Chancellor is keen to mollify wealthy global investors and attract foreign investment into the UK

Starmer should secure deal as soon as possible to exempt UK steel from US levies, says Community union

Rolling coverage of the latest economic and financial news

Concerns raised that section 899 could backfire and also undermine dollar's safe haven statusForeign investment into the US could be threatened by Donald Trump's new revenge" taxes, analysts have warned.A provision within the president's One Big Beautiful Bill Act will allow the US to apply higher taxes on foreign individuals, businesses and investors connected to jurisdictions that impose unfair foreign taxes" on US individuals and companies. Continue reading...

Healthy scepticism is needed because flaw is that large language models remain prone to casually making things upFrom helping consultants diagnose cancer, to aiding teachers in drawing up lesson plans - and flooding social media with derivative slop - generative artificial intelligence is being adopted across the economy at breakneck speed.Yet a growing number of voices are starting to ask how much of an asset the technology can be to the UK's sluggish economy. Not least because there is no escaping a persistent flaw: large language models (LLMs) remain prone to casually making things up. Continue reading...

Downgrades by Treasury watchdog could force chancellor to raise taxes or cut spending at budget to meet fiscal rulesRachel Reeves is braced for revised forecasts by the Office for Budget Responsibility (OBR) to blow a 20bn hole in her tax and spending plans before the autumn budget.Even without changing the totals the chancellor set out in her spending review on Wednesday, a weaker forecast from the the Treasury's independent watchdog could force her to find significantly more money at the budget to meet her non-negotiable" fiscal rules. Continue reading...

Labour has helped get ball rolling by lifting the bankers' bonus cap but we have seen before how this play endsAs the old ways of turning a profit become more difficult - from assembling cars to selling soap powder - politicians of all stripes want the City to inject some dynamism into the economy.From Labour to Reform, the siren call of London's financial district is strong. If only, they ask, the wheels of the banking industry could be cranked to spin faster, surely much more money could be generated and we would all be rich. Continue reading...

As he steps down after 14 years, Paul Johnson says politicians and voters refuse to accept economic tradeoffsIn my lifetime, who have been the big chancellors?" says Paul Johnson, as he prepares to hang up his spreadsheets as the director of the Institute for Fiscal Studies. You've had Healey, Lawson, Clarke, Brown. Arguably Osborne. We haven't had one since then. They're the long-lasting ones."The fact that Rachel Reeves is not on that list will elicit no surprise in No 11, where Johnson is seen as a nitpicking critic, naive about the constraints of politics. Continue reading...

Exclusive: As the shortest day of the year draws near, government study shows how earlier sunsets curb economic activity and public transport trips

Rachel Reeves is increasing overall budgets after deep Tory cuts, but some departments face bigger spending cuts than othersRachel Reeves usually avoids any mention of the word austerity" in connection with her fiscal policies, but on Wednesday, she decided to tackle the argument head on.In this spending review, total departmental budgets will grow by 2.3% a year in real terms," she told MPs as she announced the next stage of her spending review. Continue reading...

Blistering analysis by outgoing chief concludes chancellor likely to end up gnat's whisker' away from tax risesYou can only conclude that Paul Johnson is demob-happy. The director of the Institute for Fiscal Studies is off to run an Oxford college in a couple of weeks and seems determined to go out with a bang. Normally, the scourge of chancellors and all things Treasury is quite measured in what he says. Borderline wonkish in his forensic analysis of financial statements. Choosing his words carefully as he peels back the political spin to deliver his verdict on the true state of the public finances. But for his last outing we got to see the real Paul. Paul Unplugged.The IFS press conference has become something of a tradition. The place where budgets and spending reviews come to die the day after they were delivered. Where the numbers aren't given a chance to lie. Johnson is nothing if not equal opportunities: no chancellor of either party is given a free pass. If there are discrepancies to be found, the IFS can be sure to find them. To be awarded a grade B from Paul is the sort of result a chancellor can only dream about. Continue reading...

