UK private sector shrinking as firms cut jobs; pressure to raise taxes as government borrowing jumps – as it happened

The City of London skyline Photograph: Vuk Valcic/ZUMA Press Wire/REX/Shutterstock

3.34pm BST

Closing post

Time to wrap up…

Britain’s private sector is shrinking for the second month running as factory output falls at the fastest rate in a year and a half, a new survey shows.

The latest poll of purchasing managers at UK companies found that private sector output is decreasing in May, although at a slower rate than in April.

The slowdown came as UK government borrowing rose last month to over £20bn, larger than expected.

Economists said Britain’s high borrowing was creating pressure for more tax rises in the next budget.

In other news…

• Britain’s factory downturn has continued, with manufacturers reporting a sharp fall in orders and output this month,

• US jobless claims fell last week, as America’s labour market remained solid

• Stocks have fallen in London, where the FTSE 100 share index is now down 78 points at 8708 points.

• Manchester United’s shares have fallen 8%, after they lost to Spurs in last night’s Europa League final

• Bond yields have risen too, as US debt fears worry investors

• The rise of weight loss drugs could dampen demand for cocoa, analysts at Rabobank have predicted in a new report.

Updated at 3.37pm BST

3.22pm BST

Rabobank: Weight loss drugs could hit demand for cocoa

The rise of weight loss drugs could dampen demand for cocoa, analysts at Rabobank have predicted in a new report.

Rabobank believe cocoa prices will go through a bumpy ride in the coming year, having soared in 2024, before dropping in early 2025 and then recovering in recent weeks.

This turbulence has led to a fall in cocoa consumption this year, they say, as elevated cocoa prices will lead to higher retail prices. Manufacturers have also employed “shrinkflation and skimpflation strategies” – shrinking their chocolate products or putting less cocoa into them.

Oran van Dort, commodity analyst for RaboResearch, says:

“As a result, familiar chocolate products may become smaller and more expensive, with innovations focusing on minimizing cocoa use. Ingredients like wafers, nuts, dairy, cocoa butter equivalents, and sugar will become more prevalent, altering the consumer experience and potentially reducing chocolate’s presence in supermarket aisles.”

Rabobank also suggests that a health-conscious consumer environment and increased use of weight-loss drugs also contribute to reduced demand.