Closing post
Time to wrap up..
The UK bond market has taken Andy Burnham’s vision for Britain in its stride, although investors would like to see more details of the Makerfield MP’s plans.
UK borrowing costs have dipped since Burnham pledged to oversee a devolution of power and resources across the UK should be succeed Keir Starmer as prime minister.
Burnham also pledged the biggest council housebuilding programme since the postwar period, while sticking within “the discipline of our current fiscal rules.”
The yield, or interest rate, on 30-year UK bonds is now down 2 basis points (0.02 of a percentage point), having been up around 1bp before the speech. Falling bond yields can indicate investors are more confident to hold a country’s debt, although this is a small move.
The pound has strengthened through the day too – now up over a third of a cent against the US dollar at $1.3240.
Alex Everett, investment director for rates management at Aberdeen Investments said it was:
“An assured and optimistic speech from Burnham, albeit light on detail.
Most importantly for gilt investors, he underpinned his announcements with a renewed commitment to fiscal responsibility. This was supported by an ambition to reduce the UK’s welfare bill – a politically difficult topic which signal some willingness to take challenging decisions.
While the speech was growth-focused, these offsets should provide the gilt market with near-term reassurance that a Burnham government would be mindful of fiscal constraints as well as political priorities.
In other news…
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UK mortgage approvals have hit their lowest level in two and a half years
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The chief economist of the Bank of England has warned against complacency in the fight against inflation…
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…and suggested Brexit has added to price pressures in the economy
Andy Burnham’s devolution agenda could help the UK’s AI strategy, argues Professor Richard Whittle, Professor of AI and Public Policy at the University of Salford:
Andy Burnham’s case is, at its core, an argument about where good decisions get made, and his speech sets out a vision of bottom-up, place-based growth that rejects the old assumption that prosperity generated in one corner of the country will eventually reach the rest. He says nothing about artificial intelligence, yet his framework is arguably the one that Britain’s approach to AI has been missing.
Lucy Powell, Deputy Leader of the Labour Party, has noted that this new wave of devolution should place greater emphasis on preparing young people for the jobs of the future.
UK AI policy has so far been highly centralised, organised around a small number of laboratories, investors and Whitehall units, and built on an implicit trickle-down theory: that capability concentrated in the centre will naturally diffuse to regions, sectors and workers over time. This reflects the broad ambitions of the AI Opportunities Action Plan, but regions each have distinct labour markets, industries and skills profiles. A single national strategy cannot fully account for these differences. Even within Greater Manchester there are multiple AI economies, making top-down policy difficult to design.
And as it happens, Manchester has come top in the annual SAS AI Cities 2026 Index, for the third year running, thanks to a combination of educational strength, business activity, and AI employment.
Chris Hayward, policy chairman at the City of London Corporation, has defended the role which the capital plays – after Andy Burnham pledged to shift some power to the rest of the country:
“Andy Burnham is right to recognise London as the world’s greatest city and a vital driver of national prosperity. The capital’s success underpins growth, investment and opportunity across the whole UK, driven by our thriving financial and professional services sector. This sector supports two-thirds of financial and professional services jobs outside London and around 12% of UK tax receipts which pay for vital public services.
“We support giving local leaders the tools to drive growth, improve productivity, and deliver better outcomes for their businesses and communities across the country. We look forward to seeing the details in due course.”
Andy Burnham’s speech wasn’t enough to lift the London stock market higher, though.
The FTSE 100 index is down 23 points, or -0.22% in afternoon trading at 10,484 points, away from the two-month high seen last week.
Housebuilders are among the fallers, along with mining companies.
The picture is brighter on Wall Street, though, where the Dow Jones industrial average is up 183 points, or 0.35%, at 52,059 points.
Panmure Liberum: Burnham goes all MAGA
Andy Burnham presented himself as a “Make Albion Great Again (MAGA)” candidate today, suggests Simon French of UK investment bank Panmure Liberum.
