• The Office for National Statistics (ONS) has released the latest UK Consumer Prices Index (CPI) measure of inflation data today (22 July).
• CPI inflation rose by 2.6% in the 12 months to June 2026
• This is a drop from 2.8% in May and April
• Ratesetters at the Bank of England will be watching closely to help inform its decision on whether to lower interest rates from 3.75%.

| UK inflation forecast | What is inflation? | When will interest rates fall further? | CPI release dates | MPC meeting dates |

Good afternoon. Welcome to our live coverage ahead of the Office for National Statistics releasing its latest monthly Consumer Prices Index (CPI) inflation data tomorrow (22 July).

The war in Iran had stoked fears inflation would rise, but it has trended downwards in recent months and held below 3% in April and May. What can we expect from the June data?

Stay with us as we bring you rolling build up commentary, as well as reaction and analysis after it is published.

What is the current rate of inflation?

The most recently-published data from the Office for National Statistics revealed prices rose by 2.8% in the 12 months to May 2026.

This was the same increase as in the 12 months to April 2026 and a fall from 3.3% in the year to March 2026, when the onset of the Iran war pushed up prices.

What could the June inflation data be?

Economists at research firm Pantheon Macroeconomics predict Consumer Prices Index inflation will slide to 2.6% in June.

Meanwhile, Deutsche Bank expects the CPI measure to slow to 2.7%, before rising after.

When is UK inflation data announced?

UK inflation data for the 12 months to June 2026 will be announced at 7am.

We will bring you live analysis and reaction to the ONS data tomorrow morning following its release.

What is inflation?

You’ll see the term inflation bandied about a lot, but not everyone knows what it means.

A third of Brits can’t give a definition of the word, according to recent research carried out by investing platform XTB.

So, what is inflation? Put simply, it’s a measure of how much prices have risen over a given time period.

For example, if you bought something for £1 and it was worth £1.05 a year later, the rate of inflation will have been 5%.

While prices going up sounds bad – and above a certain level it is – economists generally agree that a small amount of inflation is healthy for an economy.

This is why the Bank of England, like most central banks, targets an inflation rate of 2%.

What do you think inflation will be?

It’s time to get your predictions in. What do you think the inflation data tomorrow will look like?

Where has inflation been?

The CPI measure of inflation has trended downwards from a high of 11.1% in October 2022.

Back then, soaring energy and fuel prices caused by Russia’s invasion of Ukraine and a surge in demand for consumer goods as economies across the globe emerged from the Covid-19 pandemic contributed to much higher inflation rates.

The CPI measure of inflation fell to 1.7% in September 2024, but has remained over 2% since.

What does the Consumer Prices Index track?

The Consumer Prices Index of inflation tracks price changes across a basket of roughly 760 goods and services.

This basket is updated once a year to keep up with consumer trends. In 2026, houmous and WiFi light bulbs were added while premium bottled lager and Euro Tunnel fares were ditched.

The basket of goods and services is designed to reflect what the average consumer buys and uses in day-to-day life.

CPI is just one measure of inflation. For example, the Office for National Statistics also has a Retail Price Index.

We’re going to end our coverage for today, but join us again first thing tomorrow when we’ll bring you live coverage of the ONS data release and, of course, reaction and analysis on what it means for you.

Good morning and welcome back to our live coverage of the latest Consumer Prices Index inflation data.

The Office for National Statistics will be releasing the data at 7am, so stay with us and we'll bring you everything as and when it happens.

BREAKING: UK inflation fell to 2.6% in June

Lower fuel prices drive fall in UK inflation

UK inflation fell to 2.6% in June, from 2.8% in May, with falling petrol prices one of the significant contributors.

“A fall in motor fuel prices, particularly diesel, helped ease inflation in June,” said the ONS chief economist Grant Fitzner.

“Food prices fell this month, driven by products including chocolate, margarine and beef,” he added. “Clothing prices also fell with the start of summer sales, with bigger discounts than last year.”

Core CPI remains unchanged at 2.6%

Core CPI, which strips out energy, food, alcohol and tobacco prices (which are often more volatile than other categories), remained at 2.6% in the 12 months to June.

Meanwhile, the CPI including owner occupiers’ housing (CPIH) rose by 2.8% in the 12 months to June, down from 3% in the 12 months to May.

CPI inflation at its lowest level since March 2025

The CPI measure of inflation slowing to 2.6% puts it at its lowest level since March 2025.

It has stayed around the 3% mark since then, but economists believe it will rise over the coming months due to rising energy prices.

Sanjay Raja, chief UK economist at Deutsche Bank, said: “Expect a bumpy path with energy prices back on the rise. While we're nowhere close to the peaks seen during the height of the Iran conflict, the energy disinflation path remains uncertain.”

A deeper dive into the June figures

One of the largest contributors to the CPI measure of inflation slowing to 2.6% in June was a fall in the price of fuel, particularly diesel.

The average price of unleaded petrol, including VAT, fell from 159.48p per litre on 29 May to 155.89p on 15 June, according to the RAC.

The average price of diesel, including VAT, fell from 191.54p on 15 April to 176.77p on 15 June.

Grant Fitzner, chief economist at the ONS, said the cost of raw materials dipped for the first time since January, mainly due to the lower price of Crude oil.

Food and non-alcoholic drink price growth slowed to 1.7% in the 12 months to June also, down from 2.2% in May. The annual rate in June was its lowest since August 2024.

New chancellor John Healey still facing ‘notable’ inflation headache

Today’s figures, on the face of it, are positive, with inflation closer to the Bank of England’s government-set 2% target.

Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales (ICAEW), however, has warned the July data could be more negative, in part due to a rise in energy bills.

The Ofgem price cap rose by 13% on 1 July, covering the July to September period, with the average dual-fuel household on a standard tariff seeing their bills rise to £1,862 a year.

Thiru said: “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."

Thiru added: "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."

What does inflation mean for your money?

Inflation figures published by the Office for National Statistics are backward-looking and reflect what people across the economy spend on everyday goods and services.

If the rate of inflation is rising, it means these goods and services have become more expensive.

It also means the value of your money is gradually being eroded in real terms as the same amount of money is worth less and less.

Why it’s worth looking past the headline UK inflation figure

Because the Consumer Prices Index measure of inflation is based on price rises across a basket of 760 goods and services, it’s worth looking past the headline figure to find out how inflation is affecting you personally.

Your experience of inflation will be different to someone else who buys different goods and uses different services.

For example, this month’s figures show a large drop in the price of diesel – if you’re someone who drives a diesel car a lot, you’ll notice a bigger change in your cost of living than someone who doesn’t.

The June figures show inflation across the restaurant and hotels sector rose to 4.4%, from 4.2% in May – if you’re someone who eats out a lot or travels across the UK a lot for work, you will have noticed a bigger dent in your budget relative to the average consumer.

What does the latest UK inflation data mean for interest rates?

The Bank of England’s Monetary Policy Committee (MPC) will be watching today’s inflation figures closely ahead of announcing its latest base rate decision on 30 July.

A drop in the pace of inflation in June would suggest the MPC is more likely to lower interest rates next week, however with fears inflation could rise in July, the MPC may decide to take a more hawkish approach.

Jeremy Batstone-Carr, European strategist at Raymond James Wealth Management, said the recent re-escalation in hostilities between the US and Iran will also “likely be on the Bank of England’s mind”, with upward pressure expected on prices over the coming months.

However, he added that the MPC would be wary of stimulating growth in the UK economy, with the latest figures showing GDP rose by just 0.1% in May.

A quick recap

If you’re just joining us, the key takeaway from this morning is that the Consumer Prices Index measure of inflation slowed to 2.6% in the 12 months to June, from 2.8% in May.

One of the main downward pressures on prices was a drop in the price of fuel, particularly diesel.

However, the drop is expected to be short-lived, with economists and experts warning inflation could tick upwards in July, partly due to a 13% rise in the Ofgem price cap.

What savers need to do now

It’s worth checking if you’re getting the best rate on your savings account – anything below the 2.6% rate of inflation and you’re losing money in real terms.

There are currently 1,960 savings accounts that beat inflation, according to data firm Moneyfactscompare, including 284 easy-access accounts.

If you’ve got emergency savings sitting in an account paying less than 2.6%, you should move them into one paying a higher rate.

Adam French, head of consumer finance at Moneyfactscompare, said: “For many savers, what matters most isn't whether savings rates rise or fall in isolation, but whether they stay ahead of inflation, and as things stand, they are doing just that and allowing many households to preserve or grow their purchasing power.”

Mortgage rates ‘likely’ to rise further despite lower inflation

David Hollingworth, associate director at mortgage broker L&C Mortgages, said recent rises in mortgage rates aren’t likely to abate despite today’s positive inflation data.

Mortgage rates have started increasing, in part, due to renewed tensions between Iran and the US, pushing up lenders’ wholesale funding costs.

Hollingworth said the June inflation data would be welcome news for borrowers and the fall could take some pressure off the Bank of England to raise interest rates in the near-term, but it is “likely” mortgage rates will continue to rise.

He added: “Borrowers shouldn't feel they have to panic, but they also shouldn't delay reviewing their options. Mortgage rates can move quickly, as we have seen over the past week, so anyone approaching the end of their current deal or planning to buy a home should consider securing a competitive rate sooner rather than later.

“Most lenders will still allow borrowers to switch to a cheaper deal before completion if rates ease again, giving them certainty now and flexibility if the market moves in their favour later down the line."

Do you think CPI inflation will rise in July?

Why prices are still rising despite inflation slowing

Despite the June data showing inflation slowing to 2.6% from 2.8% in May, prices are still rising, just at a slower pace.

And while the rate of inflation has dropped from highs of 11.1% in 2022, households will likely still be feeling the impact of higher costs built up since then.

Take one look at how much the price of the weekly grocery shop has gone up, for example. According to the ONS, cumulatively, food prices rose by 38.6% between November 2020 and November 2025.

How does the UK’s CPI rate of inflation compare to other countries?

The UK CPI inflation rate in June was lower than the EU’s, but higher than Germany’s and France’s.

France’s June inflation data gave a reading of 2% while in Germany CPI inflation stood at 2.4%. Across the EU, inflation was 2.9% in June, down from 3.3% in May.

Inflation above 2% target ‘deeply concerning’ for families, says Mel Stride

The shadow chancellor, Mel Stride, has said inflation remaining above the Bank of England’s 2% target is “deeply concerning” for families.

He said: "Labour's tax hikes and reckless borrowing stoked inflation, and Andy Burnham has already made billions of pounds of spending commitments without any plan to pay for them.

“[The] Conservatives are the only party that have set out a credible plan to cut spending, cut taxes and get Britain working again.”

When will the next inflation data be published?

The ONS publishes inflation data each month for the preceding month – that’s why the data released today covers the month of June.

The ONS will release inflation data for July on 19 August.

You can find out when the ONS is set to release inflation, GDP and wages data on its website.

