Closing post
Time to wrap up…
The price of oil has breached the $95 a barrel mark for the first time in six weeks as the escalating Middle East conflict threatens further disruption to global supplies.
The benchmark oil price rose sharply on Wednesday as renewed US-Iran aggression over the strait of Hormuz was compounded by Houthi threats to target vessels carrying Saudi oil through the Bab el-Mandeb strait.
Brent crude peaked at $126 a barrel in April during the conflict but had eased to as low as $71 at the start of July. However, the price has shot up since the war has reignited in recent days and reached $95.24 on Wednesday, before easing to $94.40 by lunchtime, up more than 3% on the previous day.
UK inflation dropped by more than expected in June to 2.6%, in a boost for Andy Burnham’s plans to reduce the cost of living.
The new prime minister has pledged to bring down the cost of living to give households more disposable income and improve the outlook for the economy, announcing a winter VAT cut on electricity bills and lowering the cap on bus fares in England.
Last month’s consumer prices index reading outdid economists’ forecasts of a slide from 2.8% in May to 2.7%, amid a fall in the prices of fuel, particularly diesel, helped by the unstable truce in the Middle East conflict.
Lloyd’s of London has ruled that its former boss John Neal breached compliance rules by failing to disclose a “close relationship” with a female colleague that risked triggering conflict of interest concerns at the insurance market.
An investigation by the Council of Lloyd’s, which is responsible for the market’s management and supervision, said it could not find any “conclusive evidence” Neal was romantically involved with the company’s then corporate affairs director, nor that there were any process failures relating to her promotion during Neal’s tenure.
The publisher of Harry Potter has received a multimillion-pound payout as a beneficiary of a $1.5bn (£1.12bn) copyright settlement between the AI startup Anthropic and thousands of authors over the use of their protected work to power chatbots.
Bloomsbury, which is home to the bestselling novelists Sarah J Maas and Susanna Clarke as well as JK Rowling, said it had 14,087 titles listed within the settlement, with a proposed compensation of about $3,000 a title.
The London-based company expects to receive the cash from the settlement in instalments, potentially starting in the second half of this fiscal year, with the proceeds to be split with authors.
Southern Water ex CEO to face trial over alleged cover-up in wastewater testing
The Environment Agency has brought criminal charges against four Southern Water employees, including ex chief executive Matthew Wright, over allegations that they manipulated wastewater testing results.
The regulator has alleged that the four employees conspired to defraud it and the water regulator Ofwat by manipulating its self-monitoring testing through “artificial no-flow events” at sewage treatment works.
An Environment Agency spokesperson said:
We can confirm that we are taking criminal proceedings against Southern Water Services Ltd and a number of former employees.
We take our responsibility to protect the environment very seriously and will always pursue and prosecute those alleged to have committed serious offending against the environment.
The environment secretary, Angela Eagle, said:
The public are rightly sick of environmental pollution and attempting to cover it up is outrageous. Anyone found guilty of this crime will face the full force of the law.
This government will always back tough enforcement action to protect our rivers, lakes and seas. We have already committed to ending the practice of operator self-monitoring to ensure this cannot happen again in the future.
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EasyJet shares slump after reports EU will review airline ownership rules
EasyJet shares have fallen sharply after reports that the EU is preparing to tighten up airline ownership rules, potentially putting planned takeover bids in doubt.
Reuters quoted an unnamed EU official who said that a review would “protect strategic autonomy” and ensure control of regional airlines remains within Europe.
The comments came as two US investment firms are vying to buy easyJet. The airline’s board originally accepted the fifth bid from Castlelake, worth £5.5bn, but then recommended a higher bid from Apollo Global Management, worth £5.7bn or more than £7 per share.
EU rules demand 51% local ownership, and while Castlelake had named EU citizens as co-investors, Apollo has not explained how it plans to meet the requirements.
