Closing summary
Water bills in England and Wales will rise by an average of £94 over the next five years, under plans set out by the regulator and described by the chancellor as “a bitter pill” for households.
Rachel Reeves said the planned 21% increase to an average of £535 a year reflected “14 years of failure from the Conservatives” amid the sewage pollution scandal and cost of living crisis.
Britain’s water companies have signed up to the government’s initial package of reforms for the sector, the environment secretary Steve Reed said after meeting with executives from 16 companies.
He blamed the previous government for the current mess: “Today’s water bill rises are the result of years of failure.”
The water industry regulator has put Thames Water into unprecedented special measures, allowing extra scrutiny of the struggling water supplier as it faces the prospect of a painful restructuring or temporary nationalisation.
Ofwat said on Thursday that Thames would be placed in a “turnaround oversight regime” and subject to “heightened regulatory” measures, meaning the company must regularly report on the progress of its investment plan. It is the first time a water company has faced such measures.
The regulator made the announcement as it published its draft review on English and Welsh water companies’ business plans and said the proposal submitted by Thames was “unsatisfactory”.
The UK economy returned to growth in May after a washout month in April when activity flatlined, resuming the recovery from last year’s recession.
Figures from the Office for National Statistics (ONS) show gross domestic product rose by 0.4% month on month, double what City economists had forecast, after recording zero growth in April when wet weather hit consumer spending.
In the first week since Labour’s election landslide, the chancellor, Rachel Reeves, has promised to reboot the economy by making it the new government’s “national mission” to secure the highest sustained growth in the G7.
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Thank you for reading. We’ll be back tomorrow. – JK
Updated
James McCann, deputy chief economist at the investment company abrdn said:
The Fed will enjoy reading the June CPI report. Headline prices fell by 0.1%m/m and core prices increased just 0.1%m/m, both comfortably below expectations. Indeed, this was the weakest monthly core inflation reading in more than three years and suggests the central bank is back on track with regards to hitting its inflation target.
The news was pretty good across the board. Core goods prices were down again, helped by lower autos prices, with deflation in this sector having clearly resumed following a brief halt earlier this year. Otherwise, core services prices were up just 0.1%m/m, helped by much weaker shelter inflation. We of course have been waiting for the moderation in market rents to feed into these official measures and this is a tantalising signal that this might be more definitively playing out. Other services inflation meanwhile was negative for a second consecutive month, with air fares providing another huge contribution to this weakness.
The bump in Q1 inflation is increasingly looking like a blip and the Fed should be increasingly confident that it can start to cut rates. This easing looks increasingly timely as activity and labor market indicators start to slow. Indeed, amid softer price pressures the Fed is likely to start to turn its attention to ensuring that this slide does not turn into a rout.”