We're going to end our inflation coverage here for today. Thank you for following, and visit our homepage for all the latest personal finance and investing news.

• Andy Burnham is the UK's latest prime minister today, replacing Keir Starmer.
• Burnham promised a "new economic model" for Britain in a speech outside Downing Street.
• The ex-Mayor of Manchester announced John Healey will be his chancellor

| Will Andy Burnham 'wilt like a lettuce'? | Could Burnham lower ‘mansion tax’ threshold? | Is the triple lock safe under Burnham? | Who could be Burnham’s chancellor? |

Good morning and welcome to our live blog as Andy Burnham is set to become prime minister of the UK today.

He faces a number of daunting challenges, including a ballooning welfare bill, high levels of public debt and deepening cost of living crisis for millions of households.

The UK economy is also growing at a sluggish rate, with GDP rising just 0.1% in the month to May, so Burnham will have to find answers from somewhere rather than relying on growth.

Stay with us as we bring you live coverage, reaction and analysis, as well as predictions on what could be announced.

When is Andy Burnham expected to officially be prime minister?

The MP for Makerfield is expected to become prime minister around lunchtime today.

Burnham will first meet with the King at Buckingham Palace where he will be asked to form a government. This formal process is known as “kissing hands”.

He will then make his way to Downing Street where he is expected to make his first speech as PM before entering No.10 to select his cabinet.

Badenoch wishes Burnham ‘every success’, but criticises lack of ‘clear plan’

Kemi Badenoch has congratulated Burnham on his appointment as leader of the Labour Party and wishes him “every success” – but the niceties stop there.

In an open letter, the Conservative Party leader said the MP for Makerfield will enter office “without having set out a clear plan on any of the issues facing our country”.

“You have refused calls to come to Parliament for questions from MPs, and you have not submitted yourself to serious media scrutiny. This is not a promising start.”

Her letter goes on to say Burnham must “not repeat the mistakes of Keir Starmer’s premiership which failed because he refused to stand up to his left-wing Labour backbenchers and their endless demands for tax rises to pay for more welfare”.

She has pledged to work with the new prime minister to “bring down the benefits bill” while also calling on him to grant licenses to drill for oil and gas in the North Sea.

Who is Andy Burnham?

Andy Burnham returned to the House of Commons on 19 June, and today, just under a month later, is set to become Britain’s sixth prime minister in 10 years.

Burnham entered politics in 1994 as a researcher for Labour MP Tessa Jowell, before becoming a special adviser to Chris Smith, the secretary of state for culture, media, and sport.

He was elected to the House of Commons in 2001 and held junior government positions under New Labour from 2003, eventually joining the cabinet as culture secretary in 2008 and health secretary in 2009.

He unsuccessfully stood to lead the Labour party in 2010 and 2015, before leaving Westminster to become the inaugural Mayor of Greater Manchester.

With Keir Starmer’s Labour government unpopular and slow to deliver, allies of Burnham on the soft left of the party urged him to return to Westminster. He did so on 19 June when he became MP for Makerfield, and less than a month later – on 17 July – he was leader of the Labour party.

Starmer delivers farewell speech before Andy Burnham takes over as new prime minister

Keir Starmer is now on his way to meet the King to officially hand him his resignation as prime minister.

In a farewell speech outside the doors of 10 Downing Street, Starmer said: “I am confident that Britain is now stronger and fairer than it was two years ago. Our economy is stronger. Our public services are on the up, with the biggest fall in waiting times for 17 years.

“Children are being lifted out of poverty every single day. Immigration is down significantly, our defences and security are on a far stronger footing, and our international reputation is greatly enhanced.”

Starmer added that Burnham has his “full support” and thanked the British people for “the opportunity to serve”.

“I go with good grace. I go with a smile. And I’m proud of everything we have achieved. Thank you very much,” he concluded.

Did you want Andy Burnham to be the new prime minister?

BREAKING: Andy Burnham officially becomes prime minister

Andy Burnham is now the UK’s 59th prime minister following a meeting with King Charles III.

The King officially invited Burnham to form a government in a meeting at Buckingham Palace, just minutes after the King accepted Keir Starmer’s resignation.

As is tradition, Burnham “kissed the hands” of the King as he was appointed prime minister.

What has Andy Burnham said before becoming prime minister?

Andy Burnham has now left Buckingham Palace and is on his way to deliver his inaugural speech as prime minister at Downing Street. We’ll get the first official view on what his government will mean then – but what has he said already?

In a speech at the Trades Union Congress headquarters in London on Friday (17 July) Burnham pledged to build a Labour Party that is “distinctively and authentically” Labour.

He said: “We won’t try to out-Green the Greens or out-Reform Reform”, or repeat the mistake of “wearing too many Tory clothes”.

Hinting at reports he will decentralise and devolve power across the UK, Burnham said: “Britain took a series of wrong turns in the 1980s.

“Political power was centralised and economic power was privatised.

“The country surrendered control of the essentials – housing, water, energy, transport – and left people exposed to higher costs.”

He added: “If we want an economy and a country that works for all people and places – which to me should always be at the very core of Labourism – then it requires a new path to the one we’ve been on for the last 40 years.”

Burnham promises ‘a new economic model’ for UK

Andy Burnham has now finished his first speech as prime minister – outside the door of Number 10 Downing Street.

Burnham promised he would bring a “new economic model” to the UK.

“We will make this moment a circuit breaker for Britain, bringing forward the biggest changes in the last 40 years,” he said.

“In the 1980s, Britain took some wrong turns. Political power was centralised, economic power privatised. Large parts of the country deindustrialised, and they still haven't recovered.

“Many feel as though they're still in decline, and they don't have the ability to turn things around. And that's why we will change politics to make it more collaborative, more about problem solving than point scoring.”

Burnham railed against his generation of politicians which he said have disappointed Britain.

“I am acutely conscious that I am the sixth person in the last 10 years to walk up this street, the seventh prime minister since 2016, making this a moment for reflection and new resolution.”

Burnham to set out 10 year plan for UK ‘later this year’

Burnham is set to reveal a ‘10 year plan’ for the UK that will show how his government is set to bring about the new economic and political model he has promised.

He said: “Later this year, I will bring forward a new plan for Britain-a 10-year plan, laying out a path from where we are now to where I believe we all want Britain to be, wherever we're coming from, whatever party we support.”

Burnham: Cost of living support to be announced tomorrow

While a 10-year plan will be announced ‘later this year’, Burnham has promised that he will announce plans to bring forward cost of living support as soon as tomorrow.

In his first speech outside Number 10, Burnham said he wants to “give people some breathing space now. Some help with the cost of living. And I will set out some of those measures starting tomorrow, including how we pay for them.”

Burnham has not announced precisely what these measures will be, though we will likely find out tomorrow.

Burnham sets out his government's aims

Some of Burnham’s aims for his government were set out in his speech.

He said: “We will help more young people into work by changing the education system and giving them more support, more mental health support, and we will build more council homes.

“That is the fair and sustainable way to bring the welfare bill down to meet our fiscal rules and to honour our commitments on defence to our international partners.

“We will help people to live well, building a more preventative state, investing in people's success, rather than paying for failure, and that work starts now.”

Burnham pledges to stick to fiscal rules and defence commitments

Burnham’s speech reiterated his promise to maintain the previous government’s fiscal rules, which dictate how much the UK can borrow and spend.

This will be welcomed by many in the City as many worried that Burnham would throw these rules out after he said last year that the UK was “in hock to the bond markets”.

The UK has three main fiscal rules, but the most important is that the current budget should be on course to be in balance or surplus by 2029/30. This effectively limits how much the government can borrow.

In his speech, Burnham also confirmed that he will “honour our commitments on defence to our international partners.”

The Defence budget has been a point of controversy in recent months as former defence secretary John Healy resigned when Starmer failed to provide an extra £28 billion to fully fund the Defence Investment Plan.

Burnham: I will end rough sleeping in the UK

In his first major commitment as prime minister, Burnham has said he will end rough sleeping in the UK.

Concluding his speech, he said: “I will soon go through that door behind me and issue my first instruction to end rough sleeping in our country.

“It's about putting the right values and the right standards at the heart of government. I will put the care of people at the heart of everything I do.”

“I will give this my all, and I ask you all to pull with me. Let's build a new national sense of unity, of common purpose, and positivity. Let us make this the moment when Britain starts to believe again-the moment we bring back hope. Thank you very much, everyone.”

Rough sleeping has been a pet issue for Burnham since his time as Mayor of Greater Manchester. On the campaign trail in 2017, he promised to end rough sleeping in the city by 2020.

Burnham did not meet that target, but did make headway, bringing rough sleeping down by 57% between 2017 and 2020. However, from 2021 to 2025 it crept back up, with rough sleeping down just 26% on 2017 levels in 2025.

Who will be Burnham’s chancellor?

Burnham is expected to announce his cabinet shortly. While there are no official statements from Burnham on who his chancellor will be, rumours are circulating that there are a few top candidates for the job.

The front-runner at the moment is Shabana Mahmood, the current home secretary. This news came as a shock considering she has not held any economic position in her career.

Mahmood’s relative inexperience in economic briefs may also indicate that Burnham wants to run economic policy from Number 10.

This being said, insiders claim that Mahmood is one of the current cabinet’s most effective ministers and say that she may bring this effectiveness to the Treasury. Markets have not been spooked by the prospect of Mahmood as chancellor either.

Another potential candidate is Ed Miliband, the current energy secretary and former leader of the Labour Party. While he had previously been widely expected to become chancellor, his stock has fallen as it emerged that Mahmood was the front-runner.

Should Burnham ditch the triple lock?

One major challenge Burnham faces is the soaring cost of funding the state pension through the triple lock.

Keir Starmer vowed to not touch the mechanism, which sees the state pension increase every April by either the rate of inflation, average earnings growth or 2.5% – whichever is highest.

But the Office for Budget Responsibility estimates it will cost around £15.5 billion by 2030, up from the £5.2 billion originally estimated when it was first introduced.

Supporters of the triple lock say pensioners have worked for it their whole lives and the increase protects them from rising living costs.

But opponents suggest the policy will make funding the state pension more and more unaffordable as the UK’s population ages.

Andy Burnham needs to spell out the details of his fiscal plan now, says wealth manager

Nigel Green, group chief executive officer of wealth manager deVere Group, said Burnham needs to offer clarity now on his fiscal plan for the UK.

It comes following speculation he could increase capital gains tax rates while leaving the door open on a wealth tax and exit charge on departing assets.

Green said: “Every day this drags on without clarity is a day wealthy families and business owners are forced to plan for the worst rather than plan with confidence.

“Reports that he favours a fiscally cautious figure for chancellor gave markets some comfort this week, but speculation about personnel is not a substitute for a clear position.

“He needs to confirm his top team and, critically, tell the country what he intends to do with wealth, capital gains and exit taxation, because every week of silence pushes more capital toward the door.”

