Amid bond market jitters<\/a> over the Middle East conflict and a Labour leadership challenge, the figure was \u00a33.4bn higher than forecast by City economists and the Office for Budget Responsibility.<\/p>\n Rising borrowing costs on financial markets drove the UK\u2019s debt interest payments to \u00a310.3bn in April, \u00a3900m more than a year ago and the highest in any April on record.<\/p>\n Motorists cutting back on petrol and fuel purchases at the steepest rate since the Covid pandemic in 2020 drove retail sales in Great Britain to their biggest monthly decline in a year.<\/p>\n The Office for National Statistics<\/a> (ONS) said the overall volume of retail sales plunged by 1.3% in April compared with the previous month, the biggest contraction since May last year and worse than the -0.6% forecast.<\/p>\n Fuel purchases plunged more than 10% month on month, the biggest slide since November 2020, when monthly sales fell 14.8% as pandemic protocols put households into a second national lockdown.<\/p>\n The US cosmetics company Est\u00e9e Lauder has ended merger talks<\/a> with its Spanish rival Puig over plans to create a fashion and beauty group worth almost $40bn (\u00a330bn\/\u20ac34.5bn) after the two sides failed to agree on the balance of power in the combined company.<\/p>\n Est\u00e9e Lauder, one of the world\u2019s biggest manufacturers of skincare, makeup and fragrances, owns brands including Clinique, Bobbi Brown and Tom Ford Beauty<\/a>.<\/p>\n Puig, which floated on the Madrid stock market two years ago, owns labels including Jean Paul Gaultier, Charlotte Tilbury, Carolina Herrera and Dries van Noten.<\/p>\n The chief executive of Standard Chartered has apologised for referring to some of the almost 8,000 staff that are set to lose their jobs to artificial intelligence as \u201clower-value human capital\u201d<\/a>.<\/p>\n Bill Winters offered the apology after a backlash over comments he made earlier this week as the London-headquartered lender became one of the first major global banks to lay out plans to cut about 7,800 back-office roles, primarily in response to AI.<\/p>\n Share<\/a><\/p>\n Key events<\/p>\n Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/p>\n US stock market opens higher<\/p>\n US stocks are rising this afternoon, with the S&P 500 up 0.4% and putting it on track for its eighth consecutive week of gains and possibly its longest winning streak since 2023.<\/p>\n The tech heavy Nasdaq is up 0.4%. Shares in US cosmetics company Est\u00e9e Lauder jumped 11% after it said it ended merger talks with its Spanish rival Puig over plans to create a fashion and beauty group worth almost $40bn (\u00a330bn\/\u20ac34.5bn) after the two sides failed to agree on the balance of power in the combined company.<\/p>\n Share<\/a>Bodycote receives \u00a3.15bn takeover bid<\/p>\n Bodycote, the FTSE<\/a> 250 thermal processing services provider, has said it received a conditional takeover offer from Apollo that would value it at about \u00a31.5bn.<\/p>\n The US asset manager has proposed an all-cash offer at 885p per share, about 27% higher than Bodycote\u2019s closing price yesterday. Its shares are now up 16% to 815.5p.<\/p>\n Bodycote shareholders would also be entitled to a proposed final dividend of 16.1p per share for the 2025 financial year, though nothing has been agreed yet.<\/p>\n The company reiterated that there can be no certainty that any offer will be made. City takeover rules mean that Apollo must announce whether it intends to make an offer by 5pm on 19 June.<\/p>\n Share<\/a>UK bond yields on track for biggest weekly decline in two years<\/p>\n The yield on UK bonds are now on track for their biggest weekly decline since 2024, as a raft of gloomy economic data this week has meant investors are paring back their expectations of higher interest rates from the Bank of England.<\/p>\n The yield on the 10-year gilt has fallen 0.26 percentage points this week to 4.9%, after official figures showed this week that inflation slowed to 2.8% in April, the lowest rate in more than a year.<\/p>\n The fall was partly down to Ofgem\u2019s lower energy price cap<\/a>, which reduced the typical annual dual-fuel bill in Great Britain to \u00a31,641 from April \u2013 a fall of \u00a3117. Electricity prices dropped 8.4% in April, the ONS said.<\/p>\n Concerns are also unwinding around the impact of a possible Labour leadership challenge from Andy Burnham, the Manchester mayor who has reiterated his commitment to the government\u2019s self-imposed borrowing.