Closing post
Time to wrap up…
Andy Burnham becomes prime minister as Britain contends with a series of global economic shocks and years of weak growth in living standards, fuelled by underinvestment and deep regional divisions.
Before his arrival in Downing Street, the Labour leader pledged to deliver “good growth in every postcode” by transferring power from Westminster to local communities. But with the public finances under pressure, and time running out before the next general election, the task is not straightforward.
European gas prices have hit a four-month high as the escalation of the conflict in the Middle East raises fears of supply shortages this winter.
The Dutch natural gas benchmark briefly rose above €60 a megawatt hour (MWh) on Monday, near the peaks seen at the start of the US-Iran conflict, after the US expanded its aerial offensive and Iran retaliated with strikes on Bahrain and Kuwait.
Analysts at Independent Commodity Intelligence Services (ICIS) said Europe’s gas supplies were facing pressure this winter, with the conflict delaying the expected recovery of Qatari liquefied natural gas (LNG) exports in the critical summer storage season.
The Chinese online retail platform AliExpress has been fined a record €550m (£470m) by the EU over its failure to stop illegal goods including harmful clothing, cosmetics and kitchen gadgets being sold through its site.
The European Commission fine is the biggest imposed by the bloc under the Digital Services Act (DSA), legislation that came into force in 2024 to protect consumers from illegal goods, deceptive or addictive marketing techniques.
Henna Virkkunen, the commission’s executive vice-president for tech sovereignty, security and democracy, said: “The spread of counterfeit clothing, unsafe toys, dangerous cosmetics and other illegal and harmful products is not an unavoidable cost of shopping online – it is a failure by AliExpress to comply with its obligations under the Digital Services Act.
US chip stocks rebound
The rise in the US stock market is being led by a rebound in its tech sector, which is up by 1% today.
Several key chip and memory companies are rising today, having sold-off last week when there was lots of pessimism in the market around the sustainability of the AI trade. Micron Technology is up 5.3%, Seagate Technology and Advanced Micro Devies are both up 4.7%. Intel is up 4.3%, and the chip designer Nvidia is up 1.9%.
European gas prices hit four-month high amid fears US-Iran war will cause supply shortages
European gas prices have hit a four-month high as the escalation of the conflict in the Middle East raises fears of supply shortages this winter.
The Dutch natural gas benchmark briefly rose above €60 a megawatt hour (MWh) on Monday, near the peaks seen at the start of the US-Iran conflict, after the US expanded its aerial offensive and Iran retaliated with strikes on Bahrain and Kuwait.
Analysts at Independent Commodity Intelligence Services (ICIS) said Europe’s gas supplies were facing pressure this winter, with the conflict delaying the expected recovery of Qatari liquefied natural gas (LNG) exports in the critical summer storage season.
US stock markets open higher
It is a stronger start for US stock markets this afternoon – the blue chip S&P 500 index has opened 0.6% higher. The tech-heavy Nasdaq is up 0.8%, and the Dow Jones industrial Average is up 0.4%.
More reaction from British businesses in response to Andy Burnham’s first speech as prime minister…
Rain Newton-Smith, chief executive of the Confederation of British Industry, says:
Ambitious plans to improve the livelihoods of people across the country must be matched by action to get businesses thriving once again. Addressing the cost-of-living challenge needs to go hand in hand with tackling the cost of doing business, so we can deliver sustainable growth in jobs, wages and living standards.
CBI members recognise the case for a more place-based, delivery-led and partnership-oriented economy. They support the ambition for good growth in every postcode. That starts with building on the bedrocks of stability, accelerating the policies that turn ambition into delivery and changing the things that are stifling investment.”
Alan Vallance, chief executive of the accountancy body ICAEW, calls for no further business tax rises.
Our members are business leaders whose decisions shape the economics of towns and cities across the UK, and they tell us that to lay the foundations of economic growth, the new government must create the conditions for businesses to invest, hire and expand.
…ICAEW Chartered Accountants are clear that there must be no more business tax rises. The decisions the government takes in its first weeks and months will be critical to whether it achieves its ambitions for economic growth and prosperity, and we hope Andy Burnham will give business a shot in the arm by committing to this.”
Meanwhile Helen Miller, director of Institute for Fiscal Studies think tank, also highlights that Burnham has struck an ambitious tone in his first speech on the steps of 10 Downing Street.
Andy Burnham enters Downing Street with no shortage of ambition. Greater devolution, more public control of utilities and a new council house building programme are among the promises that helped carry him into office.
Delivering on any one of those agendas would be challenging. Seeking to rewire the British state, against a backdrop of constrained public finances and with an in-tray full of domestic and international challenges, will require much more than ambition.