Investors turn away from weakening US economy and erratic policy after Trump repeats tariff threatsThe dollar sank to its lowest level in more than three years on Thursday and the FTSE 100 closed at a record high as Donald Trump's latest trade threats and the weakening economy appeared to bring forward interest rate cuts by the Federal Reserve.Foreign exchange traders sold the dollar in favour of the yen and the euro, which both climbed by about 1% against the US currency to leave it almost 10% down on its value against a basket of currencies since the beginning of the year. Continue reading...

UK economy shrank by 0.3% in April, biggest fall since October 2023, as trade with the US slumped.. but FTSE 100 ends at new record close

Institute for Fiscal Studies says Treasury figures for projected efficiency savings are not credible

Worse than forecast April GDP data shows challenge facing Rachel Reeves to kickstart growth to fund spending review

Economics editor Heather Stewart explores the winners and losers of the government's spending reviewThe last few weeks have proved difficult for Rachel Reeves. In public, the news has been dominated by Labour's U-turn on the winter fuel allowance. In private, the Treasury has been caught up in wrangle after wrangle with ministers, all negotiating what their departments would receive in the spending review.Reeves' speech to parliament on Wednesday announcing the review was a chance to tell a more positive story - particularly for a government accused of lacking direction and ambition. Continue reading...

NPCC's Gavin Stephens says settlement in spending review will cover little more than inflationary pay rises

Rachel Reeves has announced big boosts to capital spending, but is squeezing the budgets of most government departments. How happy will ministers be?

Rolling coverage of the latest economic and financial news

Agreement struck in London will increase supply of rare earth minerals and magnets for US car industry Business live - latest updatesDonald Trump has endorsed the US-China trade deal struck in London that will ramp up supplies of rare earth minerals and magnets needed for the automotive industry, saying it will take total tariffs on Beijing to 55%.Acknowledging that his Chinese counterpart, Xi Jinping, still needed to give his final approval on the terms agreed late on Tuesday night at Lancaster House, the US president disclosed the pact would also facilitate Chinese students' access to US colleges. Continue reading...

Rachel Reeves said the new Border Security Command will receive up to 280m more a year by the end of the spending review period. She also promised that all spending on hotels for asylum seekers waiting for their cases to be heard will stop by the end of this parliament

The chancellor announced spending on health, housing, defence, and infrastructure. But will it be felt by ordinary voters? Continue reading...

Annualized inflation hit 2.4% in May, up from 2.3% in April, as Trump pushes ahead with controversial trade plansUS prices continued to rise in May as companies and consumers grappled with Donald Trump's tariffs. The president has repeatedly pledged to lower costs across the economy.Annualized inflation ticked higher, to 2.4%, in May, up from 2.3% in April. On a month-to-month basis, the consumer price index rose by 0.1%, down from 0.2% the previous month. Continue reading...

Rachel Reeves has delivered her spending update - here are the main pointsThe chancellor talks up the government's economic record and the decisions made at the budget. She makes the obligatory mention of the Conservatives' 14 years of mismanagement and decline" and the supposed 22bn fiscal hole. We are renewing Britain," she says - while accepting that many Britons have yet to feel it". This spending review will change it, she says. Continue reading...

Households seeking safety net in time of global volatility, according to Bank of England's chief cashierBritons are hoarding physical cash amid extreme economic uncertainty and to provide a safety net for possible banking system outages such as the recent one in Spain, according to the Bank of England's chief cashier.Victoria Cleland said on Tuesday that UK households were building a cash contingency pot, much as they did during the Covid and cost of living crises. Continue reading...

Rolling coverage of the latest economic and financial news, including latest UK labour market reportElsewhere in UK retail, Mark Ashley's Frasers Group has confirmed that it is in the race to buy Revolution Beauty and is considering a cash-only offer for the struggling beauty firm, which put itself up for sale last month.Revolution Beauty said on Monday that Frasers is one of a number of parties conducting due diligence as part of the formal sale process announced on 21 May". Frasers put out a statement today, confirming its participation in the sale process, but adding that there can be no certainty that an offer will be made. Continue reading...