<\/p>\n Kallum Pickering, chief economist at the broker Peel Hunt, says it is \u201cincreasingly hard to square incoming UK data pointing to an economy which is rapidly losing pressure\u201d with the idea that the Bank of England may need to tighten to help protect the economy from the impact of the Iran war.<\/p>\n double quotation markUK finances look vulnerable to a host of threats, including evidence of cooling momentum, rising interest rates, and the risk of even more planned borrowing in case Prime Minister Keir Starmer is ousted and replaced by a more left-wing alternative.<\/p>\n Share<\/a><\/p>\n Updated at\u00a007.38 EDT<\/p>\n UK consumer confidence rises despite Middle East uncertainty, poll says<\/p>\n It is a fragile economic backdrop in the UK, but GfK\u2019s consumer confidence index suggests that UK consumer confidence rose in May.<\/p>\n The index \u2014 a measure of how people view their personal finances and broader economic prospects \u2014 rose two points from the previous month to -23 in May. Economists polled by Reuters had expected confidence to fall to -28.<\/p>\n However, its major purchase index dropped two points -20, four points below May last year.<\/p>\n Neil Bellamy, consumer insights director at GfK, said:<\/p>\n double quotation markConsumers appear to be in a more generous mood in May, with a two-point increase in the headline score and improving perceptions of both personal finances and the wider economy.<\/p>\n In contrast, there is a drop in major purchase intentions, with this measure down two points to -20 in May, its lowest level since January 2025.<\/p>\n Key income groups are recording more worrying major purchase scores. For those earning \u00a314,500 to \u00a324,999, for example, the May score is -33, a 19-point fall below the -14 seen in April.<\/p>\n Similarly, there is also a steep fall within the average household income group (\u00a335,000 to \u00a349,999), with a 10-point drop from -17 to -27.<\/p>\n \u2026Moreover, our savings measure \u2013 down by the unusually high amount of 10 points \u2013 suggests people are diverting funds from savings accounts to pay for day-to-day expenses. Inflation may have fallen in April, but with price pressures expected to rise again and continued uncertainty around interest rates, it\u2019s unlikely May marks the beginning of a sustained improvement.\u201d<\/p>\n GfK Consumer Confidence Barometer \u2014 UK Measures \u2013 May 2026 Photograph: GfK Consumer Confidence Barometer powered by NIMShare<\/a><\/p>\n Updated at\u00a006.04 EDT<\/p>\n Oil prices rise as US-Iran tensions continue<\/p>\n Oil is on the up this morning. Brent crude, the international benchmark for oil prices, has risen by 3.3% to $105.92 a barrel.<\/p>\n Kathleen Brooks, of the broker XTB, says the market is still holding out hope that there will be a resolution to the war in the Middle East.<\/p>\n double quotation markThe market continues to think that a deal between the US and Iran is likely, even if we have had mixed messages from both sides. The US has said that a deal is near, but Iran cannot have a nuclear weapon, whereas, Iran has said that it wants to keep its uranium stores. From a trading perspective, it is best to ignore the noise and rhetoric from both sides and concentrate on the numbers.<\/p>\n Lower oil prices and bond yields can keep stocks supported in the short term, even if the longer-term outlook depends on the full reopening of the Strait of Hormuz.<\/p>\n Share<\/a>EU suspends customs duties on fertiliser imports The EU has suspended customs duties on imports of fertiliser due to price spikes in the wake of the US and Israel war on Iran.<\/p>\n The Council of the EU, representing member states, said on Friday however that the duty free imports would not apply to Russia or its ally Belarus on account of the war in Ukraine.<\/p>\n Duties, which currently range between 5.5% and 6.5%, will also be suspended on imports of urea and ammonia, key ingredients in the manufacture of fertiliser.<\/p>\n Makis Keravnos, finance minister of Cyprus, which currently holds the EU presidency, said:<\/p>\n double quotation markToday\u2019s decision gives European farmers better access to affordable, reliable fertiliser supplies \u2013 good news for the agriculture sector and EU consumers alike. At the same time, we are accelerating away from Russian and Belarusian products and building more resilient supply chains and partnerships globally.<\/p>\n The world\u2019s largest supplier of fertiliser is the Norwegian based Yara which has plants across Europe. It recently raised concerns that while Europe could probably tolerate price rises, poorer nations in Africa were at risk.