French also points out that the speech was short of the kind of detail that the City wants to hear:
He will hate the comparison, but Andy Burnham came across as the UK’s answer to Donald Trump in his first keynote economics speech since returning to Parliament. The speech itself could be summarised as a pitch to Make Albion Great Again (MAGA).
The UK’s PM-elect provided an overview of his likely economic agenda. It was heavy on regional devolution, place-based policymaking, and national-interest industrial policy. It was also light on detail regarding the policies (and political partners) that would underpin that vision.
It would be trite, but also true, to point out that reverse engineering some of these big ideas - requiring huge institutional upheaval - onto a 2024 political mandate that was deliberately vague on such issues comes with plenty of legitimacy questions, particularly - in time - from within his own party. Whether his pitch for bipartisanship and a diminished No.10 whipping operation survives contact with political realities remains to be seen.
Andy Burnham won plenty of applause in Manchester today as he outlined his vision for Britain; City investors, though, will want to hear more detail.
As Chris Beauchamp, chief market analyst at IG, puts it:
“Andy Burnham has ridden to power on a wave of Labour euphoria on the basis that he can provide the drive that has been lacking from Britains’s government for at least a year. But his speech is long on aspiration and short on detail - how will he achieve the things he outlines?
Kier Starmer and his team had begun to realise that the problem wasn’t identifying the failings, it was implementing the solutions. Now Burnham needs to show that he can treat the problems of Britain’s current malaise, and without simply throwing money at the problem.”
Investors still want to know who will be chancellor in a Burnham administration, how his plans will be funded and whether borrowing will rise, says Lale Akoner, global market strategist for trading platform eToro.
Andy Burnham avoided spooking gilt markets in his speech, but he did not quite do enough to put them fully at ease. His agenda points to a more active role for government in regional growth, housing, industry and skills, which could support the economy if delivered well. The key reassurance was his focus on fiscal discipline, limiting fears of a sharp shift towards looser borrowing.
“For now, the short-term impact on gilts looks contained. Lower energy prices and reduced expectations for Bank of England rate hikes should continue to support the market, although the recent rally is likely to slow from here. Sticky pricing for a possible BoE hike may also limit further falls in short-dated yields.
“The bigger risk is fiscal policy. Investors still need clarity on who will run the Treasury, how Burnham’s plans will be funded and whether borrowing will rise. Until then, longer-dated yields may drift lower only gradually, as markets reassess the initial optimism and demand more compensation for fiscal risk.”
Sticking to Rachel Reeves’s fiscal rules shouldn’t hold back Andy Burnham’s ambitions, argues Harry Quilter-Pinner, executive director at IPPR, saying:
“Labour is also right to reassure the markets by sticking to the fiscal rules. But fiscal discipline should not be confused with a lack of ambition. The government can still pursue a radical agenda by increasing investment, reforming the state and devolving real power over areas like skills, transport and local finances.
“The real test now is delivery. This is an opportunity to reshape how Britain is governed and how the economy works, but it will require bold action from day one to turn today’s ambition into lasting change.”
BRC: Burnham is right, business rates reform is needed
During his speech, Andy Burnham said he wanted to reform business rates to help pubs and high street businesses, explaining:
To reinforce that, we will reform business rates to support pubs and high street businesses – businesses that bring social benefits to communities.
Helen Dickinson, chief executive at the British Retail Consortium, has welcomed this commitment, saying retailers can help strengthen the economy:
“Retailers will be heartened to hear Andy Burnham’s ambition to create ‘good growth in every postcode’. Retail sits at the heart of our local economies, providing jobs, investment, and essential goods and services for local people.
“Retailers want to be at the forefront of ‘Britain’s renaissance’, helping revitalise our towns, cities, and high streets. Andy Burnham is right to recognise that business rates reform is essential to unlocking that investment. The current system remains broken, holding back growth, jobs and regeneration in communities across the country.
“If government can buy into retail, putting the right reforms in place, retailers will help deliver jobs, support families with the cost of living, and create the thriving high streets that sit at the heart of Andy Burnham’s vision.”