The official told Reuters that the review would look to clarify which kinds of corporate structures were allowed, and said that none of Apollo, Castlelake or easyJet had to European regulators about the details of their proposed deals.
Shares in easyJet slumped 11% in the minutes after the news emerged of the review. They remain around 50% higher than before the first takeover approaches were disclosed in late May.
The US stock market is a bit wobbly today – the blue chip S&P 500 index has slipped 0.1%, and the tech heavy Nasdaq index is down 0.5%. The Dow Jones has ticked up 0.1%.
The oil price is still higher today, but it has pared back some of its earlier gains, with Brent crude now up 2.5% to $93.26 a barrel.
AMD strikes multi-billion dollar deal with Anthropic
Now turning to the world of AI: the US chip company AMD has announced a new deal with Anthropic, the company behind Claude.
AMD has said it will make an investment of up to $5bn (£3.7bn) in Anthropic, while Anthropic has agreed to buy billions of dollars worth in AMD’s latest AI server chips.
Shares in AMD are flat in early trading.
Dr Lisa Su, chair and CEO of AMD, said:
This collaboration brings together Anthropic’s leadership in frontier AI with the full strength of AMD high-performance computing. Together, we will accelerate AI adoption at scale and establish Helios as a major platform for the next generation of AI infrastructure.”
Tom Brown, co-founder and chief compute officer at Anthropic, said:
Access to compute is central to keeping Claude at the frontier and meeting demand from our customers,” said“By partnering with AMD across the stack, we are securing the capacity we need and optimizing it for training and serving Claude. Running across a diversified range of hardware lets us map the right workloads to the right hardware.”
UK bond yields are also rising across the curve today, as higher oil prices push investors to prepare for elevated interest rates this year.
The 10-year gilt yield has risen by about 3 basis points to 5.06%, its highest level since May. The equivalent 10-year yield in the eurozone has also risen by about 2 basis points to 3.19%.
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US stock futures are slipping this afternoon, as investors look cautiously ahead to big tech earnings this week.
The S&P 500 index is poised to fall 0.2% later this afternoon when the US market opens, while futures for the tech heavy Nasdaq are down 0.6%.
Alphabet and Tesla will report their quarterly earnings this evening.
London house prices fall for ninth month in a row
House prices in London dropped 3.7% year-on-year in May, according to new figures from the Office for National Statistics, the ninth month in a row where there has been an annual fall in the capital.
London was the only region in England to record a fall in house prices, with the average across the UK rising by 2.7%. That did however mark a deceleration from April, when prices rose by 3.8%.
The biggest falls in London were in the inner parts of the city, such as Westminster and Tower Hamlets, the ONS said.
The ONS did however note that the figures were affected by changes to stamp duty in April 2025, which brought forward several property transactions as homebuyers sought to get ahead of the tax change deadline.
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Norway’s national oil company profits double to $11.5bn amid war on Iran
Profits at Norway’s state oil company nearly doubled to $11.5bn (£8.6bn) in the three months to the end of June as the jump in oil and gas prices caused by the war against Iran boosted earnings.
Equinor benefited from a decision to increase oil and gas production at the start of the conflict, filling a gap in the market after a near-halt to shipping through the strait of Hormuz caused Gulf oil flows to slump.
Equinor also profited from the jump in oil prices. Fears over a drop in global supplies left Brent crude prices swinging between $75 and more than $100 a barrel between April and June this year. That compares with roughly $60 to $70 during the same period last year.
Prologis tables 'best and final' £14bn offer for Segro
Prologis, the US property group, is still pursuing the FTSE 100 warehouse landlord Segro. It has announced its “best and final” offer, which values the business at about £14bn.
The offer is made up of 0.0920 new Prologis shares for each Segro share and a partial cash alternative of up to £3.5bn.
The fourth offer by Prologis comes just two days after Segro rejected its previous £13.5bn bid.
The FTSE 100 company has also come under pressure from one of its biggest investors, Norges Bank, which said yesterday that the proposal “merits consideration”.