<\/p>\n Share<\/a><\/p>\n Updated at\u00a005.14 EDT<\/p>\n Games Workshop is the best performer in the FTSE<\/a> 100 this morning, with its shares up almost 3% after saying that it expects core revenue for the year ended in May of at least \u00a3625m, compared with \u00a3565m last year, and pre-tax profit of at least \u00a3265m.<\/p>\n BT is another riser, with its shares up 2.9% after the company said yesterday it has increased its target for cost savings to \u00a33.7bn and said it was extending its restructuring programme by a year to the end of March 2030.<\/p>\n Reuters also reported yesterday that Indian conglomerate Bharti Enterprises \u200cis seeking to increase its stake in BT to just under the threshold that would require it to make a full takeover offer for the telecoms group.<\/p>\n A Bharti spokesman told Reuters that the company was pleased with its current 24.95% shareholding and \u201ccurrently has no plans to increase its stake.\u201d<\/p>\n Share<\/a>Bank boss apologises for calling staff ‘lower-value human capital’<\/p>\n The boss of Standard Chartered has apologised for saying that AI would replace \u201clower-value human capital\u201d, after his comments triggered a severe backlash this week.<\/p>\n On Tuesday, the London-headquartered lender outlined plans to cut more than 7,000 jobs over the next four years as it increasingly uses AI.<\/p>\n He said:<\/p>\n double quotation markIt\u2019s not cost-cutting. It\u2019s replacing in some cases lower-value human capital with the financial capital and the investment capital we\u2019re putting in.<\/p>\n This morning he posted on LinkedIn that he recognised his \u201cchoice of words\u201d has \u201ccaused upset to some colleagues.\u201d<\/p>\n In a separate earlier post however, he appeared to defend his comments, noting that the bank has for many years invested in staff whose roles have been disrupted by automation.<\/p>\n double quotation markIn that context, I said that lower-value roles are more vulnerable to automation, and that we have a responsibility to help colleagues move into higher-value roles.<\/p>\n \u2026We will continue to speak honestly about the impact of technological change, and we will continue to act responsibly in helping our people to adapt and succeed.<\/p>\n Share<\/a><\/p>\n Updated at\u00a004.12 EDT<\/p>\n UK bond yields dip despite higher borrowing figures<\/p>\n UK gilt yields are falling this morning, as investors digest the latest public borrowing figures against a fragile economic backdrop.<\/p>\n The yield on the 10-year gilt is down 0.04 percentage points to 4.93%, while the two-year gilt is down 0.02 percentage points to 4.34%.<\/p>\n It comes as investors pare back their expectations of interest rate rises, amid fears around high unemployment and the prospect of higher inflation this year.<\/p>\n European stocks have also opened broadly higher this morning, with the UK\u2019s blue chip FTSE<\/a> 100 index up 0.3%. The Stoxx Europe 600, which tracks the biggest companies on the continent, is up 0.7%.<\/p>\n Share<\/a>‘Our fiscal rules are working,’ business secretary says<\/p>\n Business secretary Peter Kyle is now defending the government\u2019s economic record on BBC Radio 4\u2019s Today programme, after official figures showed public sector net borrowing \u2013 the difference between government spending and income \u2013 was \u00a324.3bn in April 2026, \u00a34.9bn higher than in April 2025.<\/p>\n He says:<\/p>\n double quotation markInflation has just fallen, growth is to the top of the G7. I think you\u2019ll find our fiscal rules are having a positive impact on the fundamentals of our economy right now.<\/p>\n He adds that Rachel Reeves is \u201cacutely aware\u201d of high borrow costs that \u201cstem back to the mini-budget and Liz Truss experiment\u201d.<\/p>\n double quotation markIt is very hard as a country\u2026 to get a grip back on our reputation around the world. Because the bond markets are global, they\u2019re not just domestic and they\u2019re looking at us compared to other countries, and it takes a long time to get a grip back on the reputation.<\/p>\n Share<\/a><\/p>\n Updated at\u00a006.06 EDT<\/p>\n Est\u00e9e Lauder and Puig end merger talks to create $40bn beauty giantEst\u00e9e Lauder\u2019s brands include Clinique and Tom Ford Beauty. Photograph: Shannon Stapleton\/Reuters<\/p>\n US cosmetics group Est\u00e9e Lauder and Spanish perfumery Puig have ended merger talks that would have created a $40bn beauty giant.<\/p>\n Est\u00e9e Lauder said on Thursday that \u201cthe parties have terminated discussions regarding a potential business combination\u201d.<\/p>\n The merger would have combined Est\u00e9e Lauder\u2019s portfolio of beauty brands, including Clinique and Tom Ford Beauty, with Puig\u2019s Charlotte Tilbury and Jean Paul Gaultier in one group.