If the new government is to make progress this decade, it will need to quickly flesh out the vision of what it wants to achieve and be ruthless in its prioritisation.”
Updated
Houthi rebels threaten 'maritime embargo' against Saudi Arabia
Oil prices have pared back their gains from this morning, but Brent crude – the international benchmark – is still up 0.5% to $88.51 a barrel.
The rise comes as the Iran-aligned Houthi movement warns it will impose a maritime blockade on Saudi Arabia.
The Yemeni militant group announced “a maritime embargo against the criminal Saudi enemy, based on the equation of ’an eye for an eye’ effective immediately upon the issuance of this statement.”
The Houthis have said the blockade was in response to Saudi Arabia’s continued “unjust and oppressive siege on our dear people for nearly 12 years, plundering our resources and imposing a comprehensive blockade on our ports and airports by land, sea, and air.”
It adds to a growing list of risks looming over the world’s oil supplies. Traffic through the strait of Hormuz, through which a fifth of the world’s global oil supply normally flows, remains limited as the US and Iran continue to exchange fire.
Updated
Tina McKenzie, policy chair at the Federation of Small Businesses, adds that Burnham’s government must “rework the mistakes on business rates”.
She said:
The new prime minister has set out a positive, pro-small business stall in recent weeks, and we are optimistic that he can galvanise the new government to make these plans a reality.
That will mean reworking the mistakes on business rates made by the last government, by increasing small business rate relief, acting on costs after the sledgehammer of national insurance rises, and scrapping pointless paperwork that holds business back.
Where the last government did get things unquestionably right – such as the new late payment laws currently going through the Lords – we need the new prime minister to stand firm behind small firms.
Burnham 'right to prioritise cost of living', TUC says
Paul Nowak, general secretary of the TUC, has said that Andy Burnham is right to prioritise the cost of living as Britain’s new prime minister.
Andy Burnham is right to signal an end to the broken economic status quo and prioritise the cost of living.
This government should be straight out of the blocks delivering for working people in every corner of the country – with a laser focus on living standards.
For too long, ordinary families have been under the cosh while the tax avoiders and the super-rich have been raking it in.
That’s why we need to see urgent action to bring down energy bills, taxing banks’ enormous profits to pay for it and delivering Labour’s workers’ rights agenda in full.
And we need investment with good quality work at its heart to grow our economy and put more money in the pockets of working people.
This government shouldn’t be afraid to take on vested interests - whether it’s bad bosses, the super wealthy or crypto billionaires.”
Meanwhile, Shevaun Haviland, director general of the British Chambers of Commerce trade body, welcomed Burnham’s pledge for stability and a 10-year plan.
She said:
The challenge ahead is delivering on those pledges - and delivering growth.
The cost of living and the cost of doing business are two sides of the same coin, so it’s vital that Prime Minister also gives firms ‘breathing space’ from cost pressures.
Our surveys show energy and taxation are squeezing businesses, hitting confidence and investment. Easing the cost of doing business will deliver the growth we all want to see.
In his speech today he spoke about boosting British industry through public procurement, something which we have long called for. We widely welcome his pledge to support young people and skills.
Getting growth in ‘every postcode’ of the UK is only possible if business is placed at the heart of the economic strategy. Any structural changes to the economy must deliver growth – and that happens when firms invest and expand.
UK borrowing costs edge higher as Andy Burnham made PM
The yield on the 10-year UK government bond rose slightly after new prime minister Andy Burnham pledged to deliver a “new economic model” for the country.
The 10-year gilt yield nudged up by about 3 basis points to 4.98%, as Burnham promised a new economic model and a 10-year plan for the country, as well as immediate cost of living support to be announced as soon as tomorrow.
He said:
Later this year I will bring forward a new plan for Britain, a 10-year plan laying out a path from where we are now to where I believe we all want Britain to be, wherever we’re coming from, whatever party we support.
But I can do something to give people some breathing space now, some help with the cost of living.
And I will set out some of those measures starting tomorrow, including how we pay for them.
He outlined some of his ambitions and – in perhaps an attempt to comfort bond investors – reiterated that his government will meet its fiscal rules.
We will help more young people into work by changing the education system and giving them more support, more mental health support, and we will build more council homes.
That is the fair and sustainable way to bring the welfare bill down to meet our fiscal rules and to honour our commitments on defence to our international partners.
We will help people to live well, building a more preventative state, investing in people’s success rather than paying for failure.
Sterling is standing firm against the US dollar, up 0.07% to about $1.34.
The UK’s blue chip stock index, the FTSE 100, is unchanged – still down by about 0.2% today, around where it was this morning.