Prologis said in a statement that its proposal “is final and will not be increased”.
Dan Letter, the chief executive of Prologis, said:
There is no doubt a combination of both companies would deliver meaningful value. We have listened to feedback from shareholders and this morning, we have improved our proposal to make a compelling offer to the Segro Board. We run Prologis with discipline and this is our best and final offer.
Segro shares are up 3.8% this morning.
Oil has breached the $95 a barrel mark today – but some analysts have predicted that the price could rise to more than $120 by the end of the year if disruptions at the strait of Hormuz continue.
Analysts at the US bank Goldman Sachs sent out a note on Monday saying that Brent crude could rise above $120 by the fourth quarter, although it is not their base case assumption, Bloomberg reported.
Oil prices have not been above $100 a barrel since May, and topped $126 at the end of April.
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Oil price touches $95 as US-Iran conflict escalates
Oil prices are climbing further this morning as investors grow fearful around the impact of the war in the Middle East on global supply.
Brent crude, the international benchmark for oil prices, is up 4.6% to $95.16 a barrel, its highest point in six weeks. Oil prices have risen by abut 20% this month as Washington and Tehran have exchanged fire.
Last night the US carried out its eleventh night of consecutive strikes against Iran, while the Iran-backed Houthi movement has threatened a naval blockade on Saudi Arabian ports.
Kathleen Brooks, of the broker XTB, notes the sharp rise today comes after Donald Trump said he was not interested in holding talks with Iran last night.
The rise in the oil price comes after President Trump played down the prospect of fresh talks with Iran. He also said that he would escalate tensions even further and will hit Iran’s Pickaxe Mountain, which contains an underground nuclear site.
…Reports suggest that US allies in the Gulf are getting tired of US strikes on Iran due to their ineffectiveness, however, there is no immediate solution to break the impasse. Should there be a wider war to bring Iran to its knees, or should the two sides commit to fresh peace talks? Markets would likely prefer fresh peace talks, especially now that the crisis is impacting global oil flows beyond the Strait of Hormuz. There are signs that tankers are avoiding or slowing down their approach to Bab El-Mandeb Strait near Yemen, after the Houthis threatened attacks on cargo ships in alliance with Iran. For now the Red Sea remains operational, but global supply chains are increasingly coming under threat as escalations in the conflict heat up. This will keep upward pressure on global supply chains, and inflation risks are ramping up every day this conflict escalates.
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OpenAI says its models went rogue and hacked startup in ‘unprecedented incident’
OpenAI has revealed an autonomous AI agent powered by its technology went rogue during a test, accessed the open web and hacked a prominent startup by itself in an “unprecedented incident”.
The company behind ChatGPT said Hugging Face had detected and contained the agent – an AI tool designed to carry out tasks without human assistance – which had entered its systems.
We consider this incident to be an unprecedented cyber incident, involving state-of-the-art cyber capabilities.
The company warned that it expected this type of incident to become more commonplace as models – the technology that underpins AI tools such as chatbots and agents – become more capable.
Bloomsbury gets slice of $1.5bn Anthropic copyright settlement
Bloomsbury has said it will receive a share of the $1.5bn US court settlement that resolves claims Anthropic used copyrighted books to train its AI models without paying for the content.
The company said in a statement today:
Bloomsbury confirms that it is among the beneficiaries of the Anthropic settlement and will receive settlement spread over several payments estimated to start in the second half of the financial year.
The court has listed 14,087 Bloomsbury titles as within the settlement and the proposed settlement is for about $3,000 for each work… to be divided equally between the author and the publisher.
Analysts at the broker Peel Hunt estimated that the company will receive about £14m in total.
Shares in Bloomsbury, which is listed in London, are up by about 1% this morning.
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Lloyd's of London says ex CEO 'breached compliance rules'
Lloyd’s of London has said its former chief executive John Neal breached compliance rules during his time at the insurance broker for failing to disclose a personal relationship with a female employee.