Washington-based lender cuts its forecast for world GDP growth, blaming Donald Trump tariffs

Bank of England governor has said he sees pay as crucial in determining pace of rate reductions

US hoping to get handshake from China over access to rare earths, at meeting in London todayThe presence of US commerce secretary Howard Lutnick at today's talks in London is seen as directly related to China's export ban on rare earth minerals and permanent magnets, critical in aerospace, military and semi-conductor companies worldwide, my colleague Lisa O'Carroll reports.After the call between Donald Trump and Xi Jinping last week, their first since Trump's inauguration in January, the US said Xi had agreed to resume shipments of rare earths to the US, breaking the logjam needed for talks to resume. Continue reading...

Pippa Crerar and Kiran Stacey discuss Rachel Reeves's U-turn on winter fuel payments: will it be enough to undo the damage done by the policy? Plus, they look ahead to this week's spending review as negotiations with ministers go down to the wire. And after its chair dramatically quit the party only to return 48 hours later, what's going on with Reform UK? Continue reading...

Exclusive: Andy Haldane says Labour sloganeering' will not empower regions where Reform is making headwayNigel Farage is the closest to a tribune for the working class", the former Bank of England chief economist has said, in a stark warning for Keir Starmer's Labour party.Andy Haldane said the surge in support for Reform UK in the opinion polls suggested there had been something of a moral rupture" between the government and many voters, which he said should spur Starmer to take action with a radical reset" of its growth plans. Continue reading...

Labour has so far struggled to explain its purpose and the need to do so will be all the more pressing if it raises taxes againRachel Reeves hopes to use Wednesday's spending review to tell a long-overdue story about Labour's purpose in power that looks beyond fixing the Tories' fiscal mess.After the winter fuel U-turn and Labour's battering at the hands of Reform in last month's local elections, the chancellor's team are well aware that voters and backbench MPs need reasons to believe. Continue reading...

Chancellor had anticipated surpluses from final salary schemes would boost investment in UK economyPlans to invest 160bn of surplus funds from final salary pension schemes to boost the UK economy over the next 10 years have been dealt a blow by a Whitehall assessment that found there was likely to be little more than 11bn available to spend.In a knock to Rachel Reeves's growth agenda, a report by civil servants at the Department for Work and Pensions (DWP) found that the expected surpluses in occupational schemes would be used by businesses to offload their pension liabilities to insurance companies. Continue reading...

Economists are concerned, politicians are angry - but the national debt keeps growing, no matter who's in chargeIn this febrile political era, few issues command stronger bipartisan support than the need for fiscal responsibility. Barack Obama and Donald Trump committed to curtail the US national debt on their respective roads to the White House.And yet, no matter the party, Americans have been able to count on one thing above most: the national debt will keep climbing. Continue reading...

Independent Commission on Neighbourhoods calls for spending on mission critical' local regeneration schemesRed wall" Labour MPs are urging Rachel Reeves to fund grassroots social infrastructure" such as parks, community centres and libraries, as well as high-profile transport projects, to ensure voters in left-behind areas can benefit from growth.The Independent Commission on Neighbourhoods (Icon), chaired by the Labour peer Hilary Armstrong and supported by a string of backbenchers, has identified 613 mission critical" local areas. Continue reading...

Optimism is growing in Brussels, but high-risk strategy has only weeks to play out before pause in tariff threat endsIn Brussels' corridors of power, quiet optimism is growing that the EU's hardball strategy to secure a US trade deal is working. While Britain quickly moved to try to cushion the impact of Donald Trump's tariffs with a deal agreed last month - and US-Chinese relations are a tit-for-tat situation - the EU has taken a different stance. We are positioning ourselves between rollover UK' and retaliatory China'," said a Brussels source.The stakes are not just the 706bn in transatlantic trade between the EU and US but the fallout from what diplomats and businesses say is a dangerous assault on the global rules-based system that governs western democracy. Continue reading...