BREAKING: Rachel Reeves out as chancellor

Rachel Reeves has been sacked as chancellor as Andy Burnham begins building his cabinet.

In a statement on X (formerly Twitter), she said: “It has been the privilege of my life to serve as the Chancellor of the Exchequer.

“The economy today is stronger, fairer and more resilient because of the choices we have taken as a Labour Government over the past two years.

“Stability restored, investment delivered and reform to our economy under way. I said when I was appointed Chancellor that I would judge my time in office if the lives of ordinary working class people have been improved. I’m proud to say that they have.

“And to every young woman and girl let my time in office show there should be no ceilings on your ambitions, your hopes or your dreams.

“I wish the very best of luck to my successor, Andy and his cabinet. You have my full support, and I will continue to play my part in helping this Labour government deliver the change the country needs.”

Who else has left the cabinet?

Other notable Starmer loyalists who have left government include justice secretary and deputy prime minister David Lammy, as well as housing secretary Steve Reed.

Business secretary Peter Kyle and Richard Hermer, attorney general, have also both left the cabinet.

Meanwhile, Liz Kendall, science, innovation and technology secretary, has also been sacked.

Will Burnham end fiscal drag?

In an interview with The Times published this morning, Andy Burnham rejected the idea that he is simply a “tax raiser” and implied he may look at possibly increasing the personal allowance.

He said that while he was campaigning in Makerfield “one thing I heard most on the doorsteps [...] was frustration about the personal allowance, frozen at £12,570”.

He added that the recurring complaint that the tax burden on ordinary, working people is too high has been “lodged in [his] mind” ever since.

In the interview, he said figures in Westminster are “just characterising me as a tax raiser. Well, again, it’s never that simplistic, is it?”

Tax thresholds have been frozen at 2022/23 levels under successive governments – a process called fiscal drag. What was first intended as a temporary measure has been extended multiple times, most recently by Rachel Reeves in the 2025 Autumn Budget.

Thresholds typically have increased in line with inflation, but as they have been frozen more people are finding themselves ‘dragged’ into higher tax bands when their earnings increase.

Burnham to use 'any flexibility' in the fiscal rules to fund spending

Andy Burnham has said he will use “any flexibility” that exists within the UK’s self-imposed fiscal rules to help fund investment in infrastructure.

In a press conference, he said: "I've said we'll stick to the fiscal rules and by that I mean the existing fiscal rules and use obviously any flexibility within them.

"But we will stick to the existing rules and I've made that very clear in Downing Street. So none of this is about taking risks with the economy. I've never done that in any role that I've had."

The UK’s fiscal rules stop the government from borrowing excessive amounts of money with the budget required to be balanced or in surplus by the end of this parliament in 2029/30. Former chancellor Rachel Reeves tweaked these rules to allow greater borrowing in order to fund infrastructure investment in 2024.

In the press conference, Burnham said his policies will be fully funded and this will be “clearly set out in our budget.”

Burnham confirms he will look at reforming tax thresholds

In that same press conference, Burnham also elaborated on his comments to The Times this morning that he is looking at frozen tax thresholds.

Tax thresholds have been frozen at 2022/23 levels, dragging more people into higher tax brackets. This includes the tax-free personal allowance of £12,570.

He said: “I think [tax thresholds have] been frozen now, hasn’t it for a number of years, so it has dragged more people in… and that particularly has become a growing issue. So all of this will be looked at though at the budget, and obviously it’s difficult given the financial circumstances in which we find ourselves.

“I have a visibility of the issue and the impact it’s had on the different groups that I’ve mentioned, but it’s difficult because changing the threshold is not without significant consequences. But I’m looking at it,” he said.

Burnham pledges council house building blitz

A major part of Andy Burnham’s plan for the country is to build more council houses.

In his first speech as leader of the Labour party on 17 July, he said he wants to oversee the “biggest council house building programme in the post-war era.

He reiterated this in his first speech as prime minister this morning, saying: “We will build more council homes”.

As local authorities are in charge of the building and maintenance of council homes, the pledge to build more will require more money diverted from central government to local councils.

BREAKING: John Healey appointed chancellor

Former defence secretary John Healey has been appointed chancellor of the exchequer by Andy Burnham.

Healey has experience working in the Treasury – he was economic secretary to the Treasury from 2002 to 2005 and financial secretary to the Treasury from 2005 to 2007 under Gordon Brown.

He was also secretary of state for local government from 2007 to 2009, which Burnham may see as a positive considering he plans to give more power and money to local authorities.

Healey notably resigned from the government last month after Keir Starmer refused to give the ministry of defence an extra £28 billion to fully fund the Defence Investment Plan.

The move comes as a surprise as home secretary Shabana Mahmood or former energy secretary Ed Miliband were heavily rumoured to take up the position.

That's all from the MoneyWeek team today. Look out for your emails as we will bring you more this week, with analysis on what Burnham means for your money. Have a pleasant evening.

Germany's fragile coalition government has announced a major package of economic reforms aimed at kick-starting the country's chronic low growth. The long-awaited measures, announced earlier this month by chancellor Friedrich Merz, include tax cuts, greater labour-market flexibility and a broad easing of bureaucratic red tape – and follow separate but related pension reforms, announced a week earlier.

Assuming the measures clear the Bundestag (very likely, but not certain), no one expects them dramatically to boost Germany's immediate fortunes. But they are definitely a positive first step that should “lift business sentiment”, says Simon Nixon on Substack. Moreover, they “could hardly have come at a more crucial moment, given the mounting evidence that the German economy is being eaten alive by Chinese competition”.

Why is China a threat to Germany's economy?

The news that Volkswagen is weighing plans to cut 100,000 jobs – more than double the number agreed with the unions – and close four factories in Germany is the latest blow to hit the country's vehicle sector, which has been ravaged by cheap Chinese competition and innovation in electric vehicles, as well as Donald Trump's tariffs.

Similarly grim dynamics are playing out in other export-oriented industries, such as chemicals and aircraft manufacturing. Meanwhile, “panic” is spreading through the Mittelstand, the vast network of midsized, family-owned companies that form the backbone of the German economy, says Tom Fairless in The Wall Street Journal. German industry is currently shedding more than 10,000 jobs a month and industrial output fell by roughly 10% between February 2022 and early 2026, with energy-intensive sectors plunging by more than 15%.

Is Germany's economy growing?

Barely, and at a far slower rate than that of peers. Adjusted for inflation, GDP is only fractionally higher (0.8%) than it was in 2019 – an unprecedented period of stagnation for the Federal Republic. In manufacturing, Germany's traditional engine, the situation is even worse: industrial production peaked in late 2017 and remains 9% lower than a decade ago.

This year, growth is expected to be between 0.5% and 0.8%. Europe as a whole has been stuck with low growth for years, but Germany – the continent's biggest economy – is far behind its neighbours. Germany's cumulative growth since late 2019 is a mere 0.8%; the rate in France is 6.3% and Italy 7.4%. In the eurozone overall, cumulative growth is 6.6%, and it's 6% for the UK.

Why is Germany struggling?

The rise of China is a factor: exports to China fell by a fifth between 2021 and 2025, while car exports halved. But it's broader than that, with causes including high energy costs, inflexible labour markets and lack of technological innovation. According to Ifo, a leading economic think tank, the economy is undergoing a “profound structural change that is shaped by decarbonisation, digitalisation, demographic changes and geopolitical disruptions”. Compared with other countries, Germany is adapting slowly.

What is in Germany's reform package?

There are 33 measures altogether, with three main areas sticking out. First, there's €10 billion-worth of income-tax cuts for lower-and middle-income earners paid for by tax rises for the wealthy. The current top rate of income tax, 45%, will kick in at €250,000 (£212,000, far higher than the UK's £125,000), but a new 47% rate will take effect at €280,000. Germany's overall corporate tax burden is set to drop to roughly 25% from 2028 (depending on the state), matching the UK's.

Second, there are labour-market reforms, including more flexible employment contracts, tighter rules around sick-leave certification, and measures designed to discourage early retirement.

And third, there's action to cut the bureaucratic burden on businesses, including reducing reporting requirements, simplifying permits, digitising compliance requirements and streamlining data-protection rules where they exceed EU standards. There are also ambitious changes to the pension system, including a new link between the retirement age (eventually set to reach 70) and life expectancy.

Is Germany fiscally stable?

Relative to its European peers, yes. Germany's famous “debt brake” places strict limits on how much the federal and state governments can borrow – it restricts the federal structural deficit to 0.35% of GDP while strictly prohibiting net debt for federal states. In all, the Merz government plans to borrow about €200 billion next year, 12.5% more than this year, and overall borrowing between 2027 and 2030 is projected at €838 billion.

Germany's debt-to-GDP ratio will rise to 69.5% next year, still lower than the eurozone average, with the public deficit widening to 4.3% of GDP. As the country's low borrowing costs testify (ten-year bond yields are a little over 3%, compared with just under 5% for the UK), none of this worries the markets.

Will Germany's reform package work?

Analysts overwhelmingly agree the package is necessary, but not sufficient. Holger Schmieding, chief economist at Berenberg, described it as “a lot of small steps” that, combined with planned reforms of the country's welfare system, could “add up to major progress”. On their own, the new reforms are “unlikely to zap life into a rapidly deindustrialising economy that has barely grown since 2019”, agrees The Economist.

But the fact that Merz's coalition has “shown itself capable of comprehensive action” is cause for celebration. This is a package that could create the framework for future growth, says Carsten Brzeski of ING. What's still missing is a “clear longer-term strategy for affordable energy for both households and companies, as well as some tax relief for companies”. Still, the package is an encouragingly clear sign that “Germany is at last moving” away from “moaning and analysing” – and “towards tangible action”.

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Over one million Brits are set to be additional rate taxpayers in the 2026/27 tax year, with record numbers paying above the basic rate of income tax according to the latest HMRC projections.

The number of people in the highest tax bracket is set to reach 1.3 million this year, double the number in 2021/22, as a record 3.2% of the population have an income of at least £125,140.

The number of additional rate taxpayers has ballooned by 33.8% since the 2023/24 tax year as tax thresholds have not increased in line with inflation.

Meanwhile, the number of higher rate (40%) taxpayers is also rising rapidly. An estimated 7.7 million Brits are set to pay tax at this rate in the 2026/27 tax year as they earn between £50,270 and £125,140 – up by 34% compared to figures from the 2023/24 tax year.

The overall number of people paying tax in the UK is up too. There are projected to be a total 40.8 million taxpayers across all bands in the 2026/27 tax year, up from 36.7 million in 2023/24.

Frozen thresholds are dragging more Brits into higher tax bands

The higher and additional rate tax bands are seeing fast increases as more people’s incomes rise above the thresholds.

But many of them are paying tax at higher rates than they would have in 2021/22 when adjusted for inflation.