While it found “no conclusive evidence” that Neal and the former employee had “engaged in a romantic relationship during their employment at Lloyd’s”, it said their relationship “was sufficiently close during their employment at Lloyd’s that it could be viewed as creating a perceived conflict of interest.”
Both parties failed to disclose their relationship to the business, Lloyd’s said.
Sir Charles Roxburgh, chair of Lloyd’s said:
Trust, integrity and effective oversight are fundamental to Lloyd’s. Based on the findings of this investigation, we have concluded that the conduct of the former chief executive fell significantly below the standards expected of him. It also established serious failings in the governance standards and in following processes, most worryingly in the handling of whistleblowing reports. These were serious failures that should never have been allowed to happen.
These findings underline the importance of robust governance structures and processes. Where standards were not best-in-class, we have put that right. However, governance can only ever be part of the answer. Culture and personal accountability also play a vital role. That is why the Council of Lloyd’s is unequivocal about the behaviour we expect from everyone, at every level, at the Corporation of Lloyd’s.
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Mirror publisher slumps 20% as online traffic falls
It is a gloomy picture over at Reach, the company behind the Daily Mirror and the Daily Star, with its shares slumping by more than 20% this morning.
The publisher told investors its digital revenue had taken an 11% hit in the first half of the year, as fewer referrals from Google triggered a sharp drop in its online traffic. On-platform page views were 40% lower compared with the same point last year and indirect revenues fell 16.2%.
Meanwhile, its print revenue continued its decline, falling 8.3% to £178m. Overall it made a statutory operating loss of £43.5m, mostly driven by £36.1m non-cash impairment charge connected to the closure of two print sites, £21.7m amortisation of publishing rights and titles and £18.9m of restructuring costs.
Duncan Ferris, an analyst at the broker Freetrade, said the company was stuck in a “strange position, cutting costs to keep profits afloat as readers bail out at a frightening pace.”
Its revenue deterioration has accelerated, with digital headaches only worsening as declining Google referrals caused web traffic to tumble and dealt a heavy blow to programmatic advertising.
…Extensive cost-cutting did shield company profits from much of the impact, but operating profits still slipped. Measures to control costs have been aggressive, with Reach shuttering print operations in Watford and Glasgow.
The central issue is failing revenue across both parts of its business. Neither print nor digital currently look up to delivering growth. Reach can cut costs to preserve profit, but there’s only a limited amount it can do here before it runs out of road.
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Oil continues rise as Middle East conflict escalates
Oil prices are continuing their upward march this morning, as the US military completed its 11th night of strikes on Iran.
Brent crude, the international benchmark, is up 2.7% this morning to $93.46 a barrel – and no doubt contributing to fears in the UK that inflation is unlikely to keep falling.
European stock markets have had a shaky start to the day – the Stoxx Europe 600, which tracks the biggest companies on the continent, is down 0.3% this morning, led by falls in its tech sector. The German Dax is up very slightly by 0.03%, while the French Cac 40 is down 0.1%. The UK’s blue chip FTSE 100 index has slipped by 0.02%.
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JD Wetherspoon issues fourth profit warning of the year
If ever there was need for more evidence that pubs are being squeezed particularly hard by rising inflation – JD Wetherspoon has just issued its fourth profit warning in seven months.
Chairman and founder Tim Martin said in a brief update this morning:
Profits for the year are likely to be below market expectations, with marginally lower sales than anticipated in the final quarter, combined with higher costs in the areas of food, labour, repairs, energy and business rates.
The FTSE 250 pub chain said its like-for-like sales increased by 4% in the 12 weeks to 19 July 2025, compared with the same period last year. Year-to-date like-for-like sales were up by 4.2%.
The company last warned in May that profits might come in “slightly below” the market’s forecasts at the time of £73m.
Shares in the pub chain have slumped 9.6% this morning.
