Closing post
Time to wrap up…
The governor of the Bank of England has warned there are growing signs that the UK jobs markets is slowing as employers respond to higher national insurance contributions (NICs) by cutting hiring and offering weaker pay rises.
Andrew Bailey also told the BCC’s annual conference today that growth in the economy is likely to “moderate” this year, after a pacy start to 2025.
His comments came shortly before new data showed America’s economy shrank faster than previously thought in January-March, due to the surge of imports to beat Donald Trump’s trade wars.
Prime minister Keir Starmer acknowledged the tax burden placed on businesses during his speech to the BCC this morning, as firms urged the government not to impose further tax rises.
In other news…
A report into the Office for National Statistics has identified ‘cultural’ failings which led to its problems producing reliable data, and recommending splitting the top job running the ONS.
Energy secretary Ed Miliband has declined to support a plan to build the world’s longest subsea power cable to bring North Africa’s renewable energy to British homes and companies.
Shell has said it has “no intention” of making an offer for the rival fossil fuel company BP after speculation it had been planning a £60bn takeover, ruling out a formal approach for the next six months.
The former Barclays chief executive Jes Staley has lost a legal challenge against the UK financial regulator, leaving him banned from the City for life for misleading the watchdog over his relationship with the sex offender Jeffrey Epstein.
The dollar has fallen to a three-year low following a report that Donald Trump is considering bringing forward the announcement of his choice to succeed the Federal Reserve chair, Jerome Powell.
No respite for the US dollar as the widely-followed DXY index depreciates to its lowest level since early 2022.
— Mohamed A. El-Erian (@elerianm) June 26, 2025
Today’s move brings the year-to-date drop to just over 10%.#economy #markets #dollar pic.twitter.com/uQUYYl2kTq
The selloff pushed the pound up by almost a cent to $1.375, its highest level in over three years.
Review finds cultural failings at UK statistics office
The Devereux Review of the Office for National Statistics has found cultural problems that ultimately contributed to the statistical problems that have plagued the organisation.
They fall into three areas:
a “commendable interest in both new approaches to statistics”, which led the ONS to de-prioritise the crucial task of delivering core economic statistics of sufficient quality to guide decision making
A weak system of planning and budgeting, leading to ONS staff not having the resources they needed.
A reluctance, at senior levels, to hear and act on difficult news. The ONS aimed to be “radical, ambitious, inclusive, and sustainable” – which it lived up to in the Covid-19 pandemic when other activities were de-prioritised. However, the Review adds, “several people suggested that the list of values was missing “realistic””.
The review says there has been:
…a reluctance on the part of some to take at face value the warnings which have been raised, apparently preferring instead to categorise those making the warnings as lacking in accountability.
This categorisation seems to me to be without foundation, and it has undoubtedly made life difficult for many senior people working at ONS who are concerned about the quality of population and economic statistics. I am not surprised that so many, experienced, senior leaders have chosen to leave.
Updated
ONS to spend £10m fixing its problems
A review into the UK’s troubled statistics body has recommended splitting its top job.
The Devereux Review of the Office for National Statistics’s performance and culture has found that there are various “deep-seated” issues at the ONS.
Sir Robert Devereux, a retired civil servant, has recommended that these issues would best be addressed by temporarily splitting the role of National Statistician in two. That would create a new role of ONS Permanent Secretary.
This new Permanent Secretary position could be handed to someone with a track record of leading, and turning around, an operational business, Devereux says ,adding:
I suggest temporary separation since, with the more effort to develop evident talent within the Government Statistical Service, I think it might well be possible to re-combine the roles in due course, once the organisation’s core business is back on a more stable footing.
The role of National Statistician is currently unfilled, as Professor Sir Ian Diamond retired with immediate effect, on account of ill health, during the Review.
The ONS’s operations have been criticised, after its surveys were hit by falling participation rates among the public, leading to questions about the validity of its data.
Today acting National Statistician Emma Rourke says:
“We welcome Sir Robert Devereux’s report and fully acknowledge the issues he has highlighted. This represents a turning point for the ONS as we commit to implement the recommendations and reset towards a culture that embraces feedback and challenge.
The ONS has also published a new plan for economic statistics, under which it will invest £10m to improve its core economic and population statistics.
The ONS has also admitted that improving these statistics will take collective effort, adding:
In some cases, this may mean revising published figures or historical series. That is not a sign of failure, but of a statistical system willing to evolve, led by evidence, and open about how it improves.
We will work closely with users to ensure revisions and breaks in series are well managed, with support provided to users.