This is a result of a process called ‘fiscal drag’, where tax thresholds are frozen by the government and not uprated with inflation. That means that when workers’ earnings rise (even just to keep up with inflation), they are ‘dragged’ into higher tax brackets.

Fiscal drag is often called a stealth tax because, while tax rates have technically not increased, more people start to pay income tax at higher rates despite their purchasing power not increasing significantly.

For example, the tax-free personal allowance has remained at £12,570 since 2021 and has not increased with inflation. If it had, then, using the Bank of England’s inflation calculator, it should have risen to around £16,013 by May 2026.

Thanks to frozen thresholds, workers are paying tax on their earnings between £12,570 and £16,013 when they wouldn’t be if thresholds had increased in line with inflation.

Laura Suter, director of personal finance at AJ Bell, said: “Frozen tax thresholds are affecting almost everyone who pays income tax, from pensioners to anyone earning more than the £12,570 personal allowance. But the biggest impact is felt by those pushed into a higher tax band.

“Once your income exceeds £50,270, every additional pound you earn is taxed at 40%, rather than the 20% basic rate. That means a much larger slice of any pay rise goes to the taxman, leaving you with far less extra money in your monthly payslip.

How to lower your tax bill

Fiscal drag can be damaging to your personal finances as it means you are keeping less of your earnings than you otherwise would have if thresholds had increased with inflation.

It can be particularly difficult for people whose earnings sit on the edge between tax bands. For example, someone who earns £50,000 will today pay the basic 20% rate of income tax. However, if their earnings increase by just 2% (£1,000), £730 of this will be dragged into the higher 40% tax band.

In this situation, the only way you can lower your tax bill is to reduce your taxable income. That does not mean saying no to a pay rise – it means using the extra cash in a more tax-efficient way.

The simplest way of doing this is to put more money into your pension through salary sacrifice as this is deducted from your pre-tax income.

If you earned £51,000, you would need to pay 40% income tax on the £730 of your income that sits in the higher rate tax bracket. However, if you put this into your pension through salary sacrifice instead you would be taxed 0% on that £730.

There are other salary sacrifice schemes in the workplace too where you can pay for certain things out of your pre-tax income. The most common of these is the ‘cycle to work’ scheme where you can pay for a bike with tax relief, but schemes exist to pay for electric cars and other goods and services.

Hundreds of thousands more pensioners look set to pay income tax than the government previously estimated, according to new HMRC figures.

Since freezing the thresholds in 2021, more people – especially pensioners – have been caught by the income tax net.

The tax allowance was set at £12,570 in 2021/22. Since then, three million more people over 65 are due to pay tax and for the first time, more than 10 million people in this age group will be liable.

Why are more pensioners paying tax?

Steve Webb, partner at pension consultants LCP and the former pensions minister, said a combination of the freeze in personal tax-free allowances, combined with the significant year-on-year rises in the state pension (and other sources of taxable income), alongside a rise in the size of the pensioner population, means the number of tax-paying over-65s has risen dramatically.

Department for Work and Pensions (DWP) figures suggest around 12.2 million people in the UK are receiving a state pension, meaning more than seven in 10 pensioners are now taxpayers, with an extra million expected by 2030-31.

The new state pension is currently £12,547 – just below the basic income rate threshold of £12,570. From April 2027, it is expected to rise to £12,578 – just above it, meaning state pensioners will have to pay income tax on these small amounts.

Every year the government releases income tax liabilities statistics, which show the total number of people paying tax. The data is split by factors such as age, region and marginal tax rate.

The Spring Statement suggested previously published figures might have underestimated the number of taxpaying pensioners but it was buried in the accompanying paperwork, whereas it has now been officially confirmed.

What are the government plans to help pensioners?

In the Autumn Budget, chancellor Rachel Reeves proposed a special scheme that would prevent such people paying tax, citing the administrative burden but as yet, no details have emerged.

Speaking to MoneyWeek, Webb said: “They need to get cracking because it needs to be clear by next April and it will probably need legislation. It’s all very well saying it doesn’t matter until the next of the financial year but that’s not really good enough – people want to know where they stand. So I think they’re up against it because any of the possible solutions so far look to be a bit of a mess.”

While no details have emerged, Webb said rumours are circulating.

“There’s talk they'll do something quite radical, like tax everybody’s state pension at source – taxing everybody at 20% and then people who are non-taxpayers will have to claim a refund.

“That doesn’t actually solve the problem but it means that they’re not collecting lots of silly small amounts of tax through a ‘process’. That’s the rumour, which I think would be absolutely awful as you’d then have several million non-taxpaying pensioners who would all be overtaxed and all have to jump through hoops to get back money that they don’t currently have to pay.”

A HM Treasury spokesperson said: “Anyone whose only income is the full new or basic state pension without any increments will not pay income tax and we are committed to that over this Parliament.

“By keeping the triple lock, 12 million pensioners will see their income rise by up to £470 this year, and they continue to benefit from the highest personal allowance in the G7.”

Andy Burnham will have a lot of important jobs when he steps into Number 10. One of them will be to try to fix the UK’s apparently broken stock market.

The persistent undervaluation of UK stocks may provide buying opportunities for investors, but it seems to be overseas institutions that are taking advantage, rather than the country’s own DIY investors.

EasyJet (LON:EZJ) is the latest British company to be the subject of an opportunistic takeover bid from a foreign private equity firm. It is unlikely to be the last.

Analysis from stockbroker Peel Hunt showed there have been £165 billion worth of takeover bids for British companies since the start of 2023. In that time, there have been 11 initial public offerings (IPOs) with a combined value of £6 billion. That amounts to a massive shrinking in value of the UK market.

“To say that the UK has a problem in retaining its companies and listing new ones would be a massive understatement in our view,” Charles Hall, head of research at Peel Hunt, stated in a report.

“The situation on the London market is now so serious that it requires bolder interventions to save our stock market,” said Richard Stone, chief executive of the Association of Investment Companies (AIC), an industry body that represents the UK’s investment trusts.

Why aren’t British investors buying their own stock market, and is there anything Burnham can do to change that?

Why aren’t Brits investing?

Part of the problem is the is a lack of investing culture in the UK. The Starmer government attempted to solve this by launching a retail investment campaign, fronted by the mascot Savvy the Squirrel.

It doesn’t seem to have worked, and the disruption in Downing Street appears to be making Brits even more cautious. Research from investment platform IG shows that nearly one in four British investors (23%) have changed their investment allocation as a result of political uncertainty.

“Rather than simply expressing concern about the outlook, many retail investors are actively reassessing where they want their money invested,” said Chris Beauchamp, IG’s chief market analyst.

UK investors have multiple sources of uncertainty to contend with. As well as domestic political upheaval, there is also the persistent geopolitical tension in the Middle East as well as the spectre of persistent inflation.

“That doesn't necessarily mean investors are abandoning risk altogether,” said Beauchamp. “Many continue to look for long-term growth opportunities, but confidence in UK markets will depend on greater political and economic certainty over the months ahead.”

What could Burnham do in order to save the UK’s stock market?

Industry leaders have called on Burnham to reform the tax system around UK stocks in order to encourage domestic investors to buy the country’s shares.

“Abolishing stamp duty altogether would give the biggest financial return to the UK economy by encouraging more investors to buy UK equities and drive economic growth,” said the AIC’s Stone, who also called for reforms to the rules that impact investment trusts and venture capital trusts (VCTs).

He highlighted that investment trusts are currently subject to “onerous double taxation” as they pay stamp duty when they buy UK-listed shares, and investors are then charged stamp duty when they buy the shares of the trusts themselves.

“It’s vital to support businesses at an earlier stage of their growth journey by reversing the decision to reduce tax relief on VCTs,” said Stone. “The cut in tax relief from 30% to 20% is expected to lead to a sharp decline in funding for VCTs, which provide the capital to growing businesses as they scale up and prepare to list on the stock market.

“If we don’t support our home-grown companies, we reduce the chance of seeing successful IPOs on our domestic market,” Stone continued. “We will also continue to see home-grown businesses head overseas, leading to the UK missing out on job creation and wealth.”

Millions of older workers could face a longer wait until they retire amid reports that changes to the state pension age could be brought forward.

Currently, the state pension age is due to rise to 68 from 2044 but a report from the Office for Budget Responsibility (OBR) suggests this could take place sooner.

It comes amid debate about the cost of the triple lock and a government backed review of the state pension age which is due to make recommendations on changes in the comings months.

The OBR’s latest Fiscal Risks and Sustainability Report said state pension spending is projected to increase from 5% to 9% of GDP over the next 50 years.

It added that a policy assumption underpinning the state pension projection is around future changes to the state pension age.

In its baseline scenario, the OBR assumed that the state pension rises to 68 between 2037 and 2039 and then to 69 in the 2070s.

This is different to the current trajectory that suggests the state pension age will rise to 68 in 2044/45.

Keeping to the timetable would cost an average additional £6 billion in today’s terms in each of the years the state pension age rise is delayed.

The OBR said: “The Treasury has confirmed to us that this is the government’s current policy position, rather than the legislated increase set in the Pensions Act 2007.

“This is also consistent with the recommendation of the first state pension age review in 2017 that the legislated-for rise to 68 between 2044 and 2046 should be brought forward to the late 2030s, and the principle that 32% of adult life should be spent in retirement, both of which the government at the time committed to. However, the rise to 68 remains legislated to happen between 2044 and 2046, with no subsequent rises legislated for.”

If these changes are made, it is estimated that five million people aged between 49 and 55 would have to work for an additional year before being eligible for their state pension.

The Treasury has been asked for comment.

How to prepare for state pension age changes?

The funding and timing of the state pension seems to regularly be under review.

Much of the criticism around the state pension is the use of the triple lock calculation, which can lead to above-inflation rises and is costly for the Treasury.

Beyond scrapping the triple lock, an alternative is to make people wait longer by changing the state pension age.

The state pension age was always going to increase in the coming decades but may now be sooner than many expected to help boost the nation’s finances.

Nothing has been confirmed yet but a revised timetable does potentially mean working longer.

Catherine Foot, director of the Standard Life Centre for the Future of Retirement said: “The state pension remains a critical element of retirement incomes in the UK for millions of people, and the reports that state pension age increases could be accelerated are a reflection of the difficult balancing act government faces in keeping the system affordable while people live longer, and ensuring it remains fair and adequate for those who rely on it.”

But Adam Cole, retirement specialist at Quilter, suggest that rather than relying on the government, there are steps that people can take.

“Someone aged 49 could build a fund capable of replacing a year's projected state pension with contributions costing just over £50 a month after basic-rate tax relief. Even someone aged 55 could potentially achieve the same outcome for around £75 a month net,” he said.

"While no one welcomes changes to the goalposts, these examples highlight the power of starting early. Small, regular pension contributions, combined with tax relief and investment growth over time, can provide valuable flexibility and help reduce dependence on an increasingly stretched state pension system."

Workers could boost their retirement pots by thousands of pounds under major government reforms.