Even the private equity industry is giving Andy Burnham’s speech a warm welcome.
UK Private Capital chief executive Michael Moore said:
“We welcome Mr Burnham’s focus on public and private investment working hand in hand to make the UK an innovation nation. Private capital has a vital role to play in every nation and region of the UK, backing businesses, unlocking investment and helping local economies realise their full potential.
“By bringing decision-making closer to the communities it affects, and by strengthening partnerships between local leaders, businesses and private capital, investors such as our members can help more scale-up businesses and innovative spin-outs across the country grow and commercialise their ideas.
“Such focus on place-based collaboration and investment as a baseline for the UK economy presents a serious new opportunity for building a more dynamic and growing economy.”
UK Private Capital is the industry body for the private equity (PE), venture capital (VC) and private credit ecosystem in the UK.
Investor: assured and optimistic speech from Burnham, but light on detail.
Andy Burnham has pulled off the trick of pleasing both progressive economists and City investors.
This morning’s speech from the frontrunner to become the next UK prime minister has been given a positive reaction from think thank The New Economics Foundation, and from asset manager Aberdeen Investments.
Alex Everett, investment director for rates management at Aberdeen Investments, was encouraged that Burnham said his plans would be supported by the “current fiscal rules”, saying:
“An assured and optimistic speech from Burnham, albeit light on detail.
Most importantly for gilt investors, he underpinned his announcements with a renewed commitment to fiscal responsibility. This was supported by an ambition to reduce the UK’s welfare bill – a politically difficult topic which signal some willingness to take challenging decisions. While the speech was growth-focused, these offsets should provide the gilt market with near-term reassurance that a Burnham government would be mindful of fiscal constraints as well as political priorities.
With such a focus on investment and improvement spending, the re-affirmation of prudence was welcome at this relatively early stage.”
As flagged at 12.13pm, UK government borrowing costs have fallen slightly – a sign the speech went down well with the markets.
Danny Sriskandarajah, chief executive at the New Economics Foundation (NEF), hopes that Burnham can deliver his vision of an economic reset, saying:
“This morning’s speech sets out a hopeful vision for people-powered success. Three things stood out as particularly welcome: calling time on trickle-down economics, upping the need for public intervention when markets fail and shifting power to people and communities.
At a time of rising inequality it is good to hear Andy Burnham go beyond aggregate growth being a defining mission and instead focus on good quality, equitable growth. His ambition to set out a 10 year plan for bringing essential services like water, housing, energy and transport back under public control is much needed. And the promise to modernise an insufficiently accountable state and nurture a more collaborative politics will be welcome at a time of falling trust and growing division. None of this will be easy and the proof will be in the policy, but it has the makings of the economic and political reset the UK needs.”
Updated
Andy Burnham also hasn’t rocked the pound.
Sterling rose slightly during his speech, and is now up almost a third of a cent against the US dollar to $1.323.
Bond market unrufflled by Burnham speech
UK borrowing costs have dipped very slightly, as prime-minister-in-waiting Andy Burnham lays out his vision for the country.
Having been slightly higher before Burnham began speaking, UK gilt yields have now dipped slightly.
Burnham is promising to rebalance power within the country, with a vision for “good growth” in every postcode, and a rejection of the trickle-down economic model.
He’s laying out plans for redistributing power across the UK.
And, defining his “Manchesterism” vision, Burnham says:
It comes from running sound finances, as we have done here in Greater Manchester, which in turn gives businesses the stability and the confidence to invest, increasing their productivity and adoption of new technology.
It comes from placing our universities at the heart of local economies, as all the mayors do, and bringing the innovation-led approach through start-ups and scale-ups.
It comes from committing to decent infrastructure in all parts of the UK and getting national investors to back the aspirations set by regions.
It comes from giving people the security of a good home and good employment, so that they can be as productive as possible, from good mobility and an ability to afford the basics.
