Key events
Angela Rayner urged Rachel Reeves to consider a series of wealth tax rises, it has been revealed, in a move that underscores growing unease within the government over the chancellor’s tight spending plans.
A memo sent by the deputy prime minister to the chancellor before March’s spring statement proposed eight potential tax measures worth an estimated £3bn to £4bn a year, including reinstating the pensions lifetime allowance and increasing the corporation tax rate for banks.
The proposals were not adopted, with Reeves opting instead to announce cuts to public spending in March, in line with her self-imposed fiscal rules.
While the memo, obtained by the Daily Telegraph, was framed as a discussion document, it is likely to be seen as Rayner staking out ground for Labour’s left wing within a cabinet increasingly shaped by Starmer-aligned centrists.
Another April inflation spike will add to the Bank of England’s unease, said JPMorgan economist Allan Monks.
He noted that wage growth remains high.
Combined with the BoE’s recent hawkish rhetoric – including Huw Pill’s comments yesterday, but more specifically the three or four hawks in the centre-ground identified in the March minutes – this CPI [consumer prices index] release likely closes the door to a June cut and increases the risk that the BoE will pause in August.
We maintain our August call for now, with plenty of data still to come. We expect the BoE will still be surprised to the downside on GDP and wage growth.
Average annual household bills in the uK have increased by £112 to £5,606 – up from £5,494 last year, according to the comparison site Compare the Market.
The research shows energy, council tax, and water bills have risen by a combined average of £391.
However, the cost of car insurance has fallen by £268, on average, year-on-year. The average cost of home insurance is also down, by £11 year-on-year in April to £212.
The TUC is calling on the Bank of England to stay the course on interest rates.
TUC general secretary Paul Nowak said:
Today’s unwelcome rise in inflation – driven by higher energy and water bills – is painful but not unexpected.
The Bank of England must stay the course and continue to cut interest rates to relieve pressure on households. High rates have already choked growth and hit businesses hard. Lowering them will put more money in people’s pockets and help them spend in their local economies.
The TUC is a federation of 48 trade unions and represents 5.5 million workers.
A £25m post-Brexit border control post in Portsmouth may have to be demolished if the UK government’s deal with the EU removes the need for health and veterinary checks on food imports, according to the port’s director.
Mike Sellers had already spoken out last year about how more than half of the site would never be used because planned checks on EU food and plant products had been pared back since it was designed, leading to the building being called a “white elephant”.
The hi-tech facility at the UK’s second busiest cross-Channel terminal was one of more than 100 border control posts (BCPs) around the country built to government specifications to handle post-Brexit checks on imports subject to sanitary and phytosanitary checks, such as meat, fish, dairy products, fruit and vegetables.
On the trade front, US chip exports controls have been a “failure”, the head of Nvidia, Jensen Huang, told a tech forum on Wednesday, as the Chinese government separately slammed US warnings to other countries against using Chinese tech.
Successive US administrations have imposed restrictions on the sale of hi-tech AI chips to China, in an effort to curb China’s military advancement and protect US dominance of the AI industry. But Huang told the Computex tech forum in Taipei that the controls had instead spurred on Chinese developers.
The local companies are very, very talented and very determined, and the export control gave them the spirit, the energy and the government support to accelerate their development.
I think, all in all, the export control was a failure.
China has a vibrant technology ecosystem, and it’s very important to realise that China has 50% of the world’s AI researchers, and China is incredibly good at software.
Oasis fans are expected to splash out more than £1bn on the reunion tour including tickets, accommodation, food, drink, outfits and merchandise, according to research that found a quarter of ticket holders would have been happy to spend even more.
The band’s comeback concerts after a 15-year hiatus are expected to be the most popular, and profitable, run of gigs in British history.
Research by Wonderwallets, part of the Barclays Consumer Spend report, estimates £1.06bn will be spent by the 1.4 million fans attending the 17 UK tour dates – more than £757 a person.
However, the excitement around once again being able to see the Mancunian band live has been marred by a scandal over “dynamic” ticket pricing, which led to some fans paying more than £350 for tickets with a face value of £150, and has prompted an investigation by the UK competition watchdog.
Joanna Partridge
Electrical goods retailer Currys has reported higher profits and a jump in sales, and said it is benefiting from lower interest rates.
The company said in a trading update to the stock market that it expects to report pre-tax profit of around £162m for the year to 3 May, higher than its previous £160m guidance, and 37% higher than a year earlier.
Currys said improving finances reinforced the board’s decision to resume dividends to shareholders.
The retailer – which struck a more gloomy tone in January, when it said it was entering a period of “depressed hiring” – said like-for-like sales growth had accelerated to 4% in the past 17 weeks since the key Christmas trading period. It said it was helped in part by lower interest costs.
