UK government borrowing in June was £16bn, slightly below forecasts, as new Prime Minister Andy Burnham announced VAT cuts on electricity bills. Despite this, public finances remain fragile, and high debt levels persist, while the unemployment rate held steady at 4.9%.
Andy Burnham assumes the UK premiership amidst economic shocks and weak growth, pledging "good growth in every postcode" by reindustrialising, devolving power, tackling the cost of living, addressing youth unemployment, boosting social housing, and navigating defence spending and fiscal rules.
Research by the Health Foundation indicates that restoring the UK population's health to 2014 levels could boost GDP by 2% (£57bn) and generate a £72bn dividend for public finances. Healthy life expectancy fell by two years in a decade, increasing long-term health conditions and associated NHS and disability benefit costs.
Hong Kong's civil service chief pledged a future "reasonable and attractive" pay adjustment after the Legislative Council approved a flat 2% rise for civil servants. Lawmakers criticized the 2% increase, effective retroactively from April, as insufficient compared to survey recommendations and union demands, raising concerns about civil service appeal and the local economy.
Two letters debate public sector defined-benefit pension schemes. One argues the £1tn liability figure is misleading and that good pensions help attract staff, while the other suggests raising pay to allow workers to fund their own pensions.
Malaysia's Defence Minister Mohamed Khaled Nordin stated that while the US has the right to ask allies to increase defence expenditure, Malaysia, as a developing economy, faces limitations. His comments followed US Defence Secretary Pete Hegseth's call for Asian allies to raise military spending to 3.5% of GDP to counter China's military build-up. Malaysia's 2026 budget allocated 21.74 billion ringgit for defence.
The British premiership is facing unprecedented instability, with frequent PM changes hindering long-term strategy and economic progress. Unlike past periods of churn, current political fragmentation and societal divides make governing exceptionally difficult.
The UK bond market sees sharp sell-off as Keir Starmer's leadership is challenged, fearing political instability and higher borrowing, reminiscent of Liz Truss's tenure.
Chancellor Rachel Reeves is fighting on multiple fronts against critics of her economic stewardship as the Middle East conflict threatens to derail the UK economic recovery she says was underway. Reeves has labelled Trump's war on Iran 'folly' and attacked Conservative opponents, while her team insists the economy was improving before the latest shock. Official data showing 0.5% growth in February and borrowing down £20bn support her case, but oil prices at $100/barrel and potential interest rate rises could wipe out much of her fiscal headroom. An Iran Board meets twice weekly at the Treasury to discuss emergency measures.
The Institute for Fiscal Studies found that the Conservatives' Help to Buy scheme primarily benefited high-earners in the top 10%, accelerating housing and wealth inequalities. Rather than helping people onto the property ladder, the policy helped already fortunate buyers accumulate wealth faster or purchase more expensive properties. The study adds to previous findings showing the scheme failed to address structural housing costs and represented a lost opportunity to invest in social housing or council building programmes.
UK government borrowing fell in the last financial year, but economists warn that the Iran war will likely drive borrowing higher and slow growth. Multiple UK companies have issued profit warnings, and service sector costs have seen their largest jump in 30 years.
UK public finances are under pressure from the Iran war, with experts predicting higher government borrowing due to increased energy prices and debt interest, despite a recent small drop in the annual deficit.
Government data suggests Shabana Mahmood's proposed migration changes will save only £600m, a fraction of the £10bn claimed by the Home Secretary. Experts warn the changes could deter migrants and lead to revenue loss.
