UK Business and Finance Update: May 2026

Three separate stories are worth paying attention to this month. Energy costs for manufacturers are being addressed with an expanded government scheme. The Help to Buy scheme has been the subject of a critical IFS review. And new data shows UK consumers have pulled back on travel spending for the first time in five years.

Here is what is happening and what it might mean for you.

Expanded Energy Support for Manufacturers

The government has confirmed it will extend the British Industrial Competitiveness Scheme (BICS), bringing more energy-intensive manufacturers into a support package first outlined in 2025.

Around 10,000 businesses — including firms in steel, automotive and pharmaceuticals — could see electricity bills reduced by up to 25%. The original scheme covered 7,000 companies, so a further 3,000 are now being brought into scope.

From April 2027, eligible businesses will be exempt from certain electricity charges linked to net zero policies, saving an estimated £35 to £40 per megawatt hour. A one-off payment will also be made in 2027 to compensate businesses for the support they would have received from April 2026.

The scheme is expected to cost £600 million. It will be funded through wider energy system changes and government spending, with no impact on household bills. Businesses can check eligibility using their Standard Industrial Classification (SIC) code.

Business groups have broadly welcomed the move, though some argue it does not go far enough. Critics point out that sectors including hospitality, retail and agriculture remain excluded, despite facing significant ongoing cost pressures. Industry bodies continue to report that around four in ten UK businesses are still struggling to manage their energy bills.

Help to Buy Largely Benefited Higher Earners, Says IFS

A new report from the Institute for Fiscal Studies has concluded that the UK government’s Help to Buy scheme — introduced in England in 2013 — largely benefited higher earners rather than the first-time buyers who most needed support.

The scheme ran two main policies: a mortgage guarantee scheme allowing buyers to secure mortgages with a 5% deposit, and an equity loan offering a government-backed loan of up to 20% on new-build homes (rising to 40% in London for part of the scheme).

At its peak in 2014/15, Help to Buy supported around one in five first-time buyer purchases in England. However, the IFS concluded it made only a limited difference to overall housing affordability and had minimal impact on social mobility.

The restriction to new-build homes — which are relatively scarce in many parts of the country — meant the scheme’s reach was limited, particularly in high-cost areas such as London and the South East. Buyers in cheaper regions, who tended to have higher incomes, were more likely to benefit. Income-based mortgage lending limits also meant many participants were already close to their borrowing capacity, and some still relied on last-minute financial help from family.

Critics argue the scheme contributed to rising house prices by boosting purchasing power. Supporters maintain it helped thousands onto the property ladder and supported housebuilding more broadly.

The equity loan scheme is now closed to new applicants in England and Scotland, with Wales due to follow. The mortgage guarantee scheme remains in place across the UK.

Travel Spending Falls for the First Time in Five Years

UK consumers have cut back on travel spending for the first time since March 2021, according to data from Barclays.

Overall card spending grew by just 0.9% year on year in March, slightly below the 1% recorded in February. Within that, travel spending fell by 3.3%. Spending dropped across travel agents, airlines and public transport. Hotel and accommodation spending edged up by 1.2%, supported by increased domestic bookings over the Easter period.

Many households are delaying overseas trips or opting for UK breaks instead. Ongoing tensions in the Middle East have led around one in seven adults to delay major purchases or build up savings in anticipation of rising energy costs. Although the UK energy price cap fell by 7% in April, it is expected to rise sharply in July due to higher wholesale prices.

Essential spending rose modestly by 0.5%, with fuel up 1.6% — its first increase in over a year. Discretionary spending growth slowed to 1.1%, though clothing and entertainment remained relatively resilient. Retail sales overall grew strongly, rising 3.6% year on year, led by a notable increase in food spending.

Consumer confidence presents a mixed picture. Most people feel reasonably secure about their own household finances, but optimism about the broader UK and global economy has declined.

If you would like to talk through any of these developments and what they might mean for your business or personal finances, get in touch with the Caseron team.