Badenoch: UK has too many 'takers'
Kemi Badenoch then argues that the “fundamental question” facing the UK is whether it is “whether we are for the makers or for the takers”.
Badenoch tells the British Chambers of Commerce that this boils down to:
Whether we are for those who work hard, who get on, who build businesses, who make things happen, whether it’s a plumber or a nurse, or those who don’t. And I know whose side I’m on.
Turning to the government’s political crisis over its welfare reform bill, Badenock says:
Our debt interest is well over 100 billion pounds a year. Welfare spending is out of control. The state is bloated. Productivity has flatlined, and the economy is stuck in first gear. Our country is living beyond its means.
Calling for “a total different approach”, Badenoch says things need to be made easier for those ‘makers’.
Echoing George Osborne’s attack in 2012 on families on benefits who live with “the blinds are down” as neighbours head to work, the Tory leader says:
Currently this country has too many people who are taking, whether it is those who sit at home with the curtains drawn while others go out to work, or those who skip the queue and arrive here illegally, only to be given privileged access to social housing, the NHS and our generous welfare system.
[On the lattter point, the House of Commons Library explains that “Migrants in the UK on visas, illegally or seeking asylum are usually ineligible for welfare benefits and social housing”.]
Our Politics Live blog has all the latest details on the welfare bill row:
Badenoch: We've had economic change for the worst
Opposition leader Kemi Badenoch is now addressing the BCC’s annual conference, and laying into the government’s record.
Badenoch tells business leaders that one reason her party lost the election last July is that they were no longer trusted, and also that they got enough things wrong that people wanted change.
She then criticises Keir Starmer’s economic record over his first year, saying:
After 12 months of Labour in office since July, we’ve had inflation higher, unemployment up, growth halved.
I mean this is change, but it is change for the worse. And it didn’t have to happen.
[factcheck: At 3.4% last month, inflation is higher than last July, when it was 2.2%. But, it’s still short of the 11.1% hit in October 2022.
On growth, Badenoch may be referring to the Office for Budget Responsibility’s forecast for growth in 2025, which was halved in March to 1.0%. It blamed a “more challenging and uncertain backdrop” for this cut.
And the unemployment rate has indeed risen, to 4.6%, the highest since July 2021.]
Badenoch blames the goverment’s increase in national insurance, calling it a “jobs tax” that is killing jobs, adding:
It is making it impossible for businesses to grow. And then we see that family businesses, which form the backbone of many of our communities, have been hit with increased taxes.
A gauge of trade activity is risen in the last quarter, amid the scramble to ship goods before new US tariffs come into effect.
The World Trade Organization’s Goods Trade Barometer rose to 103.5, up from 102.8 in the three months to March
But the WTO is concerned that there may be a slowdown later this year, saying:
“The decline in export orders and the temporary nature of frontloading suggest that trade growth may slow in the months ahead.”
Miliband refuses support for subsea cable to bring power from Morocco
Ed Miliband has rejected plans put forward by the former boss of Tesco to build the world’s longest subsea power cable to bring North Africa’s renewable energy to British homes and companies.
The energy secretary has ruled out granting Sir Dave Lewis a support contract to guarantee stable payments for the electricity delivered by the Xlinks high-voltage cable project from wind and solar farms in Morocco.
Lewis and a string of high profile investors had hoped to bury a 4,000km cable along the seabed to carry up to 8% of Great Britain’s electricity from renewable energy and battery projects in the Tantan province to the Devon coast in under a second.
But after five years of lobbying the government for support for the world-first energy project the energy secretary rejected the plans amid concerns over whether the project would deliver value for money, and wider economic benefits for UK supply chain firms.
There were also concerns over the geopolitical implications of relying so heavily on energy from a foreign country following four years of upheaval on the Russia-Ukraine border and in the Middle East.
Lewis told the Guardian last year that Xlinks - which is backed by French energy company TotalEnergies, the UK’s Octopus Energy, and its founder Greg Jackson - hoped to secure a contract which pays between £70 to £80 per megawatt hour (MWh).
This sum would be less than the deal struck with the developers of the Hinkley Point C nuclear power plant, and in line with the expected cost of future offshore wind farms.
But after spending around £100m developing the project Lewis and his backers are expected to try to find a new route to market by setting up power purchase agreements - known as PPAs - directly with major energy buyers.
Back in the UK, the competition regulator is considering whether Boeing’s deal to acquire Spirit AeroSystems could affect competition.