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Kallum Pickering, chief economist at the broker Peel Hunt, also argues that the inflation cooldown will not last for long – and that the rate could in fact rise above 3% by the end of this year.
Any dovish impulse for the Bank of England from the softer UK headline CPI will be more than offset by the firmer core reading. The June data are unlikely to alter money market bets for a hold next week or a hike in September — however, we believe markets will be surprised in September when the BoE continues to hold.
Today’s data are unusually backward-looking nature given the recent re-escalation in the Middle East. Looking ahead, the inflation picture becomes more complicated. Commodity prices are climbing again as Middle East tensions intensify, and July’s energy-price-cap increase will lift household bills.
Inflation therefore looks set to rise above 3% in H2. However, as UK underlying fundamentals remain disinflationary, there is scope, in our view, for further positive surprises even as price momentum picks up.
Rob Booth, chief UK economist at the consultancy Pantheon Macroeonomics, also predicts that inflation is likely to ramp up to more than 3% this year.
Looking ahead, previous Chancellor Rachel Reeves’ temporary summer VAT cuts on meals and recreation will slow services inflation further in July before we see a sharp rebound to 4.0% in September as those tax cuts expire. We have to take seriously the possibility that business surveys that had previously provided an excellent steer to underlying services inflation have now gone awry. But for now, underlying services inflation slowing well below the survey steer shown in our chart below points to some upward correction ahead. We look for inflation to peak at 3.3% in November, after taking account of new PM Mr Burnham’s VAT cut on energy utilities.
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The biggest downward effect for inflation came from motor fuels, particularly diesel, the ONS found.
The average price of diesel fell by 10.7p per litre between May and June, compared with a a fall of just 0.6p in the same period last year. The average price stood at 176.4p per litre last month.
Meanwhile petrol prices fell by 2.1p per litre in June – the first time it has dropped since the start of the conflict in the Middle East in February. Its June average was 155.3p per litre.
Food inflation slows to 1.7%, as sugar, chocolate and fat prices drop
A slowdown in food prices will be particularly welcome news for shoppers.
The ONS says food and non-alcohol drink prices rose by 1.7% in June, down from an annual rate of 2.2% in the May. On a monthly basis, it slipped 0.2%.
The biggest falls were in sugar, gams, syrups, chocolate and confectionery.
There are also some drops in the price of oils and fats (particularly margarine and other vegetable oils), meat (particularly beef), dairy, and vegetables.
Harvir Dhillon, an economist at the British Retail Consortium, an industry body, said the fall in food prices drop had also been enabled by strong competition between supermarkets.
Food inflation had a particularly notable drop, its lowest in almost two years, with prices falling on the month. This was driven largely by intense competition between supermarkets, trying to entice their customers during a warm spell of weather, despite supply chain pressures.
Dr Liliana Danila, chief economist at The Food and Drink Federation (FDF), adds:
We continue to anticipate rising food price inflation as the year goes on, however this is likely to be lower, come later and plateau for longer than the previous inflationary cycle.
With disruption the new norm for the food system, it’s critical that the new prime minister takes food security seriously and is ready to work in partnership with industry to ensure our food system is investing for growth and resilience, from vital tech adoption to future-facing skills.
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Inflation slowdown may be 'false dawn', businesses warn
Businesses are not optimistic that a slowdown in inflation will last. Martin Sartorius, lead economist at the Confederation of British Industry (CBI), predicts that inflation will ramp up over the coming months.
We expect this easing will prove temporary. Inflationary pressures are likely to firm over the next few months, reflecting the ongoing impact of the Iran conflict on energy bills and some passthrough to domestic prices. Renewed tensions in the Middle East mean that households and businesses will continue to face an uncertain and volatile outlook as we head towards autumn.