The Department for Work and Pensions (DWP) has laid out its workplace pensions roadmap for the next three years, aimed at bettering outcomes for savers.

The government estimates that, on current trends, those retiring in 2050 will have lower private pension incomes than those retiring in 2026, with millions facing retirement poverty.

Rachel Vahey, head of public policy at investment platform AJ Bell, said: “The government has set out an ambitious programme of reforms that has the potential to transform workplace pensions, making it easier for people to compare pensions and switch to get a better deal.”

The measures will run alongside the new free online pensions dashboard, which is expected to launch in the 2027/28 tax year.

Vahey added: “Combined with pensions dashboards, these reforms have the potential to create a new generation of more engaged savers.

“For the first time, people will be able to see what pension savings they have built up across different providers, alongside clearer information about how well those pensions are delivering for them.”

League table for workplace pensions

The "centrepiece" of this three-year plan is a Value for Money framework.

Pension savers will be able to see how their workplace pension scheme is performing and the returns it is generating against other pension schemes via a league table.

Schemes will be ranked from red (poor value) to green (outperforming on value) on a range of metrics including investment performance, charges and quality of service.

Schemes not performing well for savers will have to improve or be forced to wind down.

The league table will be rolled out to all workplace pension schemes from 2029.

Torsten Bell, minister for pensions, said: “The stakes are high, when the gap between the best and worst performers could cost a saver with a £10,000 pot over £5,000 across just five years.”

However, Helen Shackelford, partner at consulting firm LCP, said introducing a league table could “constrain innovation”.

She added: “Short-termism in a long-term system may ultimately compress the range of member outcomes and penalise funds that have made strategic decisions with a 20–30 year horizon.”

Creation of pension ‘megafunds’

The government reforms also include plans to consolidate smaller defined contribution (DC) workplace pension schemes which are used for automatic enrolment into ‘megafunds’.

From April 2030, these multi-employer schemes must reach at least £25 billion of assets under management or have at least £10 billion with a growth plan to reach £25 billion by 2035.

The government says these larger funds will improve returns for savers through lower fees, higher returns and a more diversified pool of investments.

‘Guided Retirement’ to provide better outcomes for savers

Under a Guided Retirement framework, pension savers accessing their pots at retirement will be offered default options from 2029.

The idea behind the change is that pension savers who don’t want to take an active role in deciding how to access their pots will still receive a decent stream of income in retirement.

But savers won’t have to accept the default option and they’ll also be able to choose an option more suited to their needs, if they prefer.

Bank bonuses have reached their highest levels since the 2008 financial crisis, prompting calls for a hike in the windfall tax to help struggling households with their energy bills.

Analysis of bank bonus data by the Trades Union Congress (TUC) shows £25 billion was paid out in bonuses in the financial year ending in March 2026 - up 16% annually.

The TUC said bank bonuses have never been higher in cash terms and saw their highest real-terms quarter since 2008.

Ahead of the chancellor’s Mansion House speech this evening, the TUC claims these figures suggest there is room for a higher bank surcharge tax that could help fund a social tariff that would permanently cut energy bills for the majority of households.

The trade union says that “while sky-high bills are looming for ordinary working people, bank bonuses are booming”, adding that this is further evidence that banks could easily afford to pay more tax.

What is the bank surcharge tax?

The bank surcharge tax or windfall tax is an additional 3% corporation tax on the profits of banks above £100 million.

It was introduced 2016 as part of efforts to redistribute wealth back into the UK economy and was reduced from an initial 8% in April 2023 by the Conservative government.

Reforming the bank surcharge tax

Critics claim that the surcharge doesn’t go far enough, especially as banks have also benefited from charging higher interest rates on loans and mortgages in recent years.

Sara Hall, co-executive director at research group Positive Money, said: “Record bonuses to celebrate record profits - the cost of living crisis must be something of a fantasy to City bankers.

“Banks aren’t redirecting the windfall profits they’ve made from higher interest rates towards the households or businesses struggling to pay them, so it falls to the Government to do so in their stead.”

TUC analysis reveals an increase in the bank surcharge could raise between £9 billion and £60 billion over the next four years.

Even just reversing the Tory cuts and setting it at 8% would raise £9 billion over four years, the TUC said.

A 16% surcharge, doubling the surcharge's previous value before the Conservatives cut it, would deliver £24 billion over four years.

Meanwhile, a 35% surcharge, which would be the same level as the windfall tax the Conservatives imposed on energy companies, would deliver £60 billion over four years.

It comes after the big four banks made profits of £45.7 billion in 2025.

TUC analysis of the wider banking sector shows profits are 40% higher than in the lead up to the 2008 financial crisis.

The trade union suggests an increase in the bank surcharge tax could deliver a permanent social tariff - and further support when there is a spike in costs - to cut energy bills to all those on low and middle incomes by up to £559 a year.

Paul Nowak, general secretary of the TUC, said: “While sky-high bills are looming for working people, bank bonuses are booming.

“Every time there is talk of taxing banks, some of the richest people in the country start whining and try to claim they can’t afford to pay any more.

“But the big banks are making a killing off the back of higher interest rates and mortgage misery across the country. They can well afford to pay more tax.

“The case for an increase in the bank surcharge tax has never been greater. It’s a long overdue common-sense solution – and the government should use to money raised to cut people’s energy bills.”

Positive Money's Hall suggests prime ministerial frontrunner Andy Burnham is being handed a rare opportunity to rebalance the scales in the public’s favour.

She said: “He should seize the chance to implement this popular policy that won’t cost the Government a penny, but might just earn it some desperately-needed trust.”

Should banks help fund a social tariff?

A higher bank surcharge could ultimately mean reduced bonuses.

That may please the unions but not everyone is in agreement.

Samuel Mather-Holgate, managing director of Mather and Murray Financial, highlights that bank bonuses are not just City excess but are a performance tool.

He said: “If banks want to attract people who can grow lending, manage risk and deliver returns, pay has to reward results.

"Since the bonus cap era, UK bank profitability and competitiveness have hardly looked world-beating, so doubling down on restrictions would be a strange answer. There is a fair debate about whether banks should contribute more to public finances, but cutting bonuses to fund energy bills risks treating pay policy as a piggy bank.

“A social tariff may be worth considering, but it needs a stable funding model, not a raid on incentives that help banks perform.”

Anita Wright, financial planner at Ribble Wealth Management, added: “Energy bills didn't go up because bankers got paid too much. They went up because years of cheap money and a falling pound made everyone's cash worth less.

“The same forces that fattened those bank profits are the ones now squeezing families.”

If you really want to help people with their bills, said Wright, people should ask why the pound in their pocket buys less every year.

She added: "Blaming bankers is easier. It also fixes nothing. Someone always has to pay. Changing who picks up the tab isn't the same as shrinking it.”

The number of investigations into capital gains tax (CGT) rose by 26% last year, netting HMRC £266 million from Brits who had underpaid.

The taxman closed 9,800 investigations in 2024/25, up from 7,800 the previous financial year, according to new Freedom of Information (FOI) figures – the highest number of investigations in a tax year since the Covid pandemic.

Of those whose claims were probed, the average amount of underpaid tax rose from £23,333 to £27,142.

The total tax taken by HMRC following investigations increased by 46% year-on-year, from £182 million in 2023/24, the FOI figures obtained by tax and accountancy firm Lubbock Fine revealed.

Rachael Griffin, tax and financial planning expert at wealth manager Quilter, said the figures suggested “investors, landlords and business owners should not assume capital gains tax reporting slips under the radar”.

Griffin added: “At the same time, HMRC has significantly improved its ability to identify discrepancies through increased data sharing and digital reporting.

“Investment platforms, estate agents, conveyancers and other financial institutions provide information that can be cross-checked against tax returns, making it increasingly difficult for gains to go unreported.”

An HMRC spokesperson said: “We’re committed to helping people pay the right amount of tax, and the vast majority do. We take a variety of approaches to ensure all taxpayers are aware of their obligations and pay what they owe at the right time.”

Why people are being investigated over their capital gains

The uptick in CGT investigations comes after the annual exempt amount was reduced from £6,000 to £3,000 in April 2024. It was reduced from £12,300 to £6,000 in April 2023.

Griffin said: “Far more people now have a potential reporting obligation, including those who may never previously have had to think about CGT. As a result, some individuals may be finding themselves caught out simply because they are unaware of the rules.”

Lubbock Fine said HMRC was also cracking down on cryptocurrency investors, some of whom might not be aware crypto assets are taxable.

Graham Caddock, director at Lubbock Fine, said: “Cryptocurrencies were renowned for being the ‘wild west’ of investing. For many crypto investors this categorisation has stuck and many underestimate how seriously HMRC treats undeclared gains.

“Even worse, some crypto investors think that gains made through digital assets somehow sit outside the normal tax rules, which is exactly why HMRC is targeting the sector so aggressively.”

Lubbock said a lot of retail investors and young day traders were unaware selling shares could trigger a CGT bill as well.

How to avoid being investigated over your capital gains

First, it’s worth making sure you report any gains correctly.

Caddock, from Lubbock Fine, said: “Many CGT enquiries start because of basic errors such as failing to get an independent valuation (perhaps more than one) for such things as gifts of family company shares or even property.”

If you have had to input estimates in the value of assets when you report your capital gains, it’s worth explaining why too.

“This may avoid an enquiry altogether, and the disclosure will help limit HMRC’s ability to enquire into earlier tax periods,” Caddock explained.

Charlene Young, senior pensions and savings expert at investment platform AJ Bell, said lots of people come unstuck when it comes to reporting gains on property.

Young said: “While gains made on your main residence are usually exempt from CGT, profits on second homes must be declared and the estimated tax paid within 60 days of completion to avoid penalties and further investigation.

“HMRC can use data from the Land Registry, banks and estate agents to cross-reference what it has been told by taxpayers, or what it suspects hasn’t been declared.”

It’s also worth making full use of your annual £20,000 ISA allowance where possible. Gains made from investments held in a stocks and shares ISA are shielded from CGT.

The second quarter (Q2) of 2026 saw increased enthusiasm from British investors, and they appear to be positioning their assets strategically in order to capitalise on looming challenges for the artificial intelligence (AI) boom.

Data from investment platform eToro shows that their its investors predominantly bought semiconductor stocks, particularly the makers of memory chips, during Q2.

Memory is a key bottleneck for the AI and technology trade. Ownership of memory hardware producer Sandisk (NASDAQ:SNDK) on the platform rose 185% in Q2 compared to Q1, according to the analysis, while ownership of Marvell Technology (NASDAQ:MRVL) rose by 90%.

^{Source: eToro}

“We are entering a more mature phase of the AI trade,” said Lale Akoner, global market strategist at eToro. “Retail investors are no longer just buying the most obvious winners; they are starting to look for where supply bottlenecks, pricing power and capital spending are likely to create the next layer of beneficiaries.”