The deal was agreed almost a year ago, with Boeing paying $4.7bn for aerospace supplier Spirit, which makes the body of the 737 Max jet,
The CMA is inviting comments from parties by 15 July. It wants to find out if the deal will result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
Recurring US jobless claims rise to highest since November 2021
America’s jobs market also appears to be slowing!
Recurring applications for US unemployment benefits have risen to the highest level since November 2021, a sign that more Americans are staying out of work for longer.
The number of ‘continuing claims’ for unemployment support rose to 1,974,000 in the week to 14 June, an increase of 37,000 from the previous week’s revised level. This is the highest level for insured unemployment since 6 November, 2021 when it was 2,041,000.
The continuing claims figure is a proxy for the number of people receiving benefits, so this indicates a slowdown in the US jobs market.
The number of new claims for jobless support dropped last week, though, to 236,000, a decrease of 10,000.
US economy shrank more than thought in Q1
Newsflash: The US economy shrank more rapidly than previously estimated in the first quarter of this year, as Donald Trump’s tariff threats widened the US trade gap.
The U.S. economy contracted at a 0.5% annualized rate in Q1, more than the 0.2% rate of decline estimated a month ago, the Bureau for Labor Statistics has reported.
That’s the equivalent of a 0.125% quarter-on-quarter contraction.
The BLS says:
The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending. These movements were partly offset by increases in investment and consumer spending.
BoE governor: signs that wage growth is slowing
Bailey also warned there is “still some way to go” in the process of bringing wage growth down.
Such a reduction is necessary, he argues, to create “a sustainable disinflation” in the UK economy.
Governor Bailey says there are signs that pay growth is slowing, explaining:
Annual private sector regular average weekly earnings (AWE) growth was 5.1% in the three months to April, down from 5.9% in the three months to January, having risen in the second half of last year.
That said, AWE measures are reducing much as we have been expecting, and momentum in the latest data has softened.
The latest data on pay settlements and pay expectations point to a significant decline in wage growth in the year ahead. The latest intelligence from the Bank’s Agents continue to suggest average pay settlements for 2025 of 3.5 to 4.0%, closer to levels consistent with the inflation target.
Andrew Bailey also indicated that the increase in employer NICs rates, which began in April, could be pushing up prices in the shops.
He tells the BCC’s conference that food price inflation, which rose to 4.4% in May, is also on the Bank’s “watch list”, adding:
The prices of meat, chocolate and non-alcoholic drinks have gone up the most, consistent with higher wholesale prices for beef, cocoa beans and coffee. These price increases are to an extent idiosyncratic, with reports of reductions in cattle herds and climate-related disruptions to coffee and cocoa production.
But our Agency intelligence also highlights labour costs and costs related to new packaging regulation as wider factors at play. And, like energy prices, food prices are salient to consumers. We have to make sure that these increases do not feed through to second-round effects either.
BoE governor: rising evidence of slack in the labour market
The governor of the Bank of England has warned UK businesses that Britain’s jobs market may be easing.
In his speech to the BCC’s annual conference, Andrew Bailey says he is hearing “a bit more evidence” that firms are adjusting pay and employment levels following the rise in employer National Insurance Contributions announced in the last budget.
Bailey says:
In recent months, the evidence that slack is opening up has strengthened, especially in the labour market. But there remain uncertainties around the overall balance between supply and demand in the economy as well as the remaining inflation persistence in the system.
The governor cites the latest labour force statistics, which shows subdued employment growth is subdued, and “several indicators of labour demand and hiring intentions have softened”, including a fall of over 100,000 in the number of payrolled employees in May.
Bailey: UK economy likely to grow at a more moderate pace
Bank of England governor Andrew Bailey then warns the British Chambers of Commerce that UK growth is likely to slow to a “more moderate pace” over the coming quarters.
Bailey explains that the 0.7% growth in January-March was stronger than expected, but partly due to one-off factors.
He says:
First, the unexpected strength in the first quarter was driven by strong outcomes for volatile components of GDP in the monthly figures for March. This was possibly a result of front-loading of activity ahead of increases in Stamp Duty Land tax and Vehicle Exercise Duty, and with a temporary boost to trade ahead of the imposition of new tariffs on exports to the United States. Consistent with this, monthly GDP contracted by 0.3% in April.
Second, looking at the expenditure components of GDP, while business investment was strong in the first quarter, businesses tell us that heightened uncertainty and a weak demand outlook are weighing on investment intentions. That could point to slower investment over coming months – although how it pans out remains to be seen, and again I was encouraged by what the Prime Minister had to say earlier.