We anticipate the Bank of England’s Monetary Policy Committee to keep interest rates unchanged when it meets next week, as it maintains a ‘wait and see’ approach to the economy. Although risks remain elevated, a loosening labour market, soft domestic activity, and tighter financial conditions mean that the Committee is unlikely to raise rates in the near term.
Suren Thiru, chief economist at the accounting body ICAEW, describes the inflation slowdown as a “false dawn”.
June’s slowdown is a false dawn as it may have already been reversed this month with higher energy bills, following Ofgem’s energy price cap rise, likely to have lifted inflation above 3%.
Though stubborn services and core inflation suggest that the UK remains exposed to the inflationary fallout from the Iran war, weaker wage growth and a sluggish economy will help blunt any second‑round effects.
Renewed US–Iran hostilities have reignited inflation fears, with rising oil prices and supply chain pressures putting the prospect of inflation touching 4% later this year back on the table, despite October’s VAT cut on electricity bills.
Elevated inflation will likely become a more notable economic headache for the new chancellor in the coming months by deepening the cost‑of‑living crunch, while also squeezing his fiscal headroom, raising borrowing costs, and increasing financial market volatility.
These benign figures quash any lingering prospect of a July rate rise, particularly as rate-setters may want to assess the impact of any measures announced by the new prime minister before deciding whether to tighten policy again.
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Government has 'much more to do' to help with cost of living, says chancellor
The new chancellor John Healey has said that while a falling rate of inflation is welcome news, there is still much more the government should do to help.
He said in a statement this morning:
Falling inflation is news families want to hear but there is much more to do to give people the breathing space they need.
That is why yesterday we cut VAT on electricity bills and today we’re announcing a £2 cap on bus fares from January. We have chosen to focus on the cost of living in our first week, signalling that concern for working people will be at the heart of everything we do.
Both these changes are a win-win. They help keep inflation down, while helping people afford the essentials.
Burnham’s government announced the cut on VAT on electricity bills yesterday, in a move that is expected to reduce bills by an average of £45 a year from October.
And this morning, Burnham announced that single bus fares across England will be capped at £2 from January.
The nationwide cap is currently set at £3 until the end of March 2027 although some areas – including London and Greater Manchester, where Burnham set a £2 limit as mayor – have lower top rates for single tickets.
Introduction: UK inflation drops at faster-than-expected pace
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Some welcome news to kick off the day: inflation in the UK slowed in June to 2.6%.
Economists had expected that the consumer price index would fall to 2.7%, down from 2.8% in May. But the rate has fallen more than expected, partly thanks to a drop in motor fuel prices, particularly diesel, according to the Office for National Statistics.
Grant Fitzner, chief economist at the ONS, said:
Food prices fell this month, driven by products including chocolate, margarine and beef. Clothing prices also fell with the start of summer sales, with bigger discounts than last year.
The cost of raw materials dipped for the first time since January, mainly due to the lower price of crude oil, while the increase in the costs of goods leaving factories slowed again.
But analysts are warning that there is still a risk inflation could ramp up this year, as conflict in the Middle East continues.
George Brown, senior economist at Schroders, said:
Lower fuel prices applied the brakes to inflation in June, but this rear-view mirror picture doesn’t tell us much. With oil prices rising again amid renewed tensions in the Middle East, there could be inflation issues further down the road.
For the Bank of England, the crucial question is whether this remains an energy shock or becomes a domestic inflation problem. So far, a cooling labour market suggests there is little risk of the sort of second-round effects that would warrant tighter monetary policy.
That should allow policymakers to keep a steady hand on the wheel. While markets are pricing more than two rate hikes over the next year, we think the Bank can stay on hold as it gauges whether the latest energy shock is just a temporary bump in the road or something more persistent.”
Still, the slowdown in inflation will likely be welcomed by the new team in Downing Street, as Andy Burnham promises to provide more cost of living support.
The agenda
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7am BST: UK inflation for June
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7am BST: Wetherspoon Q4, Reach half-year results
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9pm BST: Alphabet Q4 results
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