Updated
AliExpress fined record €550m by EU for failing to stop sale of illegal and fake goods
AliExpress, the Chinese online retail platform, has been fined a record €550m (£470m) by the EU over its failure to stop illegal goods including harmful clothing, cosmetics and kitchen gadgets being sold through its site.
The European Commission fine is the biggest yet exacted by the bloc under the Digital Services Act (DSA), legislation that came into force in 2024, to protect consumers from illegal goods, deceptive or addictive marketing techniques.
Henna Virkkunen, the EC’s executive vice-president for tech sovereignty, security and democracy, said:
The spread of counterfeit clothing, unsafe toys, dangerous cosmetics and other illegal and harmful products is not an unavoidable cost of shopping online – it is a failure by AliExpress to comply with its obligations under the Digital Services Act.
Scale is not an excuse; risks must be identified and addressed systematically to ensure consumers can safely shop online. Today, we are holding AliExpress to this standard and request it to take action.”
Ryanair says its planes are safe after passenger nearly sucked out of window
Ryanair has moved to reassure travellers that its planes are safe after a passenger was saved from being sucked out of a window mid-flight and said it has been in touch with his family.
This month, Ljubisa Karović was sucked out headfirst after an engine failure resulted in parts smashing an acrylic window during a flight from Thessaloniki in Greece to Memmingen near Munich in Germany.
His wife, Svetlana Grković, saved the 61-year old from falling out of the aircraft by holding on to his legs and managed to pull him back in with the help of two other passengers.
Neil Sorahan, Ryanair’s group chief financial officer, said:
Our customer care team have actively been in touch with the family since the incident.
Our crew did a phenomenal job and got the aircraft back to Thessaloniki. Everyone bar none walked off the aircraft. It was a great job done by the cabin crew and the pilots.
Sorahan said it was “way too early” to discuss whether Ryanair would have to compensate the couple while the airline awaited the outcome of an investigation into the incident.
Updated
Kathleen Brooks, of the broker XTB, notes that there will be plenty of new economic data in Burnham’s in-tray this week.
On Tuesday, the unemployment rate is expected to rise to 5%, which is further evidence that job growth in the UK has been hindered by Reeves’ s £25bn hike in employers national insurance.
…We will also get the latest public sector borrowing data, and analysts expect a continued rise in monthly public net sector borrowing. This would follow May’s much higher-than-expected borrowing rate. Surging welfare payments and elevated gilt yields, mean that the UK is likely to continue to be mired in high debt levels for years to come.
On Wednesday, the CPI data is expected to show an encouraging moderation in the headline and core CPI rate. However, Burnham won’t be able to bask in the glory for long, as price growth is still above the BOE’s target rate, and financial markets continue to price in one rate hike from the BOE this year.
…Overall, this week’s data could show a worrying economic backdrop.
She adds that the market’s judgement of Burnham will be reflected in government bonds.
The 10-year gilt yield is hovering close to 5% and has risen by 1% since Labour took office in 2024. This is a tipping point for the UK economy, and he must focus on reversing this rise.
A 5% yield weighs on economic growth, depresses investment and increases the government’s debt interest bill. He cannot risk anything that pushes yields up further. Drawing a line under inflation busting public sector pay rises, and welfare spend restraint will be the fastest way for Burnham to ease upward pressure on bond yields in the first months of his premiership.
We should know who Burnham’s chancellor is by this afternoon, Burnham is also expected to lay out his 10-year plan for the UK at Downing Street before 1330. Realistically, he only has 2.5 years as leader in the current parliament, so much of what he says could be meaningless, unless he lays out a timeline for a new election, which we don’t think that he will do.
Investors will be watching the bond market carefully today as Andy Burnham is set to become the prime minister and prepares to pick his cabinet.
Russ Mould, an investment director at the broker AJ Bell, said bond markets reacted positively on reports last week that current home secretary Shabana Mahmood is frontrunner for chancellor.
Gilt yields eased back last week on speculation that Mahmood would get the job, which is the biggest clue that markets are accepting the governmental change in a calm manner.
That’s good for now, but it’s what comes next that really matters. Bond investors are looking for any clues on public spending intentions, how they will be funded, and any policies that deviate from the path pursued under the Starmer-Reeves regime. Burnham’s big speech later today might offer a glimpse at what he wants to achieve but is unlikely to give the full picture.
Updated
Jeff Bezos and UK government invest in £2bn British startup CuspAI
Amazon’s founder, Jeff Bezos, and the UK government have invested in a £2bn British artificial intelligence startup that is aiming to become the “search engine for rare materials” that accelerates the next wave of technological breakthroughs.