And, while real household incomes have risen quite strongly, consumption has not followed suit. The household savings rate, in other words, has gone up – and to quite a high level compared to past experience. We have not seen evidence yet to indicate any decline in the saving rate, with the implications that carries for consumption.
Updated
The governor of the Bank of England is warning UK businesses that they are at risk from “elevated global uncertainty”.
Speaking to the BCC’s annual conference in London today, Andrew Bailey says:
There is a lot going on in the world around us. Escalation of the conflict in the Middle East drove up energy prices in the past few weeks but in the last few days they have come back down again. Global trade policies remain unpredictable. These are things that weigh on the global economy.
Bailey then warns that the UK economy’s potential growth has slowed in recent decades – from an estimate of over 2.5% in the period from 1990 to the financial crisis, to just 1.25% since.
Raising the potential growth rate of the economy is one of the most important challenges facing us as a society today, Bailey insists, saying this is the only way to sustainably lift the standard of living.
Bailey also gives Keir Starmer some credit, saying:
Growth also requires strong institutions and public policies to provide a supportive environment. I welcome the Government’s strong commitment to growth and its initiatives to strengthen the UK’s relations to our trade partners.
The Prime Minister’s messages this morning were very positive and welcome news, setting out a course that can unleash further investments that will make a real difference to the UK economy.
Jes Staley fails to overturn ban for misleading watchdog over Epstein links
Newsflash: Jes Staley, the former CEO of Barclays, has failed to overturn a ban on holding senior management roles in the financial services industry.
Staley has lost a legal challenge against the UK regulator, leaving him banned from the City for life for misleading the watchdog over his relationship with the convicted sex offender Jeffrey Epstein.
Here’s the full story:
BCC: The reality of British business is hard, relentless and knackering
The British Chambers of Commerce were also reminded about the financial burden which the Starmer governent has put on businesses.
BCC director general Shevaun Haviland told today’s conference that she hears “frustration, irritation and exasperation” from companies around the country, as the economy continues to struggle.
She added:
The reality of British business is hard, it’s relentless, it’s knackering, it’s being endlessly creative, its seven days a week....and it’s absolutely essential for the UK’s future prosperity.
So, it’s not been helped by the Treasury demanding that business plug the black hole in its finances.
Haviland added that the size and scale of the rise in National Insurance Contributions took businesses by surprise; it has driven down consumer confidence, and contributed to a third of companies either making staff redundant or considering it.
Spain's PM says Trump tariffs threat is 'doubly unfair’
While Keir Starmer has the comfort of his trade deal with the US, other leaders are still scrambling to make progress ahead of Donald Trump’s 9 July deadline.
That’s the date when high tariffs may be imposed, unless countries have reached agreements with the US.
The Spanish prime minister Pedro Sanchez has been dragged into a spat with Trump, after he struck a deal with Nato to avoid raising Spain’s military spending to 5% of GDP, as other members have pledged.
Trump is unhappy about this, declaring last night that he will make Spain “pay twice as much” in new tariffs.
The US president said:
We are negotiating with Spain on a trade deal and we will make them pay twice as much. I’m actually serious about that.
“I like Spain. It’s a great place, and they’re great people, but Spain is the only country, out of all of the countries, that refuses to pay. They want a free ride but I am not going to let that happen.”
Sanchez has hit back, calling Trump’s threat “doubly unfair,” as Spain actually runs a trade deficit with the US.
He told reporters in Brussels:
“Europe and the world have been suffering from a trade war, from tariff measures that we have considered — at least in Spain — from the first minute as unfair and also unilateral.
In the case of Spain, they’re doubly unfair.”
BCC chief calls for 'responsive' fiscal rules
Keir Starmer was followed onto the stage at the QE2 centre by Shevaun Haviland, director general of the British Chambers of Commerce.
As expected, Haviland urged ministers not to hit businesses with further tax rises for businesses in the next budget.
She also added her voice to the debate on Rachel Reeves’s focus on fiscal rule forecasts, insisting that these fiscal rules need to be “responsive”.
Haviland says:
“There must be no further tax increases on business in the autumn budget.
“Business leaders are resilient, but they are also flexible.
“Some of our well thought-out business plans sometimes no longer meet our needs. When the facts change, so do we.
“And the Government needs to take the same approach.
“If the UK economy is subject to any further economic shock, such as a sustained spike in oil prices, then we need fiscal rules that are responsive and protect business investment.”
Earlier this week the Bank of England governor, Andrew Bailey, warned against “over-interpreting” the Office for Budget Responsibility’s forecasts.