And it comes from not leaving everything to the market, but public intervention where necessary, to set higher ambitions for towns, as we did in Stockport, and kickstart the process of change.
This is Manchesterism.
Crucially for the City of London, Burnham also says his plans are “backed by the stability that comes from sound public finances and the discipline of our current fiscal rules.”
That will reassure worries that he might plan a splurge of debt-fuelled spending.
So, 10-year bond yields are now flat, having been up 1.4 basis points (0.014 of a percentage point) before the speech. 30-year bond yields are very slightly lower, having been up almost 1bp.
Bond yields, which measure the rate of return on the debt, fall when the price of the debt rises.
Those are very small moves – but they are in the ‘right direction’ if Burnham is trying to keep the bond markets on side.
Updated
Shares in Comcast have jumped by 20% in pre-market trading in New York after it announced plans to split itself into two companies.
Comcast to spin off NBCUniversal and Sky
Media news: Comcast Corporation has announced plans to split itself in two.
Under the plan, Comcast will spin off its NBCUniversal media and entertainment company, which will also include its theme parks division, Universal film and television studios, NBC and Telemundo networks, Peacock, and Bravo, and its European media business, Sky.
That will leave Comcast as a network operator, running broadband, wireless and entertainment platforms.
Brian L. Roberts, chairman and co-chief executive officer of Comcast Corporation, says:
“This is a very exciting day for our company. The transaction we are announcing will unlock a more entrepreneurial management approach and open up a multitude of new opportunities for each business. I very much look forward to helping guide our collective growth for this next chapter.”
Brexit has made inflation spirals more likely, BoE's Pill warns
Huw Pill, who we heard from first thing this morning warning about inflation complacency, has committed more news during a panel discussion hosted by the central bank of Uzbekistan.
The Bank of England’s chief economist warned that Britain’s efforts to control inflation are being made harder by the country’s exit from the European Union.
Pill said Monday that structural changes to the economy since Brexit have made the UK more prone to “self-sustaining momentum” in price pressures, Bloomberg reports.
Worryingly, there’s also been a steep decline in job roles for graduates in the UK, according to research.
Jobs site Adzuna said graduate vacancies fell by more than 40% in May compared to a year ago, down to around 8,400. That’s the steepest decline on record.
Key event
“UK mortgage approvals - eek they’re weak!”
So says Anthony Codling, managing director of RBC Capital Markets, after mortgage approvals for house purchase fell to 56,205 in May.
He adds:
The sharp monthly decline is likely to negatively impact the UK housebuilders who had been enjoying a steady improvement through the first quarter of the year.
April’s print of 66,034 was the strongest since late 2024, making May’s fall all the more jarring. Year-to-date the picture remains broadly supportive: the January-to-May average of 61,972 is holding up, but momentum has stalled.
Chart: how UK mortgage approvals fell in May
The total value of new mortgage approvals also fell in May.
Net borrowing of mortgage debt by individuals decreased to £2.9bn in May, down from £4.4bn in April, the Bank of England reports.
That’s the lowest since April 2025.
Damien Burke, head of regulatory practice at banking and credit advisory consultancy Broadstone, says:
“The sharp slowdown in mortgage borrowing and approvals suggests the surge in activity earlier this year has now faded, with buyers and homeowners taking a more cautious approach. While borrowing costs have eased from their recent highs, affordability remains stretched and many prospective buyers continue to contend with elevated house prices and wider cost-of-living pressures.
“For lenders, the changing outlook highlights the importance of integrating forward-looking affordability assessments that better reflect real borrower behaviour and lifetime income patterns. As caution rises, these more personalised models can help to sustain housing demand over the coming months.
Updated
UK mortgage approvals hit two and a half-year low
UK mortgage approvals have fallen to their lowest level in two and a half years, as the recent jump in borrowing costs hit demand for home purchases.
The Bank of England has reported that lenders approved 56,205 mortgages in May, down from 66,034 in April, and also below the average of 63,300 over the previous six months.