Despite the rise in ownership of these winners, none were significant enough to knock the AI infrastructure giant Nvidia (NASDAQ:NVDA) off pole position as the most-owned stock for eToro’s UK retail investors.

^{Source: eToro}

Investors became more confident during Q2

According to research from retirement firm Scottish Widows investors were more willing to put funds into their portfolios during Q2 than in the previous quarter.

Average portfolio contributions rose by 47%, reaching £3,554 between April and June, up from £2,413 from January to March, according to the firm’s latest investment pulse survey of 2,000 UK-based retail investors.

“Investors have shown real resilience this quarter, increasing their contributions even as global conflict has escalated and the UK political landscape has shifted expectations,” said Manuel Pardavila-Gonzalez, Scottish Widows’s managing director of investments. “Even as the cost of living continues to bite, most aren’t reacting to short-term noise or alarmist headlines – they’re staying the course rather than making knee-jerk decisions.”

He added that Q2 often sees a seasonal spike in investing as investors top up their portfolios and make use of their ISA allowance around the end of the tax year on 5 April.

The survey also identified a shift in allocations overseas. While UK-held investments remained the largest single allocation at 57% (down from 62% in Q1), allocations to North America increased from 16% to 21% – consistent with eToro’s findings that US tech stocks held high appeal for British investors last quarter.

Similarly, AI was the post popular investment theme – 35% of respondents highlighted this as their favourite theme – followed by renewable and clean energy infrastructure with 25% of respondents.

Where else did retail investors look last quarter?

Memory isn’t the only AI bottleneck that retail investors exploited last quarter.

Energy is another important part of the AI puzzle. With the power demands of AI data centres rising all the time, demands for energy are set to grow, and this was reflected in a dash for clean power and energy infrastructure stocks like GE Vernova (NYSE:GEV), Bloom Energy (NYSE:BE) and NuScale Power (NYSE:SMR).

“Energy remains on retail investors' radar, but the perspective is evolving,” said Akoner. “While traditional oil and gas names feature heavily among the fallers, investors appear to be turning their attention to clean power, nuclear-linked energy and low-carbon infrastructure.”

Akoner added that as well as AI’s increasing power demands, the energy transition away from fossil fuels in order to improve individual countries’ energy security is a further tailwind for clean energy stocks.

Unsurprisingly, given SpaceX’s blockbuster IPO taking place in the quarter, the space economy was another focal point for investors in Q2.

Space infrastructure manufacturer Intuitive Machines (NASDAQ:LUNR) was the fourth-biggest riser among UK users, with holders increasing 62%, while Rocket Lab (NASDAQ:RKLB), AST SpaceMobile (NASDAQ:ASTS) and Ondas (NASDAQ:ONDS) were also among the 20 stocks that saw their ownership on eToro increase most during the quarter.

It remains to be seen whether investors will sustain their current tech optimism going forward, but Scottish Widows’ Pardavila-Gonzalez believes investors should stay the course.

“While we’re expecting more of the same uncertainty in the next quarter, the principles of investing remain the same and it’s important not to let short-term volatility derail long-term plans,” he said.

What is Manchesterism?

Manchesterism is the new political buzzword that Andy Burnham uses to describe his political philosophy – essentially meaning social democracy with an emphasis on close relations with business, regional devolution, strong municipal government and public control (though not ownership) of essential services. It is the word the soon-to-be PM himself prefers to sum up his outlook and record as metro-mayor of Greater Manchester since 2017.

In Burnham's words, the concept means “a modern and functional response to the high-inequality, low-growth trap that came from the 1980s drive to privatise economic power and overcentralise political power in the Treasury”.

To Burnham's critics, Manchesterism is nebulous flannel with no coherent set of policies attached; vibe-shift politics at its most virtue-signalling and vacuous. Meanwhile, to economic historians – free-market liberals in particular – his adoption of the concept is ironic and mildly annoying.

What's wrong with Manchesterism?

In the 19th century, “Manchesterism” was coined to describe the culture of laissez-faire capitalism that grew up in Manchester and its cotton-rich Lancashire hinterland. Burnham sees his new Manchesterism as the nemesis of “neoliberalism”.

By contrast, original Manchesterism meant the free-trade liberalism of Richard Cobden and John Bright, leaders of the Anti-Corn Law League, which campaigned successfully to scrap the protectionist tariffs that kept bread prices artificially high. The idea – as relevant today as ever – was that free markets and free trade will lead to a more equitable society by making goods available to all at reasonable prices.

What about modern Manchester?

Its recent history is also of expansion and getting richer: the city-region's economy has grown at more than 3% since 2015, double the overall UK rate, and the skyline is dotted with gleaming new towers. However, as Burnham acknowledges, the roots of that transformation long predate his tenure as city-region mayor.

In the late 1980s, the Labour mayor of Manchester City Council, Graham Stringer, began opening up the city to private-sector property investment. In the early 1990s, only a few hundred people lived in Manchester's city centre. Following the massive redevelopment and regeneration that followed the IRA bombing in 1996, that figure is now approaching 100,000.

In the 2010s, Labour council leader Richard Leese, together with the council's chief executive, the late Howard Bernstein, opened up the city to foreign investment in property and expanded the tram system. They also negotiated Greater Manchester's far-reaching devolution deal – creating the city-region and mayor position – with then-chancellor George Osborne in 2014.

What has Andy Burnham achieved as Greater Manchester mayor?

His signature achievement has been to bring Greater Manchester's buses, which were deregulated in the 1980s, back into one publicly controlled system known as the Bee Network. The municipal authority doesn't own the companies, rather it operates a franchise system under one (distinctive yellow) branding, with control over services, routes and fares (capped at £2 for a single trip).

It's been a success, with passenger numbers and customer satisfaction up. He's also attracted some £2 billion of public and private investment into the Greater Manchester Good Growth Fund, which aims to fund the building of 10,000 council and social homes by 2028, as well as a series of public-private industrial schemes.

Is Manchesterism socialism?

Burnham reckons Manchesterism is “business-friendly socialism”, says Tej Parikh in the Financial Times. But the long-term rise of Manchester was actually built on stable, pragmatic local government and its openness to private enterprise. “The emphasis on attracting investment, clustering and connectivity has supported creative destruction” – in particular the regeneration of old industrial zones into business spaces, drawing in higher value-added sectors including professional services, technology and media.

That's the real story of Manchesterism, not public control of colourful buses. Regional devolution has helped, but the city's rise is more “about the ‘neoliberal' forces the politically astute Burnham has recently criticised, and less the socialist principles he suggests”.

If the UK as a whole is to grow faster under its new PM, it will need to draw on the real “Manchesterism, not the version Burnham supporters think he represents”.

Can Manchesterism work at the national level?

“What Manchester does today, the rest of the world does tomorrow,” remarked prime minister Benjamin Disraeli on a visit to Britain's industrial powerhouse in the 1870s. Burnham, despite his eye-catching plans for a “Number 10 North”, will obviously not find it that simple.

If the UK does indeed follow Manchester's example, a new paper by two Burnham allies, Mathew Lawrence and Alex Williams (“The Productive State: A Framework for Manchesterism”), ought to be a promising guide to what we might expect. It calls for “public control of essentials” such as water and sewerage, energy networks and rail infrastructure, alongside social housing and social care.

But Greater Manchester doesn't actually have public control of these sectors. And in any event, the idea that what worked so well for Manchester will work for the UK is “the very definition of a fallacy of composition: the generalisation from a single example to the whole, from a city to a country”, says Wolfgang Munchau on UnHerd.

The crucial difference between a country and a large city is not size, it is macroeconomics and fiscal policy. Cities don't have currencies, don't have significant tax-raising powers and “they certainly don't have bond markets. Becoming acquainted with the latter will be a new experience” for the self-styled King of the North.

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Is the shine coming off the Nasdaq 100?

The index – effectively a benchmark for US big tech, since it includes the largest 100 stocks listed on its namesake exchange but excludes finance companies – reached an all-time high of 30,730 on 3 June.

Over the next month, the index fell by 4.6%.

Increased fears over a potential artificial intelligence (AI) bubble bursting have played their part in this demise.

The AI boom over the last few year has been driven largely by a consensus that the enormous sums spent on AI infrastructure would inevitably pay for themselves.

“Now that is changing, and some [tech companies] are issuing debt to fund their AI operations,” said Annabel Brodie-Smith, communications director of the Association of Investment Companies (AIC) – an industry body that represents the UK’s investment trusts. “It’s understandable that some investors are looking to diversify their portfolios away from the AI boom and many investment trusts offer a great opportunity to do this.”

Any passive investments you hold will likely be heavily exposed to the big tech stocks that form the bulk of the Nasdaq 100 and the S&P 500.

“Correlation is the real risk in current markets,” said Saftar Sarwar, chief investment officer at model portfolio service manager Binary Capital. “A ‘diversified’ global portfolio is often not that diversified. Five companies account for around 30% of the S&P 500 – a very high level of concentration.”

But could these investment trusts offer some diversification and protect you in case the bubble bursts?

How to diversify away from AI

One of Sarwar’s first tips for diversifying away from AI is to avoid the “obvious emerging markets” of Korea and Taiwan.

These, he says, “are now significant technology-exposed equity markets”.

Instead, he recommends “so-called emerging frontier markets” like Poland, Egypt and Turkey, and picks out BlackRock Frontiers Investment Trust (LON:BRFI) as a route to gaining exposure given its 52% weighting towards financials.

Tomiko Evans, chief investment officer at portfolio manager Crossing Point Investment Management, recommends European stocks as another market that could offer diversification.

“Europe gives investors access to a broader mix of companies across sectors such as industrials, financials, healthcare, consumer goods and infrastructure-linked areas,” she said.

“Within this space, JPMorgan European Growth & Income (LON:JEGI) is one option we find interesting. The trust provides exposure to growth, but through a diversified European equity portfolio,” Evans continued. “Its approach combines quality, value and earnings momentum, allowing the managers to seek companies with attractive growth prospects while remaining disciplined on valuation.”

Buy British to avoid AI?

Both Evans and Sarwar believe undervalued UK stocks provide fertile ground for anyone looking to reduce their exposure to AI.

“UK equities have spent a decade unloved, and undervalued, for exactly the reason that now could look like an important advantage: minimal AI and technology exposure,” said Sarwar. “Trusts such as Merchants Trust (LON:MRCH), City of London (LON:CTY) and Law Debenture (LON:LWDB) own UK value or UK traditional equities with dividend yields of around 3% to 4%... These are good investment trusts if you want to move away from the whole AI theme and believe that the UK offers more compelling equity valuations relative to other markets.”

Sarwar also highlighted Temple Bar Investment Trust (LON:TMPL) for its value discipline and its heavy weighting towards the UK in comparison to the US.

Evans, meanwhile, picked out Murray Income Trust (LON:MUT). “Rather than simply owning the traditional large cap UK income names, the managers can look across a broader range of companies that can generate cash, pay sustainable dividends and offer scope for capital growth,” she said, adding that the trust offers “UK equity exposure, income discipline and relatively limited direct technology exposure” for investors that want to reduce their tech exposure without moving fully into defensive assets.