If those forecasts were to move against the chancellor, she could feel pressure to raise taxes or cut spending to keep within her fiscal rules (which include having debt falling in five year’s time).
As Bailey pointed out, “There is a danger in over-interpreting a five-year-ahead forecast.”
Financial watchdog considering scrapping protections against repossessions
The City watchdog is considering scrapping rules meant to protect struggling homeowners from having their homes repossessed, as prime minister Kier Starmer pushes regulators to remove red tape for businesses.
The chief executive of the Financial Conduct Authority (FCA), Nikhil Rathi, said the much-lauded mortgage charter, introduced just two years ago, was up for review as the body tries to address criticism for allegedly hampering economic growth.
“The Chancellor sees the regulatory system as having regulated for risk, not growth. So we’re engaging seriously with this feedback, and we continue to make changes at pace,” Rathi told TheCityUK annual conference in London on Thursday morning.
“Take mortgages – I have raised with the prime minister and the Chancellor the mortgage charter. It was designed for a period of sharply rising interest rates. But could it now be retired, with the [Consumer] Duty in place, repossessions lower, the maturing risk mindset?
Do we need this duplicative approach, with the added reporting burdens it brings? So as we at the FCA review the mortgage market fundamentally, what signal does it send about political risk tolerance if the charter is retained?”
Repealing the mortgage charter would mean that homeowners would no longer have access to a safety net that effectively gave them a a 12-month grace period before their home is repossessed.
The charter means signatories have pledged the following:
No home will be repossessed within 12 months of the first missed payment.
Customers can seek advice from their lender without it affecting their credit score.
Customers can switch to an interest-only deal for six months; or extend their mortgage term and revert back within six months if they want. Neither option requires an affordability check or will affect their credit score.
Updated
Here’s a video clip of Keir Starmer telling businesses that their contribution has made a “huge difference”:
'I fully acknowledge that this year, as we've had to fix the foundations of our country and deal with the unprecedented mess that we inherited, we've asked a lot of you'
— Sky News (@SkyNews) June 26, 2025
PM Sir Keir Starmer speaks at the British Chamber of Commerce
Latest: https://t.co/KT8KHV9N1I
📺 Sky 501 pic.twitter.com/v9fq9AxyUi
Plus, here’s the PM talking about the opportunities for businsses from recent trade deals:
'When I'm sitting across the negotiating table with the EU, with the US, with India, whoever it is, trust me, I'm fighting for you'
— Sky News (@SkyNews) June 26, 2025
PM Sir Keir Starmer addresses the British Chamber of Commerce https://t.co/KT8KHV9N1I
📺 Sky 501 pic.twitter.com/3NybyFtJud
Starmer: I'm a 'leaner-in' on AI
Starmer is then asked how the government can help unlock and unleash technology and innnovation in the UK.
He cites the government’s push to reform planning rules to make it quicker to get permission (citing a house in York that took 25 years to get built).
And he also points to artificial intelligence, saying there are two stances:
You can either be forward leaning, and see AI as a huge opportunity that’s going to transform our businesses, large and small.
Or you can lean out and see it as a bit of a risk, be cautious, and put a lot of regulations around it.
I’m a leaner-in, Starmer insists, adding “I think it’s going to be transformative.”
He concludes by calling for “a true partnership” between government and business, saying:
Business should run business. Government should partner business by creating the conditions which makes it easier for businesses to run their businesses.
Starmer defends employment right bill
Q: Do you “fully get” the concerns that businesss have about the employment rights bill?
Keir Starmer says he does, as businesses “don’t hold back” when they raise concerns.
But he adds that many people recognize that a secure, protected workforce is good for business, and drives up productivity.
Most of what is in the employment rights bill is done by good businesses, and is good practice anyway, he argues.
Starmer pledges to keep working with businesses about the bill, but he doesn’t sound close to a u-turn.
He insists that “I firmly believe that a well-respected, well-protected workforce is an essential ingredient” to creating economic growth and productivity.
[Explainer: the bill introduces reforms such as banning zero-hours contracts, ending fire-and-rehire, and introducing “day one” protections from unfair dismissal.
Polling suggests it could substantially increase Labour’s popularity with Reform and former Conservative voters.
Critics, though, say the measures will cost businesses money and push up job losses]
Updated
Starmer: A period of global conflict like we haven't seen in a long time
Keir Starmer then takes questions.
Q: How concerned are you about the economic impact if there is a renewal of violence in the Middle East?
Starmer points out there has been an immediate impact on oil prices (downwards) since the Israel-Iran ceasefire was agreed at the start of the week.
