CNBC's UK Exchange newsletter: Is London's financial future evolving or eroding?

After respective years in the Big Apple, I knew my instrumentality to London would beryllium a civilization shock.

Instead of Times Square with its skyscrapers and blinding lights, I would roam astir Piccadilly Circus and its Victorian buildings; Dunkin Donuts connected each large intersection would beryllium replaced by Greggs connected thoroughfare corners, and I'd be ordering a sausage rotation alternatively of a bagel for lunch.

But beyond the trivial switch-ups, I was successful for a bigger daze than I thought — on the economical front.

Firstly, the outgo of living, from rent and utilities to public transport, has risen significantly.

A instrumentality bid summons from London to my household location in Norwich is now over 30% higher – costing a whopping £72, compared to the £54 it utilized to outgo me.

It should possibly not person been specified a shock; the U.S. has, aft all, experienced markedly little ostentation than the U.K. implicit caller years.

More recently, prices successful the U.K. rose 3.6% successful the twelvemonth to June 2025, compared to a 2.7% summation successful the U.S. The Bank of England now expects ostentation to highest astatine 4% successful September, lone returning to its 2% people by mid-2027.

When I moved to New York, it was a twelvemonth and a fractional aft the Brexit referendum. All these years later, and Brexit continues to predominate discussions.

In conversations with CEOs and concern leaders, I perceive however Brexit inactive hamstrings the economy, peculiarly done commercialized barriers, accrued borderline costs and reduced productivity compared to staying successful the European Union.

Equally concerning is that London's estimation arsenic a starring planetary fiscal halfway is progressively successful question, arsenic it struggles to vie with the likes of New York, Hong Kong and Frankfurt.

Fundraising from archetypal nationalist offerings successful London, meanwhile, has tumbled to its lowest level successful astatine slightest 30 years, according to information from Dealogic, successful a motion the U.K.'s equity markets are losing their attractiveness.

Bank of England Governor Andrew Bailey told maine past week that concern uncertainty successful the country remains very high, aft I asked him astir the effectiveness of involvement complaint cuts by the cardinal bank.

"There is simply a overmuch higher level of uncertainty and fixed that galore concern decisions are irreversible erstwhile we instrumentality them, the worth of waiting truthful goes up, and that is what is happening," helium said.

Another blistery taxable successful London implicit caller months has been changes to the alleged non-dom taxation rules for affluent foreigners.

London's spot marketplace has been peculiarly impacted by the uncertainty, according to spot website RightMove, which cited disorder astir the rules arsenic 1 crushed down reduced request from buyers — some home and overseas — successful the capital's housing market, arsenic location asking prices fall.

Despite the challenges and setbacks, each is not lost. Business leaders tell me there is inactive anticipation and accidental for London.

While determination are upside risks to inflation, the Bank of England cut interest rates this month. The bank's monetary argumentation committee cited advancement successful disinflation successful underlying home prices implicit the past mates of years, arsenic halfway CPI and services ostentation stay flat, portion highlighting the simplification successful wage growth.

Lower interest rates could assistance to spur depletion and investment, arsenic good arsenic assistance to get the spot marketplace backmost connected track. More affordable mortgages whitethorn yet let for much parity betwixt buyers and sellers successful the 2nd fractional of the year. 

When it comes to Brexit, concern business successful the U.K. stalled aft the ballot to permission the bloc successful 2016. However, determination person been immoderate signs of recovery, with a absorption connected circumstantial sectors similar exertion and pharmaceuticals. The U.K. has been seeking caller commercialized deals extracurricular of the EU, including with Australia, New Zealand and India — and of course, the U.S.

In fact, Britain's trade deal with President Donald Trump — though worse than during his first term — is inactive amended than the EU's agreement with the U.S.

London-based chartered accountants and concern advisors Lubbock Fine noted that the U.K.'s important tariff vantage could payment the country as a manufacturing hub for EU companies, seeing them relocate to the U.K.

Yet, erstwhile it comes to rebuilding London's estimation arsenic a powerhouse successful fiscal services, determination is much enactment to beryllium done.

Crucially, it volition entail policymakers creating an situation that is conducive to doing business.

In my recent conversation with Antony Jenkins, erstwhile Barclays CEO, helium highlighted the request to thrust entree to superior for start-ups and minimize the outgo of doing business.

He was positive connected the reforms that are being made to promote much concern into the backstage assemblage and is funny successful retargeting the R&D taxation recognition toward higher-growth businesses. But ultimately, Jenkins says there needs to beryllium a bigger absorption connected maturation policies to boost GDP per capita and pull entrepreneurial talent.

"Let's look it, there's galore charismatic things astir the U.K. We person marketplace enactment astir the satellite successful things similar fiscal services, technology, AI, the originative industries, and the U.K. is simply a large spot to live, truthful we person each these strengths," helium said.

"What we request to bash is amp up the different things that volition marque this spot much charismatic for business."

— Ritika Gupta

England Lionesses and Gotham FC's Jess Carter tells CNBC's Tania Bryer that societal platforms "need to bash better" to support radical online.

— Holly Ellyatt

Elon Musk's Tesla launches bid to proviso energy to British households. The Texas-based institution formally submitted its petition for an energy license to the British vigor regulator Ofgem astatine the extremity of past month.

The authorities won't admit it, but taxation rises are coming — and determination are nary bully options. British Prime Minister Keir Starmer was asked astir suggestions that tax rises would beryllium indispensable successful autumn, but said helium did "not recognise" the figures. Nonetheless, helium declined to regularisation retired hiking VAT, income taxation and corp tax.

Bank of England main says nary rift with UK authorities arsenic Revolut licence hold draws scrutiny. Authorizing Revolut arsenic a afloat licensed bank has go an important contented for the U.K. government, peculiarly arsenic cardinal figures successful the tech manufacture person challenged taxation changes that impact the wealthy.

— Holly Ellyatt

The U.K's FTSE 100 has had a muted week, slipping 0.1% implicit the past 7 days to extremity Tuesday astatine 9,147.81.

After a leap successful July (when it roseate implicit 4%), the scale seems to person enactment its feet up successful August — overmuch similar galore traders — pursuing the uncertainty and accompanying marketplace volatility surrounding Trump's tariffs regime.

The show of the Financial Times Stock Exchange 100 Index implicit the past year.

Sterling, meanwhile, has risen against the dollar implicit the past week. It was trading implicit 0.6% higher astatine $1.3517 precocious Tuesday aft U.K. jobs information — which showed a cooling of the U.K. jobs market, but beardown wage maturation — and U.S. ostentation figures, which sent the dollar lower.

U.K. authorities enslaved yields person besides ticked higher, with the 10-year yield trading astir 4.626% connected Tuesday.

— Katrina Bishop

— Holly Ellyatt