The Cambridge-based CuspAI has raised $450m (£330m) in funding from investors including Bezos and the government’s sovereign AI fund, valuing the two-year old business at $2.6bn.
The company has launched the AI Materials Foundry, a coalition of more than 48 tech companies, industrial firms and research facilities, with the aim of building software underpinned by artificial intelligence to discover and develop new materials for chipmakers and other industries.
CuspAI hopes to significantly cut research times and reduce or eliminate the use of rare metals – including iridium and ruthenium – in chipmakers’ supply chains.
Segro hits out at rival's £13.5bn takeover bid as 'opportunistic'
Warehouse company Segro has said a £13.5bn takeover offer from its US rival Prologis is “opportunistic” and timed to” capitalise on a dislocated share price”, as tensions rise between the two businesses.
The company has said in a statement:
The Board of Segro carefully reviewed the further revised proposal, together with its advisers, and concluded that Segro’s compelling growth strategy and standalone prospects underpin superior value creation versus the further revised proposal. Accordingly, the Board unanimously rejected the further revised proposal.
Despite this rejection, Segro engaged and met with Prologis management yesterday to understand Prologis’ ability to improve its financial terms to a level that could be capable of being recommended by the Board of Segro. Prologis provided no new information in this meeting and made no improvement to the further revised proposal.
It added:
Prologis’s proposals have been opportunistically timed to capitalise on a dislocated share price and just as Segro’s markets are inflecting and momentum is accelerating. The effect would be to transfer the benefits of Segro’s considerable embedded value and this significant progress to Prologis shareholders before they are fully reflected in Segro’s earnings and valuation.
Oil falls back below $90 as Iran reports diplomatic exchanges with US
Oil has fallen back below $90 a barrel, paring back some of its earlier gains after reports of diplomatic exchange between the US and Iran.
Iran has said that diplomatic exchanges with the United States via mediators were ongoing, despite US military strikes on the country.
AFP reports that the foreign ministry spokesman Esmaeil Baghaei said at a press conference in Tehran:
We have been informed by mediators, we have received messages – without going into details – but the main point is that the diplomatic apparatus has been active in recent days and ideas have been conveyed to us by certain mediators.
Brent crude, the international benchmark for oil, has now pared back some of its earlier gains – but is still up 1% to $89.07 a barrel.
The Stoxx Europe 600, which tracks the biggest companies on the continent, is now up slightly by 0.1%, though the UK’s FTSE 100 is still down 0.3%.
Europe is “particularly vulnerable” to a squeeze on finished fuel supply, according to PVM Oil Associates, an energy and commodities broker.
John Evans, an analyst at the firm, said:
The European continent is at present particularly vulnerable to the lack of finished fuels as demand has severely increased due to the ongoing, unforgiving heatwave reflected in the demand on the electricity grid. The Gasoil/Brent crack rallied nearly $10/barrel last week and is up nearly $25/barrel since the world thought Hormuz was cured in the middle of June.
…One could argue that the recent scrutiny received by AI and technology companies, and stock market falls, are due to the increased awareness of both overstretched valuations and investment, and now, in AI buildouts, overcapacity.
Yet it cannot be denied on how this current flare-up in and around the pinch of Hormuz, and its inflationary influence, causes nervousness for investors as they consider their portfolio exposure to companies which might feel a heavy load if indeed the notions of ‘higher for longer’ interest rates play out.
As for oil prices, with Brent knocking on the door of $90/barrel and only one errant bombing or incident away from pushing on to $100/barrel once again, and supply of gasoline and diesel getting ever shorter, time is running out for the US President to assuage the current anxiety building within the oil fraternity.”
European stock markets fall amid rising Middle East tensions
It is a shaky start for European stock markets this morning: the Euro Stoxx 600, which tracks the biggest companies on the continent, is down 0.2%.
The UK’s blue chip FTSE 100 index is down 0.6%, led by losses in the real estate sector, which is own 1.2%. Energy companies BP and Shell are however rising on the elevated oil price, with shares up 1.5% and 0.7% respectively.
Over in the bond market, oil prices are feeding a rise in gilt yields. The 10-year yield is up by about 4 basis points. Meanwhile the pound is up slightly against the dollar by 0.05% to $1.34.
Updated
Segro rejects sweetened £13.5bn takeover bid
The UK warehouse landlord Segro has rejected the latest takeover bid from its US rival Prologis, which valued the FTSE 100 company at £13.5bn.
Segro has repeatedly rejected Prologis’ takeover attempts, including a £12.6bn all-share proposal in June, saying it was “opportunistically timed” and significantly short of fair value.