That’s the lowest total for mortgage approvals for any month since December 2023.
Approvals for remortgaging also decreased, to 33,300 in May, from 51,200 in April.
Potential homebuyers were hit by a rise in mortgage costs after the Iran war began, as the jump in the oil price pushed up bond yields as investors anticipated a surge in inflation.
Simon Gammon, managing partner at Knight Frank Finance, said:
“The uncertain economic outlook and mounting pressure on household finances caused a sizeable drop in mortgage lending to homebuyers during May. Leading fixed mortgage rates sat just above 4.5% during the month, up from around 3.5% before the conflict in the Middle East began.
“The property market remained fairly resilient through March and April, with mortgage lending running in line with long-run averages, but May’s data provided the first signs that a larger number of borrowers were beginning to sit on their hands. That’s unsurprising given the uncertain outlook for inflation, the rising cost of living and weaker consumer confidence. The property market is particularly vulnerable during periods of uncertainty because of high transaction costs – buyers often find it difficult to justify paying stamp duty.
“Conditions have improved since. The agreement between the US and Iran announced in mid-June prompted oil prices to fall sharply, easing inflation expectations and prompting a series of rate cuts by the major high street lenders. Should that agreement hold, mortgage rates could ease further through the summer, setting the stage for a recovery in the autumn. However, domestic political uncertainty around the incoming prime minister’s policy agenda remains a clear risk.”
Updated
Hopes of taming inflation could be undermined by a surge in freight shipping costs.
The cost of freight shipping has risen to its highest since summer 2024, when the Red Sea was effectively closed by Houthi rebel attacks, the Financial Times is reporting today.
They report:
The price of a 40ft container (FEU) — an industry-standard measure — between China and the US east coast rose to $7,880 last week, up 62 per cent from a month earlier, according to shipping platform Freightos. Rates between China and the Mediterranean jumped 47 per cent to $6,431.
These increases appear to be driven by companies trying to avoid a new round of US tariffs, expected next month.
UK’s Bridgepoint buys US real estate unit
Shares in UK private equity firm Bridgepoint have jumped by over 9% in early trading after announcing a foray into the US property world.
Bridgepoint are buying Florida-based Kayne Anderson Real Estate in a cash-and-share deal worth $1.393bn.
Although “Kayne Anderson” sounds like an exciting combination for England at the World Cup, they’re actually an investment management firm. As well as the real estate arm which Bridgepoint are buying, the group also operates in energy and infrastructure, private credit and wealth management.
Raoul Hughes, chief executive of Bridgepoint, says:
“This marks another major step forward in our strategy to strengthen our position as a leading global middle-market private markets platform. Real estate is a growing private markets asset class and Kayne Anderson Real Estate has built a leading position as a scaled specialist with an exceptional track record and strong fundraising momentum.
The Transaction is highly complementary and immediately accretive. Bridgepoint’s and Kayne Anderson Real Estate’s investor networks have limited overlap, creating attractive opportunities to broaden relationships and enhance fundraising.
Adding Kayne Anderson Real Estate creates a more balanced and diversified platform, with around half of our AUM invested in real assets and around half of our management fees generated in the US.”
BT and Verizon to create joint global business in $625m deal
BT and the US mobile company Verizon are to combine their international businesses, ending the British telecom group’s more than 18-month search for a buyer.
Verizon will pay a $625m (£473m) “equalisation” fee to BT to guarantee equal voting rights in the new 50/50 joint venture, the companies announced on Monday. The deal is expected to create a company with more than 3,000 customers across about 180 countries and $4bn in combined annual revenue.
It marks the end of BT’s long search for a buyer of its international business, as its chief executive, Allison Kirkby, works to refocus the company on the UK market.
She said the deal marked an “important step forward for BT as a whole, as we deliver on our UK-focused strategy”.
BAT cutting 5,500 jobs in cost-saving drive
British American Tobacco has just become the latest company to cut jobs as it uses AI to boost productivity.