Rumours are already swirling about what changes Andy Burnham could make if he were to win the Labour leadership contest – including a shake-up of the capital gains tax regime.

The MP for Makerfield looks more-than-likely to gain the keys to Number 10 later this month and is said to be considering Wes Streeting as his chancellor.

Should Streeting take on the role, he could look at reforming capital gains tax (CGT) in attempts to drum up much-needed cash for the Treasury.

In an interview with the BBC’s Nick Robinson in May, the former health secretary suggested raising the three CGT rates to mirror income tax rates – 20%, 40% and 45%.

Currently, you pay a rate of 18% if you’re a basic-rate taxpayer and 24% if you are a higher or additional-rate taxpayer.

A number of experts have called for the equalisation of CGT rates with income tax rates, including the Centre for the Analysis of Taxation and Dan Neidle, founder of tax think tank Tax Policy Associates, arguing it would reduce tax avoidance and boost UK economic growth.

Neidle posted on X that Streeting’s proposal was “good”, suggesting the extra money it brought in could be used to cut the basic rate of income tax.

“That would be a brave thing for a Labour politician to do, but in my opinion the right thing at this moment. Spend the rest on e.g. defence. I think most people would agree,” Neidle said.

However, Jeremy Hunt, former chancellor for the Conservative Party, said a CGT rate rise would be “terrible” for the economy.

He said: “It doesn't matter if you're left or right, don't do it. If you increase your CGT above 24%, you will get less revenue, not more, because investors will change their behaviour.”

MoneyWeek asked Andy Burnham’s office for comment.

How would a rise in capital gains tax rates affect you?

Calculations by wealth manager Rathbones suggest aligning CGT rates with income tax rates could increase the tax bill on a £50,000 gain by almost £10,000 for an additional-rate taxpayer.

A higher-rate taxpayer’s bill would rise by over £7,500, according to Rathbones. The tax bill on a £10,000 gain would be more than £1,000 higher.

Basic-rate taxpayers would be stung less – Rathbone’s calculations suggest the tax bill on a £10,000 gain would be over £100 more compared to the current rates.

These figures were calculated based on gains being made outside tax wrappers such as ISAs and pensions and including the £3,000 CGT annual exempt amount.

How to protect against capital gains tax

Everyone gets a CGT annual allowance of £3,000. Any gains made within each tax year less than this amount aren’t taxed, and there are other methods you can use to lower your CGT bill too.

Maximise the use of ISAs

Gains made inside tax wrappers like ISAs are free from CGT so it’s worth utilising your full ISA allowance each year. The current annual ISA allowance is £20,000 per tax year.

Assets like shares or funds held outside an ISA can be transferred into a tax-wrapped ISA through a ‘Bed and ISA’.

Jason Hollands, managing director at wealth manager Evelyn Partners, said: “This involves selling investments, ideally not exceeding the annual £3,000 CGT exemption, and then repurchasing them within an ISA so that future gains – and income – are sheltered from tax.”

Use interspousal transfers

Assets can typically be transferred between married couples and civil partners without triggering a tax bill.

Transfers can be a useful way of moving your assets around and using up each person’s CGT and ISA allowances to full effect.

It can also be worth transferring assets to a partner who pays a lower rate of CGT, thereby reducing your combined tax bill.

Use your annual allowance rather than letting gains build

By selling assets each year within your annual £3,000 allowance, you can pull out profits tax-free and save yourself a larger bill on a big chunk of gains down the line.

Holland said: “The annual CGT exemption has become much smaller at £3,000 than it used to be, but it is still valuable. Many investors overlook it, allowing unrealised gains to build up over many years.”

It's become a cliché to describe a collectable that's hard to find as a “holy grail”. You don't often read about something being an “unholy grail”. But if there was ever such a collectable up for sale – at least in the eyes of England fans – it's the captain's armband Diego Maradona was wearing when he punched the ball into the England net during the World Cup on 22 June 1986. That infamous “Hand of God” goal put Argentina 1-0 up early in the second half, and England went home at the end of the match – while Argentina went on to win the tournament. “A little with the head of Maradona, and a little with the hand of God,” was how Maradona cheekily put it after the whistle. The armband appears as part of “The Beautiful Game” sale, held by Sotheby's in New York, which runs until 16 July. The highest bid as of late last week was $100,000, with days to go.

A less controversial lot in the sale is the remarkably small number-ten shirt that a 17-year-old Pelé wore while scoring two goals against Sweden in the World Cup final in 1958, which Brazil won 5-2. Almost 70 years after that match, Pelé remains the youngest-ever player to appear in a World Cup final, and Sotheby's expects that shirt to sell for at least $6 million, according to The Guardian. That would make it the most expensive single item of football memorabilia sold at auction.

The current record holder? The Argentina shirt that Maradona was wearing while scoring with “divine assistance”. It sold for an eye-watering $9.3 million in 2022. And recently, Dallas-based Heritage Auctions revealed it will be selling the actual ball in August. That one defies valuation. As Heritage says, the sports collectables market has been booming.

Japan's World Cup jersey sales soar

Football fever is apparent in other sales rooms, too. Sotheby's archrival Christie's is taking a decidedly left-field approach to celebrating the World Cup by selling five giant metallic football art installations, on 17 July, in New York. The works are currently on display across New York and New Jersey and a portion of the proceeds will go towards good causes.

Northamptonshire-based Budds (formerly Graham Budd Auctions) sold dozens of match-worn shirts from past tournaments this week, while more vintage tops can be found online with Dutch online auctioneer MatchWornShirt.

It might be worth keeping an eye out for one from Japan, as Eru Ishikawa notes on Bloomberg. Sales of this year's Japan away shirt have risen 29-fold compared with sales from the 2022 Qatar World Cup – and they have doubled for the home shirt – according to the manufacturer, Adidas. But good luck finding one. The adult replica shirts on the Adidas website in Japan, priced at ¥13,200 (£60) each, have sold out. Japan may already have been knocked out of this year's World Cup, but at least its fans will be left holding on to something longer lasting.

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Crypto investors are being urged to ensure they have reported any capital gains to HMRC or face fines worth hundreds of pounds amid new transparency rules being introduced next year.

Financial Conduct Authority (FCA) data suggests around 8% of UK adults, roughly 4.5 million people, now hold cryptocurrency such as Bitcoin.

But commentators warn that those who have got into it as a side-hustle or to make quick profits amid Bitcoin price rises may not realise that they need to pay capital gains tax (CGT).

HMRC has previously clamped down on those failing to pay owed CGT.

As many as 101,024 CGT warning or ‘nudge’ letters were sent to investors in crypto assets between 2020 and 2025, according to Freedom of Information (FOI) data obtained from HMRC by comparison platform BrokerChooser.

Crypto investors will have no excuses from 2027 when platforms have to start reporting user data to HMRC.

Here is what you need to know.

Crypto tax changes explained

Owning crypto has never been tax-free and any profits from sales of the asset could result in a CGT bill if above the £3,000 threshold.

Currently investors have to report this to HMRC themselves but under the UK’s incoming Cryptoasset Reporting Framework, UK cryptoasset service providers began collecting user data in January 2026, with their first reports to HMRC due between January and May 2027.

Providers must record each user's name, address, date of birth, tax residence and, for UK residents, their National Insurance number or Unique Taxpayer Reference.

If you give inaccurate information or do not provide details, you could get a penalty of up to £300

HMRC expects the measure to raise an extra £315 million over four years.

If you have not paid owed tax and HMRC finds out, you may get a penalty of up to 100% of the tax due plus interest.

Harvey Dhillon, chief executive of at accountancy firm Zmartly said the person caught out is not the sophisticated trader but the everyday holder or side-hustler who bought a little, sold or swapped some, and never thought to put it on a tax return.

He added: "Crypto was never untaxed. It was just unseen, and that is the only thing changing. Selling a coin, swapping one for another or being paid in crypto can trigger Capital Gains Tax or Income Tax, and always could.

"Reported to HMRC is not the same as declared by you, and the gap between the two is where the penalties live. The person caught is not the full-time trader but the everyday holder who bought a little, sold some, and assumed a small pot could never be taxable.”

How to prepare for crypto tax

Crypto prices have soared in recent years, especially if you have bought and sold Bitcoin or Ehtereum in your investment portfolio.

With the capital gains allowance frozen at £3,000, even modest disposals can be chargeable.

Dhillon added: "If you have ever sold or swapped crypto, check your history now, work out the gains for each year, and correct anything missing before the reports land. The anonymity was the only thing protecting an unpaid bill. In 2027 it goes."

Graham Nicoll, financial planner at NCL Wealth Partners, urged people to review their transaction history.

He added: "This isn't a new tax, but it is a significant shift in transparency. I’ve seen investors who made substantial gains during previous crypto rallies wrongly assume those profits didn't need to be declared. As HMRC receives more data directly from crypto providers, those historic gains are likely to come under greater scrutiny.

"At the same time, investors shouldn't overlook losses. Properly reporting capital losses now can allow them to be offset against future gains, potentially reducing tax when markets recover or from gains on other assets.

“Anyone who has bought or sold crypto should review their transaction history, calculate any gains or losses and, if necessary, correct previous tax returns before HMRC comes knocking. Good records are now just as valuable as good investment returns."

Tens of thousands more households could be dragged into paying the ‘mansion tax’ under rumoured plans, if Burnham becomes the new Labour leader.

The prime minister-in-waiting could potentially lower the threshold at which people start to pay the High Value Council Tax Surcharge from £2 million to £1.5 million, according to reports in The Mail on Sunday.

An estimated 150,000 additional households could be pulled into paying the surcharge if the levy was brought down to the reduced amount, based on calculations done by think tank Tax Policy Associates.

The so-called mansion tax was first announced by chancellor Rachel Reeves during her 2025 Autumn Budget and is set to come into force in April 2028.

As it stands, the measure will see those with properties worth over £2 million pay between £2,500 and £7,500 per year depending on the value of their home. It is expected to bring in £430 million in 2029/30.

But should Burnham win a Labour leadership contest, he will need to find ways to fund an ever-growing welfare budget and multi-billion pound hole in the Defence Investment Plan (DIP).

Lowering the entry level at which households pay the mansion tax could be one way of doing this alongside potentially scrapping the triple lock pension system.

MoneyWeek approached Andy Burnham’s office to comment.

What is the mansion tax and how will it work?

The High Value Council Tax Surcharge will take effect from April 2028 and apply to homes in England worth £2 million or more.

The Valuation Office (VO), which is part of HMRC, is set to carry out a valuing exercise to assess which homes the surcharge will apply to.

Homes valued at £2 million or more but less than £2.5 million will be charged £2,500.