<\/p>\n However, there were concerns among investors that a deal could have stretched the company\u2019s balance sheet and distract from its turnaround plan. Shares in in Est\u00e9e rose by more than 10% in after hours trading on Thursday.<\/p>\n Est\u00e9e chief executive Stephane de La Faverie said in a statement:<\/p>\n double quotation markWe have one of the most powerful portfolios of prestige beauty brands in the world … and we believe we are uniquely positioned to drive sustainable long-term growth globally.<\/p>\n Share<\/a><\/p>\n Updated at\u00a006.01 EDT<\/p>\n British shoppers likely to keep spending less, retail body says<\/p>\n The British Retail Consortium has reacted to official retail figures this morning, which showed a drop last month.<\/p>\n Harvir Dhillon, economist at the industry body, said:<\/p>\n double quotation markWe are starting to see signs that concerns over the Middle East conflict and its impact on living costs are leading shoppers to rein in their spending in many areas.<\/p>\n \u2026Discretionary spend is likely to drop further as the cost of living squeeze worsens. To protect consumers and support economic growth in the months ahead, government should avoid further inflationary pressures through domestic policy costs. It can start by cutting non-commodity energy charges, which include the taxes and levies that account for two thirds of retailers\u2019 energy bills, and addressing the triple packaging tax that affects all retailers and their supply chains.\u201d<\/p>\n However, Susannah Streeter, of the broker Wealth Club, notes there are some signs the mood is a little less downbeat than feared.<\/p>\n double quotation markThere\u2019s been a tentative improvement in the closely watched GfK index, though it remains deep in negative territory, rising to -23 in May from -25 in April. Many households, though, have been forced to dip into cash stashes to deal with rising prices, with the savings gauge plunging. Emergency pots will only last so long, and once more bills start to rise, there could be a fresh tightening of spending ahead.<\/p>\n Share<\/a><\/p>\n Thomas Pugh, chief economist at the audit, tax and consulting firm RSM UK, says public finances are \u201conly likley to get worse\u201d.<\/p>\n double quotation markIt now looks inevitable that government borrowing will soar past the \u00a3115.5bn that the OBR expected for this financial year back in March. Indeed, a weaker economy, rising unemployment rate, soaring gilt yields and some additional fiscal support for households and businesses will combine to push borrowing significantly higher this year. We have pencilled in an additional \u00a320bn to \u00a330bn of borrowing this year.<\/p>\n What\u2019s more, if gilt yields remain around current levels through to the next budget, the chancellor will probably lose around \u00a310bn of headroom in 2029\/30 against her fiscal rules. That doesn\u2019t preclude a larger bailout now \u2013 as long as it is temporary. Instead, the real constraint on borrowing is financial markets. With 10-year gilt yields already above 5% and the budget deficit above 4%, the UK is entering the crisis in a precarious fiscal position.<\/p>\n That tough fiscal picture will remain the same for whoever ends up in Downing Street later this year. The government is facing serious fiscal pressure from the war in Iran. The risk is that a sharp increase in borrowing, and borrowing costs, this year means a bigger adjustment is needed by the end of the decade to stick to the fiscal rules.\u201d<\/p>\n Pantheon Macroeconomics has estimated that debt interest costs in 2026\/27 will be about \u00a315bn higher than assumed in the budget if gilt yields hold at current levels for the rest of the year.<\/p>\n Chief economist Rob Woods said:<\/p>\n double quotation markHeadroom against the fiscal rules would be cut by closer to \u00a310B if half the rise in yields since the Budget is sustained until 2029\/20. As best we can tell, political risk has added 20-to-40bp to gilt yields and we suspect will keep borrowing costs more elevated than they otherwise would be this year. Either a more left-leaning Prime Minister will take over, or the current PM will shift further leftwards. Granted, Mr. Burnham will stick to the fiscal rules. But doing so could be hard given the government\u2019s unpopularity, and in any case tax hikes to fund spending plans could undermine growth and worsen the fiscal arithmetic.<\/p>\n![\"Lisa](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/05\/1779502646_665_Lisa-OCarroll-byline-004.jpg\")
Lisa O\u2019Carroll<\/p>\n