BAT has announced it will cut 5,500 jobs globally by the end of this year, through its Fit2Win transformation programme.
Fit2Win is expected to cut costs by £600m by the end of 2028, by reducing complexity, building closer partnerships with technology and business services companies, and streamlining the business.
Those partnerships include a tie-up with Accenture, to give access to “advanced AI solutions”.
Tadeu Marroco, chief executive of BAT, said:
“We are building a future-ready organisation that is more agile, cost disciplined and technology enabled.
“Fit2Win is central to this ambition, strengthening how we operate and our ability to compete in a rapidly evolving environment.
“These changes affect many of our colleagues, and we are focused on supporting them through this transition with care and respect, as we position the business for the future.
In addition, around BAT 3,500 roles have been moved to “strategic partners”.
Updated
South Korea announces $590bn chipmaking expansion
Over in Korea, two of the country’s chipmaking giants and the Seoul government have announced a massive manufacturing expansion costing more than half a trillion dollars, to address the shortages of AI chips.
President Lee Jae Myung pledged to cement South Korea’s leadership in the industry with investments worth more than $576bn over several years covering semiconductors, AI data centres and robotics.
Under the plan, Samsung Electronic and SK Hynix will build a total of four fabrication plants in South Korea’s southwest region.
Lee said:
“We must secure the core elements of AI faster than any other country.
Semiconductors, physical AI, and AI data centres are the triple axis for our great leap forward.”
South Korea’s stock market has more than doubled in value so far this year, thanks to the surge in demand for chips to power AI systems.
At the end of last week, Samsung’s share price has jumped 183% so far this year, while SK Hynix had risen 310% since the start of January.
Oil price rising after US-Iran attacks
The oil price is nudging higher, after the latest tit-for-tat military strikes between the US and Iran.
Brent crude is up almost 1% at $72.61 a barrel, having fallen to its lowest level since just before the confict began on Friday.
Oil prices are pushing. up after Tehran launched drone and missile attacks against Bahrain and Kuwait on Sunday after new US strikes on sites in southern Iran.
Last night, a US official said both sides had agreed to “stand down”, which is probably helping the oil price from rising more sharply.
Introduction: BoE chief economist warns against 'complacency' on inflation
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The Bank of England’s chief economist is warning against complacency in the fight against inflation, after finding himself in a minority at this month’s BoE interest rate vote.
Huw Pill has told the Press Association that policymakers “should not be complacent” about the current rate of inflation, after the Consumer Prices Index (CPI) remained over the Bank’s 2% in May, at 2.8%.
Pill argued that in the past, inflation running around one percentage point above target would have been seen as “problematic”, adding:
“I think it should be seen as problematic, because our mandate is very clear; inflation at 2% at all times.”
“I do fear a little bit that, because we saw inflation go to 11%, policy discussion becomes, ‘oh inflation at 3% is not so bad’.”
Two week’s ago, the Bank’s monetary policy committee split 7-2 when it voted to leave borrowing costs on hold, with Pill and Megan Greene the lone voices for a hike in Bank rate.
Pill also appeared to criticise the six cuts in interest rate since August 2024, arguing that on balance monetary policy “hasn’t been restrictive enough over the last few years.”
City economists have been cutting their forecasts for UK interest rate rises in recent weeks, as tensions in the Middle East have cooled somewhat, and the oil price has fallen.
The City money markets are now only fully pricing in a rise in interest rates by next February – earlier this year, as many as three rises this year were priced in.
But the latest round of escalating strikes between Iran and the US last weekend has shown that the peace deal will not be easy to secure.
As Pill puts it:
“The world is becoming more uncertain and becoming more complex,” Mr Pill concluded.
“What we can guarantee is that monetary policy is not adding to uncertainty, and I think that is where we should keep the focus.”
The agenda
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9.30am BoE mortgage approvals and consumer credit data
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18.30pm BST: Christine Lagarde, president of the European Central Bank, gives speech at the ECB Forum on Central Banking 2026
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