He expains that one reason for his push for clean power, and renewable energy, is to achieve energy security.
Starmer adds that he thinks we are “living in a period of global conflict….the like of which we haven’t seen in a very long time.”
The world is more unstable, he adds.
Starmer: Britain will be global champion for free trade
Starmer ends his speech by telling the British Chambers of Commerce’s annual conference that he is determined that Britain becomes “the global champion for free trade”, and promises to back British business.
Starmer hails 'hat trick' of trade deals
Starmer then toots his own trumpet (or possibly waves his own rattle) over the three trade deals the UK has arranged in recent months, with India, the United States and the EU.
Starmer, a notable football nut, says this is his first hat trick since his children were seven years old, and he could still get the ball past them.
So I’m going to take this particular hat trick.
Starmer says the CEO of carmaker Jaguar Land Rover, Adrian Mardell, made it “crystal clear” that thousands of jobs across the West Midlands had been saved by the US trade deal, which brought down tariffs on UK car exports.
The PM tells UK businesses that these deals are a “transformation” of the UK’s global brand, explaining:
They said it wouldn’t be possible to get a US deal. It wouldn’t be possible to get an EU deal. If you had a US deal, you had to choose between the two. And it certainly wouldn’t be possible to get an India deal.
But, we’ve been able to get them, and that is brilliant for Britain and brilliant for you. And we’ll go forward from here.
Starmer: we’ve got to stop doing that British understatement thing
Keir Starmer then tells UK businesses we need to “stop doing that British understatement thing”.
He says he’s optimistic about creating the best possible conditions for UK businesses to succeed, while conceding that he knows “the trading environment is not easy”.
Starmer insists he’s fighting for businesses, adding:
But together, I do believe we’ve got to stop doing that British understatement thing. And we do it all the time, including me.
Believe you me, this is a great moment to get on the phone to the world and say, take another look at Britain.
Starmer adds that Jensen Huang, the CEO of chipmaking giant Nvidia, told him that “Britain is in a Goldilocks situation on AI”, and ready to take off.
Starmer: We've stabilised the economy
Starmer then tells the BCC conference that the spending review earlier this month is a “clear shift” towards investing in the future of the UK, not simply tackling the promises it inherited.
Starmer says his administration have “wiped the slate clean”, stabilized the economy, and can now move onto building a fairer Britain, with change and renewal.
PM Starmer thanks UK businesses, says we've 'asked a lot'
Sir Keir Starmer, UK prime minister, has begun addressing the BCC’s Global Annual Conference 2025 at the QEII Conference Centre.
Starmer (who was billed as ‘senior cabinet minister’ on the agenda) is back in London from the NATO summit in The Hague earlier this week.
He tells top business chiefs that the British chambers of commerce which exist across the UK play an important role – in creating jobs, wealth, and tax receipts.
Starmer then thanks UK businesses for the financial contribution they’ve made.
Starmer says the government has been addressing an “unprecedented mess”, and has “asked a lot of you” (a nod to the tax rises in last autumn’s budget).
Update: he says:
‘I fully acknowledge that this year, as we’ve had to fix the foundations of our country, [and] deal with the unprecedented mess that we inherited, we’ve asked a lot of you.
I understand that, and I want to acknowledge that.
It has made a huge difference.
Because of it, Starmer says, money has gone into the NHS and brought waiting lists down, invested in the skills of young people, and into building new homes, roads, and infrastructure.
They are all vital for the long-term growth of our country. But none of that would have been possible without your contribution.
[nice words, but businesses didn’t choose to pay higher national insurance contributions, and – as flagged earlier – they are demanding no more tax rises]
Updated
Here’s our news story on Shell doubling down on its denials that it is planning a bid for BP:
Outlook for growth in UK living standards is 'bleak'
A new report this morning warns that Britain faces a “bleak” outlook for living standards growth.
The Resolution Foundation has calculated that typical disposable incomes, after housing costs, are on track to grow by just 1% over the second half of the decade. That would be a rise of just £300.
Lower-income families are on course to fare even worse, with incomes projected to fall by 1 per cent over the second half of the decade.
Pensioners are set to fare best of all, with their incomes forecast to rise by 5% (£1,500) over the period, while families with children are set for no income growth.
A key factor, it seems, is housing. Those with a mortgage are on track to see their incomes fall by 1%, on average, as households whose fixed-rate deals end face higher costs.
Those who own their property outright will avoid this mortgage bombshell, and see their incomes rise 3% on average.