Today Prologis said Segro’s board had unanimously rejected its third proposal made on 16 July, which included a partial cash alternative of up to £2.7bn and 0.0890 new Prologies share for each Segro share.
It represented an almost 10% premium to Segro’s net asset value, and a 34% premium to its share price before Prologis revealed its takeover interest, according to the US company’s statement this morning. Segro rejected the offer a day after it was made.
The takeover attempt by Prologis – which called on investors today to back the deal – is the latest in a series of endeavours by overseas buyers targeting FTSE 100 companies.
Segro is best known for building cavernous sheds, with a multi-billion pound portfolio that includes warehouses, data centres and industrial property, mostly in the south-east of England.
Shares in Segro are down 1.4% this morning, but are up by about 19% since the first Prologis offer was made in June.
Updated
Diesel supply squeeze could hit Europe, Morgan Stanley warns
Europe faces a squeeze on its diesel supply this year, according to analysts at the bank Morgan Stanley, with stockpiles expected to decline over the coming months.
Analysts including Martijn Rats wrote in a note yesterday:
The picture is genuinely tight. Our supply/demand modeling points toward European diesel inventories falling to multi-year lows toward year-end.
…The real bottleneck in the oil system right now is refining, more so than crude…The epicenter of all this is the diesel market, and Europe in particular.
It comes as global energy markets grapple with the impact of renewed conflict in the Middle East.
Morgan Stanley now expects that European stockpiles will fall steadily from August, reaching a low of about 299m barrels in November. That would be the lowest level for that time of year since at least 2015, according to their analysis, which was first reported by Bloomberg.
Jim Reid of Deutsche Bank says the rapid rise in the oil price and fresh waves of strikes underscores “how quickly the situation is deteriorating”.
Three US service members were killed in separate incidents in Jordan and Iraq, while US strikes hit targets including Qeshm Island and multiple locations in southern Iran. At the same time, Iran broadened its retaliation beyond military sites, targeting critical infrastructure across the Gulf, including power and desalination facilities in Kuwait, as well as launching drone and missile attacks towards US bases and regional allies. And prospects for any diplomatic breakthrough remained dim, with Iran’s Foreign Minister Araghchi suggesting that some nuclear issues may ‘remain unresolvable’.
Tensions also escalated further in the strait of Hormuz, with Iran signalling a far more assertive stance over shipping flows and claiming to have intercepted vessels attempting to transit the waterway.
Introduction: Oil rises above $90 as Middle East conflict escalates
Oil prices have hit their highest level in more than a month as the US carries out its ninth consecutive night of strikes against Iran.
Brent crude, the international benchmark for oil, is now up by 2.7% to $90.49 a barrel, shortly after hitting as high as $91.41 – its highest level since June.
The jump in oil prices comes as the US carries out another fresh wave of attacks against Iran, after a fragile ceasefire agreement signed a month ago unravels and deepens a struggle for control over the strait of Hormuz.
The US announced the death of a third American service member over the weekend, after two people were killed in an Iranian attack on a Jordanian base on Friday, with another missing in action.
US president Donald Trump said “we hit them very hard again tonight” as he returned to Washington after the World Cup final, adding “we did that in honour of the, probably three, it’s probably three great patriots.”
The British military has also reported that a ship caught fire in the strait of Hormuz near the coastline of Oman, though it is unclear what triggered the blaze. Iran’s Revolutionary Guard (IRGC) later claimed two oil tankers were blown up after attempting to transit through the southern route of the strait, but there was no independent confirmation.
It also claimed on Monday that two oil tankers had exploded and been immobilised after attempting to transit the southern route through the strait of Hormuz.
The IRGC said the strait would remain unsafe as long as what it called US “aggression” in the region continued, warning that “this passage will not be safe for the transit of petrochemical products, nor even a single drop of oil and gas”.
Elsehwere this morning, uncertainty around the Middle East war has meant Ryanair has had to cut fares during the peak summer travel season.
The budget airline has said this morning that its first quarter average fares were 6% lower than last year.
Chief executive Michael O’Leary said in a statement:
The Middle East conflict led to consumer hesitancy, concerns about EU jet-fuel shortages, economic uncertainty and later bookings.
…Despite a recent, slight, uptick in volumes, and less price stimulation, Q2 pricing is trending modestly down (y-o-y) and the final H1 fare outcome is heavily dependent on the strength of close-in bookings in Aug. and Sept.
The company said its first quarter profit after tax fell 34% to €538m (£457m), down from €820m at the same point last year and compared with a forecast of €579m in a company poll of analysts.
The agenda
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Today: Andy Burnham becomes prime minister
