 239 days means we still have a few left to make it up to 365.
“I’m sure our programming team and booking team will be pushing a lot and moving dates around to make sure we can host as many games as possible.
“There are too many unanswered questions about the league itself but we’ll definitely look at it and be very interested in the project.”
The O2 Arena will host the Memphis Grizzlies’ regular season home game against Orlando Magic in late January after the NBA took a six-year hiatus from the UK.
Its return, combined with the match in Manchester in 2027, is expected to contribute £100m to the UK economy.
UK consumers cut spending amid wider economic nerves
UK consumers’ debit and credit card spending slumped in 2025 for the first time since the Covid-19 pandemic as wider economic nerves knocked confidence.
Card spending fell 0.2 per cent in the last 12 months, according to Barclays, a sharp contrast to the 1.6 per cent growth recorded in 2024.
Just a quarter of British adults said they felt confident about the state of the UK economy last year.
Whilst confidence in household finances was much higher at 64 per cent, it still tumbled from 70 per cent in January.
“People might be feeling a bit more optimistic about their own financial situations but they’re nervous about the economy generally, and social media is chock full of posts about ways to boost savings despite falling interest rates,” said AJ Bell head of financial analysis Danni Hewson.
UK consumer confidence falls
Consumer confidence plunged to a new low ahead of Chancellor Rachel Reeves’ second Autumn Budget as Brits prepared themselves for a hefty tax raid.
The Barclays data also showed that essential spending fell by 2.3 per cent, whilst non-essential expenditure grew by 0.8 per cent, with shoppers prioritising “joy-bringing” experiences over basic goods.
There was also a significant surge in the “Experience Economy,” with the entertainment category growing by 4.3 per cent after the reunion of Oasis, which alone was projected to power £1bn in economic activity and major tours by artists such as Coldplay.
“Since the pandemic, priorities have changed. Wellness has become vital, and both men and women take their skin care seriously,” Hewson said.
“Moments that make memories and can be shared with friends or bragged about online have had more appeal than ‘stuff’, although travel has taken a back seat to tickets for massive music tours.”
Boxing Day bounce could boost spending
Barclays data showed Brits were more cautious in buying expensive imports after President Donald Trump’s ‘Liberation Day’ onslaught in April, when the White House slapped sweeping tariffs across trading partners.
Over 70 per cent said they would buy more British-made products, with 12 per cent willing to pay a premium to support local businesses.
Retailers in the UK enjoyed a boost in footfall on Boxing Day, with analysis from MRI Software showing shopper footfall increased 4.4 per cent year-on-year.
The analysts said the retail sector may end the year on a “positive note” after the Boxing Day bounce.
Hewson said: “A late surge in revellers hitting the high street on Boxing Day might have boosted footfall, but the real proof will be found in retailers’ Christmas earnings updates.”
Tax crackdown in 2026: Why experts predict a wave of enforcement actions
Under the Labour government, HMRC has shifted from a reactive to a highly proactive stance, and tax experts expect increased tax enforcement in the new year.
The government has committed to invest an additional £555m annually in HMRC to boost tax compliance and transform its technology.
The investment aims to raise an extra £5.1bn in tax per year by the end of the current Parliament, as part of HMRC’s focus on closing the tax gap, estimated at over £5bn.
But as noted by a Public Accounts Committee (PAC) report, this figure could be “just the tip of the iceberg”.
Going into 2026, Andy Brown, global head of tax disputes, Kennedys, stated that “we believe that next year we are likely to see a shift towards increased enforcement actions by national tax authorities, as well as widening the scope of current tax regimes.”
“This will impact clients as it will increase their exposure to investigation, which in turn will increase compliance costs,” he added.
HMRC focuses on enforcement
HMRC plans to employ 5,000 new compliance officers by 2029/30, with recruitment beginning in 2026.
This isn’t just in the UK; in the UAE, the Federal Tax Authority has increased investigations by 110.7 per cent since 2024.
Meanwhile, the OECD Pillar Two global tax initiative, which aims to introduce a 15 per cent minimum effective corporate tax rate for large multinational companies, is being rolled out by participating countries over the coming years.
The shift is being driven by fiscal pressure to increase revenue for governments, as purse strings have tightened and governments’ ability to use technological advancements to help fill the gaps has been limited.
Tariffs as tools
Brown added that another trend in tax disputes in 2026 will be trade fragmentation and the use of taxes and tariffs as a geopolitical tool.
“The past 12 months have seen increased volatility in trade policy, particularly from major economies being driven by the tense nature of relations between world leaders and constantly shifting geo-political rivalry,” he explained.
Back in April, US President Donald Trump announced “Liberation Day” tariffs, a “barrage” of tariffs imposed on countries and businesses that upended the international trading order.
Brown added, “No doubt, global trade policy in 2026 will continue to create uncertainty, with tariffs and tax policy frequently being deployed as instruments to guard national financial security.”
AI to take centre stage
The tax experts noted that another major trend for tax disputes in 2026 will be the growth of AI.
As outlined, the tax authority is already deploying machine learning tools to detect anomalies, and taxpayers are relying on AI to manage their own exposure. “The impact on clients will see new types of procedural risk,” Brown stated.
“Authorities will also increasingly turn to predictive models and algorithm-based audits and assessments, capturing more breaches with greater accuracy,” Brown explained.
“On the upside, there will, however, be an opportunity for clients to increase proactive compliance and early engagement through AI,” he added.