The Resolution Foundation point out that policy changes – such as ending the two-child limit – would lift average incomes.
Adam Corlett, principal economist at the Resolution Foundation, says:
“The living standards story of the decade so far has been bust and boom, with Covid-19 and a cost of living crisis followed by a much-needed recovery last year. But the rest of the decade looks bleak, with typical household incomes set to grow by just 1 per cent over the next five years.
“There are winners and losers within this weak outlook, with pensioner incomes set to grow by a healthy 5 per cent over the rest of the decade, while the poorest half of the population are set to see their incomes fall.
“But a stronger economy and the right policy interventions can brighten this outlook. Maintaining strong wage growth and returning to pre-pandemic employment levels would make middle-income Britain far better off, while ending the two-child limit can lift living standards for poorer families.”
🚨 Latest Living Standards Outlook🚨
— Resolution Foundation (@resfoundation) June 26, 2025
How have incomes have fared over the decade so far, and what may lie ahead given current economic forecasts and the Government’s tax and benefit policies?
And how could targeted policy changes could improve the outlook for the poorest.… pic.twitter.com/verZhvgVw2
FTSE 100 opens slightly higher
There’s a calm feeling to trading in the City this morning, with the market slightly higher.
The FTSE 100 index has risen by 6 points, or 0.07%, in early trading to 8725 points, led by gambling firm Entain (+2.3%) and mining company Anglo American (+1.8%).
BP (+0.1%) and Shell (+0.17%) are both slightly higher.
Derren Nathan, head of equity research at Hargreaves Lansdown, says:
“Shell has denied media speculation of early talks to buy rival BP. Structurally lower oil prices are causing the majors to look at their options, but given Shell’s superior asset quality and balance sheet, any combination may be difficult for its shareholders to stomach.
Cherry picking some flagship assets could be another option, but that’s unlikely to satisfy BP investors. For now, the focus for Shell is likely to remain on buying back its own shares.”
Updated
160 jobs at risk at Hull bioethanol plant
160 jobs are at risk at Associated British Foods’ Vivergo bioethanol plant in Hull, as the company begins consultations with staff at the same time as it holds negotiations with the government over the future of the site.
It has blamed the UK-US trade deal - which would allow US ethanol into the UK tariff-free - for worsening the situation for the business.
ABF - which also owns the Primark clothing chain and the parent of breadmaker Kingsmill – had earlier in the week extended its deadline for deciding the fate of the plant until today, in the hope that the government would come up with a support package.
Bioethanol is a petrol substitute produced from agricultural products.
Vivergo, along with Ensus - which is owned by Germany’s Sudzucker Group and operates a bioethanol plant in Teesside - are behind nearly all of the UK’s bioethanol production capacity. The plants and people working in their supply chains support thousands of jobs.
An ABF spokesperson said it welcomed the government’s decision to launch formal negotiations with the company over the future of Vivergo.
They added:
“Over the coming weeks, we will engage intensively and transparently with officials to try to find a viable path forward.
In parallel, we will today begin consultation with our employees. This process will conclude with a major decision to be made on the plant’s future, which will depend on whether the negotiations deliver a credible route forwards.”
In the past few months, ABF has criticised the way the government applied regulations to imported ethanol and said this as “undermined” business. It said this situation had been “made significantly worse by the UK’s trade deal with the US”.
Under the trade deal with the US, the current 19% tariffs on US ethanol will fall to zero, while the 1.4bn-litre quota represents the size of the UK’s entire current ethanol market.
The removal of the tariff on bioethanol came as the US agreed to cut the 25% tariff rate on British steel aluminium exports as part of the trade deal, negotiations along with a lowering of the tariff on 100,000 British cars to 10%.
ABF said it had been holding “extensive discussions” with the government.
However, it told investors on Thursday that unless the government can “provide both short-term funding of Vivergo’s losses and a longer-term solution” it will close it down once consultations with staff end and it has fulfilled all its contractual obligations, and has not bought wheat since 11 June.
The Hull Vivergo plant would close by 13 September.
Pound highest since January 2022 against dollar
Sterling has hit its highest level in three and a half years against the dollar, following reports that Donald Trump could appoint a new US central bank early.
The dollar has weakened, after the Wall Street Journal reported that Trump was considering announcing his pick to succeed Jerome Powell – whose term expires next May – earlier than expected.
Trump has been increasingly exasperated by Powell, as the Federal Reserve resisted his calls for lower interest rates. Announcing Powell’s successor early would put the focus on where the next Fed chief thought interest rates should be set.