May's jobs report was dragged down by loss of 22,000 federal workers' jobs as Doge cut positionsThe US economy added 139,000 jobs in May, a slowdown compared with recent months as American businesses cope with uncertainty around Donald Trump's continuing trade war.After signs of a strong labor market in April - which was largely seen as resiliency against teetering trade policy from the White House - May saw a drop in new jobs added to the labor market, according to new data from the Bureau of Labor Statistics. The unemployment rate remained steady at 4.2%, unchanged from last month. Continue reading...

For decades, the savings from declining defence spending were effectively ploughed into the health service. Those peace dividend' days are gone

A slow and gentle lifestyle is possible; it's just not sold to us, so it is harder to listen out for

You're not about to see the back of me," insists Lagarde, sporting a necklace reading in charge', following claims she discussed leaving ECB early to run World Economic Forum

European Central Bank makes eighth quarter-point cut in a year as bloc reels from impact of Trump's trade wars

Housing associations want chancellor to class social housing as critical infrastructure to allow for extra spendingHousing bosses representing 1.5m social homes across England will press Rachel Reeves to reclassify affordable housing as critical infrastructure spending, amid a battle between the chancellor and Angela Rayner.There is deep dissatisfaction with the level of funding for social homes in the spending review due next week. Rayner, the housing secretary, is one of the last remaining holdouts in negotiations with the Treasury over departmental spending settlements. Continue reading...

Young voters are worried about their financial future and rising costs, advocacy organisation NextGen America saysYoung people in the US are looking for Democrats to embrace economic populism and authentic candidates willing to fight for them, says the new leader of a group dedicated to youth voter mobilisation.Victoria Yang is the interim president and executive director of NextGen America, an organisation that engages young people through voter education and registration. She succeeds Cristina Tzintzun Ramirez, who held the post for four years. Continue reading...

Rolling coverage of the latest economic and financial news

Rolling coverage of the latest economic and financial news, as US factory output falls again in May

Government argues investment creates skilled jobs, but others say spending elsewhere would have more impact

Nigel Farage claimed last week to speak for the working class but he is still firmly wedded to the rightwing playbookFor a politician who has done more than most to shape Britain's current challenges, nothing seems to stick to Nigel Farage. Not the chaos of the post-Brexit referendum years; or the contradiction of his closed-border English nationalism combined with a fondness for courting nomad capitalists from Malaysia to Mar-a-Lago.This is, of course, because the Reform UK leader is the agitator-in-chief. He has prodded successive prime ministers into action, but has not been in the driving seat himself. Things though are changing. Continue reading...

Confiscating the funds would shock Putin, help Ukraine, and take advantage of disillusionment in the US economyUkraine needs more than long-range missiles and fibre-optic drones in its fight with Russia. What it needs is more money, and lots of it.In particular, the war-torn nation should be handed the 300bn (250bn) of frozen Russian assets stored mostly in accounts hosted by the Euroclear trading system. Continue reading...

It is not the cryptocurrencies message that is raising eyebrows, it is Reform's broader tax and spending policiesThe message Zia Yusuf wanted to send was clear. With a backdrop of the City of London behind him, from the 34th floor of the Shard, the Reform UK chair laid out an economic policy designed to show his party meant business.In a briefing over a full English breakfast for some of the nation's journalists on Friday morning, Yusuf reiterated an announcement the Reform leader, Nigel Farage, had made overnight from another hotel 5,000 miles away in Las Vegas: the party would now accept donations in bitcoin, and if elected to power would make tax and regulatory changes to bolster Britain's adoption of cryptocurrency. Continue reading...

Time and time again over the past four months, reality has failed to match Trump's rhetoricTariffs are easy," Donald Trump claimed in March. For his administration, and the world, they have proven anything but. Now an obscure New York court has blocked his signature trade policy, setting up a battle that looks sure to end up in the supreme court.The plan was simple. For decades, Trump has made the case for tariffs. Now, in his second term, he would dramatically hike them on the world; raise trillions of dollars for the federal government; cut taxes for Americans; and lure manufacturers to the country's industrial heartlands, creating millions of jobs. Continue reading...