Virtue Accountants Monthly Newsletter – February 2025

Welcome to the February edition of the Virtue Accountants Monthly Newsletter! This month, we're bringing you essential updates on the UK economic landscape, from inflation and interest rate changes to regional budget developments and business trends. Whether you’re a startup founder, SME owner, or self-employed entrepreneur, staying informed can help you make better business decisions in 2025.

Read on for key insights from trusted sources such as the Bank of England, Office for National Statistics (ONS), and Peterborough City Council, alongside our expert commentary. 
 

How Can UK Businesses Navigate Inflation and Interest Rate Changes?

The Bank of England recently adjusted its base interest rate, reducing it to 4.5% as of February 2025. This change signals progress in tackling inflation, which dropped to 2.5% in late 2024, marking its lowest in three years. However, projections suggest inflation will climb to 3.7% by the third quarter of 2025, influenced by global energy markets and regulatory price shifts.

For businesses, this scenario brings both opportunities and challenges. Lower borrowing costs could ease financial pressures for those managing loans, while cautious consumer behavior—highlighted by a 9% drop in debit card spending in January—suggests some uncertainty in household budgets. Businesses should seize the moment to review financial plans, accommodating potential cost increases later this year. Keep an eye on updates from the Bank of England to stay informed.

What Changes Does the Peterborough City Council Budget Bring?

The 2025/26 budget approved by the Peterborough City Council includes several decisions that could impact local businesses. A 4.99% rise in council tax, intended to sustain vital services, means an additional £83 annually for Band D households. Significant funding has also been allocated to address an 18% surge in demand for adult social care services.

On a brighter note, planned investments in city development projects, such as the Peterborough Station Quarter and local university expansion, aim to boost long-term regional growth. These initiatives create opportunities for businesses in construction, retail, and other local services. Companies will need to adjust their financial strategies to account for tax changes but may also find avenues to contribute to—or benefit from—these developments.

For targeted advice on managing local taxes, Virtue Accountants can provide professional consultations. Get in touch with us, to learn more.

How Are Consumer and Business Trends Shaping 2025?

Recent trends paint a mixed picture for both consumers and businesses. Retail spending is slowly recovering, with footfall rising 4% since early February. However, it lags 9% behind the same period last year, reflecting cautious consumer sentiment. Small businesses, especially in energy-intensive industries, are also facing the burden of soaring energy costs—gas prices rose 10% last month and electricity by 44%.

For job markets, there's been a 16% decline in online job vacancies compared to January 2024, signaling a potential slowdown in hiring. However, this trend may serve as an opportunity for businesses to recruit top talent with less competition. Companies can adopt resourceful strategies, such as implementing energy-saving practices or securing government subsidies, to counteract financial pressures. More details on business energy schemes are available through the Office for National Statistics.

How Will the Agricultural and Food Industry Fare in 2025?

The Agriculture and Horticulture Development Board (AHDB) reports turbulent times ahead for the UK food sector. Wheat price volatility and elevated production costs are expected to drive up food prices, placing additional stress on businesses across food production, retail, and hospitality.

Reducing reliance on volatile supply chains and exploring alternative sources could help mitigate these challenges. Look for UK-specific agricultural support programs to ease the burden; you can find updates on subsidies and initiatives at AHDB UK. Businesses should act proactively to adapt and address these changes head-on.

How Can Virtue Accountants Support Your Business?

Navigating an uncertain economic landscape requires not just vigilance but also expert support. At Virtue Accountants, we specialise in helping businesses of all sizes manage their finances effectively. From tax optimisation strategies to budgeting advice and compliance with local regulations, our services are tailored to meet unique business needs.

Whether you're adjusting to local tax rate changes or looking to save on energy costs, our team is here to guide you. Contact us today to schedule a consultation. You can also connect with us on LinkedIn, Facebook, or Instagram for regular updates and business insights.

‍