The WSJ reported:
In recent weeks, the president has toyed with the idea of selecting and announcing Powell’s replacement by September or October, according to people familiar with the matter. One of these people said the president’s ire toward Powell could prompt an even-earlier announcement sometime this summer.
Trump is considering former Fed governor Kevin Warsh and National Economic Council director Kevin Hassett, according to people familiar with the matter. Treasury Secretary Scott Bessent is being pitched to Trump by allies of both men as a potential candidate, some of these people said. Other contenders include former World Bank President David Malpass and Fed governor Christopher Waller.
The dollar has dropped by 0.2% against a basket of currencies this morning, pushing the pound up to $1.37 for the first time since January 2022.
Britain has focused too much on trying to sign major trade deals with other countries, ministers have said, as they lay out the case for a big shift in post-Brexit trade policy.
The change forms the heart of the government’s new trade strategy, which ministers are publishing today.
The strategy marks a turn away from the days of pursuing wide-ranging free trade agreements with countries such as the US and India, which were sold as one of the biggest prizes of Brexit.
Instead, ministers say they now want to focus on more modest agreements such as deals to recognise foreign professional qualifications, which can help the UK’s services sector in particular… More here:
Shell says it has ‘no intention’ of making offer for BP
Energy giant Shell has declared it has “no intention” of making an offer for rival BP, after takeover speculation swept the City last night.
In a statement to the City, Shell insists it has not approached BP, and that no talks have taken place.
It says:
In response to recent media speculation Shell wishes to clarify that it has not been actively considering making an offer for BP and confirms it has not made an approach to, and no talks have taken place with, BP with regards to a possible offer.
Under the takeover code, this means Shell can’t bid for BP for six months, unless it has the agreement of BP’s board, or if another company bids for BP, or if BP asks for a code waiver, or if there is a material change of circumstances.
Shell explains:
This is a statement to which Rule 2.8 of the Code applies and accordingly Shell confirms it has no intention of making an offer for BP. As a result Shell will be bound by the restrictions set out in Rule 2.8 of the Code.
Last night, the Wall Street Journal reported that “early-stage talks” were taking place between Shell and BP to agree a historic £60bn takeover to create one of the world’s largest oil and gas companies.
BP has been the subject of takeover speculation as investors have been unconvinced by its turnaround plan, pushing its value down over the last year.
Updated
Introduction: UK businesses plead for no more tax rises
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK businesses are urging the government to resist any temptation to impose further taxes on them, warning it would undermine Keir Starmer and Rachel Reeves’s mission to grow the economy.
Business leaders are gathering at the QEII Conference Centre in central London today, for the British Chambers of Commerce’s annual conference, where memories of last autumn’s budget tax hikes are still fresh.
Shevaun Haviland, the BCC’s director general, will declare that if the government is serious about growth, then it cannot tax business any further.
She’ll warn that businesses were taken by surprise by the size and scale of the rise in National Insurance Contributions in the last budget.
Haviland is expected to say:
“We were unprepared for the huge burden placed upon us, and it led many of us to rethink our growth plans. As a result, our business confidence measures have fallen to their lowest levels since 2022.
For the government to achieve its Growth Mission, people need to stay in work and businesses need to invest. As always, businesses soak it up and move forward, but they feel like they are wading through treacle.”
New research released by the BCC shows that the tax hike has hit hiring. It found that:
One third of firms (32%) said they have either made staff redundant or are planning to as a direct result of the NICs increase.
13% say they have already made staff redundant and 19% say they are actively considering redundancies
Business chiefs will also hear from Andrew Bailey, the governor of the Bank of England, and Kemi Badenoch, the Conservative Party leader.
The BCC’s intervention comes as the government struggles to keep within its fiscal rules, with forecasts it may need to raise taxes in the autumn.
Ministers also face a significant rebellion the benefit cuts within its welfare bill. Abandoning the bill would blow a £5bn hole in Rachel Reeves’ budget.
The government is also trying to woo businesses with a flurry of strategic plans. Earlier this week it unveiled its industrial strategy, and today it is presenting a trade strategy – which it says will protect vital UK industries and help businesses export.
The agenda
9.15am BST: “Senior cabinet minister” addresses BCC’s annual conference.
9.45am BST: Shevaun Haviland, director general of the BCC, addresses its conference
12pm BST: Andrew Bailey, governor of the Bank of England, addresses BCC annual conference
1.30pm BST: Latest estimate of US GDP for Q1 2025
3.25pm Kemi Badenoch MP, Leader Of The Opposition, addresses BCC annual conference