Alex Baldock, Currys chief executive, said:
We finished another year of strengthening performance on a high note with encouraging momentum and accelerating sales growth in both the UK and Ireland and the Nordics. In both, we’ve grown profits by delivering sales growth, market share gains and gross margin increases.
The company is due to report its full-year results in early July.
M&S expects cyber-attack to last into July and cost £300m in lost profits
Marks & Spencer has warned that its recent cyber-attack will disrupt its online business into July, and calculated a £300m hit to profits this year.
The number was revealed as M&S said pre-tax profits rose by a better-than-expected 22% to £876m in the year to 30 March, shortly before the attack, as sales rose 6% to £13.9bn.
The company said it had more than £400m of net funds in the bank so that it had been “in the best financial health we’ve been in 30 years” before the hackers hit and the expected financial impact would be significantly mitigated by insurance, cost reductions and other actions.
Analysts said they expected to cut profit forecasts for this year by at least 10% but the City is expecting at least £100m of the profits hit to be pulled back from insurance and other measures.
Thames Water and Anglian Water face 53 criminal investigations over sewage
As water bills including sewerage rise across the country – the most since at least 1988 –two of Britain’s biggest water companies, Thames Water and Anglian Water, face more than 50 criminal investigations between them as part of a crackdown on sewage dumping, according to the government .
The utilities were subject to the bulk of a record 81 investigations into water companies between last July’s general election and March 2025, according to new data.
New powers to claw back the costs of the Environment Agency investigations will be used, meaning the “polluter will pay”, sources told the Guardian.
This could prove very costly for Thames, the heavily indebted supplier that topped the charts of active investigations at 31 and will probably have to fund the majority of them.
Britain’s biggest water company, which recently came within five weeks of running out of funds, attempted to persuade the water regulator to let it off hundreds of millions of pounds of fines. Significant further costs could risk tipping it into a special administration, a form of nationalisation.
Thames Water is rushing to find a buyer willing to inject cash as it teeters on the brink of temporary nationalisation. The company, which has 16 million customers and 8,000 employees, is labouring under £20bn of debt.
The UK inflation numbers aren’t as bad as they look, said ING’s developed markets economists James Smith.
Services inflation, which rose much further than expected, was driven by a big change in road tax and the timing of Easter. It should fall back from April’s 5.4% figure to the 4.5% area this summer, keeping the Bank of England on track for quarterly rate cuts through this year and into 2026.
Services is the part of the inflation basket that the Bank of England cares most about, and this was a much larger pick-up than economists or the Bank had expected.
But, that jump doesn’t look as problematic as at first glance once you drill into it. Smith calculates that half of that change was solely down to the rise in road tax. That will stick around for the next 12 months, then drop out of the annual comparison. The Bank of England will almost certainly ignore this, as it does with changes in other taxes like VAT, he said.
Aside from road tax, the remainder of the increase in services inflation can be almost entirely accounted for by air fares and package holidays, both of which were affected by the timing of Easter.
Away from road tax and travel, several other key areas saw further disinflation in April. Restaurants/cafes, medical care services and rents all saw their respective rates of annual inflation fall.
More generally, surveys show that pricing power is ebbing away. We expect services inflation to fall back to the 4.5% area this summer and lower still in 2026, when things like road tax drop out of the annual comparison.
That’s still too high for many of the Bank of England’s rate-setters, which is why we have long argued policymakers are unlikely to speed up the pace of easing this year. But we think an August cut is still highly likely, and the quarterly pace of rate cuts can continue through this year and into 2026.
Core inflation, which strips out volatile food and energy costs, rose more than expected to 3.8% on a yearly basis, from 3.4% in March. Services inflation jumped to 5.4% from 4.7%.
Monica George Michail, associate economist at the National Institute of Economic and Social Research, a think tank, said inflation is likely to stay higher in the coming months. She expects just one further interest rate cut this year.
The Joseph Rowntree Foundation has described the jump in inflation as “alarming” that have “really hit home” for struggling households, with more people already relying on food banks.
JRF economist Maudie Johnson Hunter said:
Alarming bill rises in April, such as water, energy and council tax, have really hit home for families already struggling to make ends meet. The Bank of England central projection is for the inflation rate to stay over 3% for the rest of 2025, meaning many of these core bill increases will remain baked into higher household outgoings, as incomes continue to fall short of essential costs.
Figures out today from Trussell also show that 2.9m emergency food parcels were provided across the UK between April 2024 and March 2025 to people in hardship, up by just over 50% in the last five years.
The government needs to take action to ensure their commitment to improving living standards moves from rhetoric into reality for households. Our research shows real incomes are currently projected to be lower in 2029 than they are today, which would be a damning legacy for a government who came to power promising to end the need for food banks.