Properties worth £2.5 million or more, but less than £3.5 million will need to pay £3,500. Homes worth between £3.5 million and £5 million will need to pay £5,000. Properties worth £5 million or more face a £7,500 surcharge.

These charges are set to be increased each year in line with the Consumer Price Index (CPI) measure of inflation. Revaluations will be conducted by the VO every five years.

How a reduced threshold of £1.5 million on the levy would be applied exactly is unclear, but would almost double the amount of households paying it, according to calculations done by Tax Policy Associates.

The think tank predicts around 243,000 households would have to pay at least something, up from 127,000 under a £2 million entry-level threshold.

What else is Andy Burnham considering?

In a major speech on 29 June, Burnham said he intended to reform business rates to support high streets and pubs which have taken a battering in recent years.

According to the British Beer and Pub Association, a trade body for the sector, 161 pubs closed across Britain in just the first three months of 2026. UK Hospitality, a trade body for the hospitality sector, has forecast six hospitality venues will close each day in 2026.

Rumours have been swirling about what else Burnham could introduce if he were to become the next prime minister of the UK.

The MP for Makerfield could reportedly look at reforming Capital Gains Tax (CGT) by bringing the rate paid in line with income tax. Basic-rate taxpayers currently pay a CGT rate of 18% while higher and additional-rate taxpayers pay 24%.

Burnham could also replace stamp duty with a ‘land value tax’ – an annual tax based solely on the value of the land itself.

One of the best ways to gauge how your fellow investors feel about the market is to follow the money.

The flows of cash in and out of European exchange-traded funds (ETFs) during June suggests a pivot back towards US stocks and funds and away from their European counterparts, according to analysis of etfbook.com data from investment manager Fidelity International.

June was a strong month for European ETF flows overall, attracting just under $45 billion in total funds – 29% above the three-month average monthly flow and 19% above the 12-month average.

“Strong corporate earnings, combined with new record highs in equity markets, have boosted investor confidence,” said Stefan Kuhn, European head of ETF and index distribution at Fidelity International.

If you’re considering where to invest for the coming months, it can help to have an idea of which way the money has been going recently.

Fund flows shift from Europe to America

Funds investing in North American equities saw $14.7 billion of inflows during the month, more than three times the monthly average for the region over the past year.

Much of the strength in American stocks will have been driven by demand for artificial intelligence ETFs, with the US still the major player in the theme. The sector also received a sentiment boost in June from SpaceX’s record-breaking initial public offering.

At the same time, though, European investors appear to have abandoned their domestic markets, with Europe-listed ETFs targeting European stocks registering $2.2 billion in outflows in June.

^{Source: etfbook.com via Fidelity International. Data as of 30 June 2026.}

“The story of the second quarter was the return of the United States,” said Kuhn. “While investors were allocating more heavily to Europe and other regions at the start of the year, we are now seeing a clear preference for the US market again,” he added.

June marks the third consecutive month of outflows for Europe-focused funds according to Fidelity.

Commodity ETFs slide as investors snap up active ETFs

Demand for commodity ETFs waned during June, coinciding with a decline in gold prices as expectations for higher interest rates (particularly in the US) rose and the war in Iran appeared to be simmering down.

“With the immediate escalation phase now behind us, some of the geopolitical risk premium has faded from commodity markets,” said Kuhn. “At the same time, many investors expect central banks to keep interest rates higher for longer, making non-yielding asset classes such as gold less attractive.”

Actively-managed ETFs, though, continue to soar in popularity. June was a record month for flows into this category of funds, according to Fidelity’s analysis.

“Strong demand for active ETFs shows that investors increasingly want to differentiate between regions, sectors and individual companies,” said Kuhn. “In a market where the gap between winners and losers is widening, active security selection can provide real added value.”

Artificial intelligence (AI) could be embedded into every aspect of a financial services business by 2030 as millions of savers and investors are already making use of the tools, research by the Financial Conduct Authority (FCA) has found.

The City watchdog asked executive director Sheldon Mills to review how advances in AI could transform retail financial services.

The Mills Review, published this week, found one in five UK adults - equivalent to 11 million UK adults - are already open to AI making decisions for them in areas such as pensions and investments but there are concerns about trust and control.

The review found that while AI has the potential to improve access, personalisation and efficiency, it could also amplify risks associated with fraud, cybersecurity, consumer harm and market concentration.

Mills said: “Artificial intelligence will transform financial services by 2030. It creates significant opportunities for consumers, firms and the wider economy. This report sets out a roadmap for how industry regulators and government can prepare for the next phase of AI-driven change in our world-leading financial services sector.”

Here is how the FCA expects AI to reshape financial services.

Changing roles in financial services

The regulator suggests human roles in financial services will change.

It highlights that many firms are already piloting and rolling out AI tools and by 2030 they could be more independent and cover every function from customer support and underwriting to compliance, claims and product design.

AI may become the main method by which they process information, serve customers, and evidence outcomes, the FCA suggests.

This could mean the role of people within firms changes from operators close to each decision towards collaborators, approvers and, eventually observers who monitor outcomes and step in when systems move outside agreed parameters.

The FCA said: “This is a substantial organisational shift, requiring new skills and a clearer account of what human oversight actually involves.

“Firm governance will extend existing model risk management to cover more complex systems and deeper reliance on third-party providers. Successful AI deployment should lift productivity and support economic growth, though the benefits will reach consumers only where firms remain accountable and markets stay competitive enough to pass them on.”

The review suggests the human role becomes one of challenge, judgement and review rather than direct production of every output.

The rise of agentic AI

Consumers are increasing using AI applications to act on their behalf and automatically follow preset instructions, known as agentic AI, and the FCA predicts this could grow in financial services.

This may involve easier bank switching, embedding insurance into other platforms, auto-rebalancing in savings and investments and pension pot consolidation.

The FCA said: “Overtime, AI systems will move beyond offering information and recommendations towards trusted AI agents that can act continuously for consumers within agreed limits, providing ongoing financial management and optimising people’s financial lives.

"If done well, this could help consumers achieve more while doing less, addressing long-standing problems such as low switching, advice and protection gaps, and improving outcomes for people with lower financial capability.”

The FCA warns that consumers will still need to be able to oversee, understand and challenge AI-driven decisions, especially when things go wrong, the report adds: “Unequal access to high-quality applications risks widening inclusion gaps - but well-designed AI systems also present an opportunity to radically improve outcomes for those who need more support.”

Changes in market power

The rise of AI could reshape who holds the power in financial services.

Investors and savers may flock to well-known investment platforms or providers now but the FCA says AI has the potential to drive greater beneficial competition in financial services and to support new entrants.

This could make the suppliers more powerful and there are risks of dependance on a few technology firms.

The FCA said: “Control of the AI-mediated customer interface may become a major source of market power.

"As consumers rely on agents to search, compare and transact, the owner of that AI layer may influence which products are visible, how choices are ranked and where value is captured, shifting the customer relationship away from financial services providers.”

AI risks

While AI could help consumers manage their finance more effectively, the FCA review wants that there will also be more fraud risks.

The report said: “Deepfakes, synthetic identities and personalised social engineering are taking fraud and cyber risks into a new era and changing how fraud and cyber-attacks are conducted. Existing weaknesses can be exploited far more quickly than before, and defenders will need to keep pace.

“Defensive, supervisory and enforcement capability must evolve at least as quickly as the threat. To remain effective, firms, regulators and their partners will need access to many of the same AI capabilities as those used by attackers.

"They will also need to share the right information with those best placed to act, when it matters and before harm escalates.”

Is AI regulated?

Artificial intelligence isn’t regulated but Mills suggests that existing rules such as the Consumer Duty and Senior Managers Regime should cover some of the risks associated with how savers and investors may use AI.

The review does add that regulation may have to evolve though to focus on shared models between firms though rather than focusing on individual conduct.

It also suggests that the FCA review AI tools such as ChatGPT and Claude to assess if there are regulatory overlaps and risks in the results generated.

Commenting on the report, Amal Jolly, chief executive of the AI company Saturn, which specialises in financial advice, said: "AI brings new opportunities to close the advice gap, improving the financial lives of millions of adults, but as this report shows it also brings huge risks.

“In financial services, AI is the new Wild West: consumers are left with no protection. Only 9% of people have access to regulated human financial advisers, but 100% of people have access to ChatGPT and other AI platforms. This is not just a theoretical problem, but can cause real harm to people who are entrusting major life-changing financial decisions to unregulated AI.”

SpaceX has joined the Nasdaq 100, meaning passive funds that track the index will now automatically hold positions in the company, which listed on 12 June.

SpaceX (NASDAQ:SPCX) joined the index today (7 July), a week after it was added to the Russell 1000 Index (29 June).

Bloomberg reported SpaceX could look forward to an estimated $5.4 billion of inflows as a result of ‘forced’ buying by index funds that track these two indices.

Elon Musk’s space exploration company was fast-tracked for inclusion following rule changes by the index providers, put in place to reflect the unprecedented size of some initial public offerings (IPOs) coming to market.

Nasdaq’s new rules now allow freshly listed companies to be included in as few as 15 trading days, rather than its previous minimum period of three months after an IPO.

What will SpaceX index inclusion mean for flows?

Nasdaq says globally, there is around $1.4 trillion in assets tracking its component companies’ combined market capitalisation (market cap) of $31.5 trillion, around half of which do so through exchange-traded funds (ETFs). The other half is in derivative products, such as futures and options.

The Nasdaq 100 index represents the largest 100 companies, excluding financials, listed on the Nasdaq Stock Market. Often described as a tech-focused index, it contains all ‘Magnificent 7’ names – Alphabet, Amazon, Apple, Tesla, Meta, Microsoft and Nvidia. But it also contains many other companies with a value of $100 billion or more from healthcare, industrials and materials, for example, with representation across 10 of the 11 standard industry classification sectors.

When a stock joins an index like the Nasdaq 100, funds tracking that index are effectively forced to buy its shares so that they still reflect the index. This creates additional demand for a stock and could push up its share price.

The UCITS version of Invesco’s Nasdaq-100 ETF (LON:EQQQ) is the largest Nasdaq-tracking ETF available to UK investors. Barclays Smart Investor platform lists it as the seventh most popular purchase during the week of 26 June to 2 July.

Alongside the uplift from index fund inclusion, several investment banks have issued positive analyst statements on SpaceX, marking the end of the ‘quiet period’ that typically follows an IPO. Morgan Stanley, Goldman Sachs, UBS and Bernstein Research are among the names backing the stock with ‘buy’ recommendations or equivalent, based on asset strength and long-term growth prospects.

Average house prices have increased for the first time since the outbreak of the Iran war in a boost for homeowners.

The newly-named Lloyds House Price Index, rebranded since the bank retired the Halifax name, showed average property values rose 0.2% in June.

The slight rise in house prices is an improvement on the previous month's 0.2% fall, while annual growth was at 0.6% compared with 0.5% a month before.

This put average UK house prices at £299,330.

It is the first monthly rise in average prices since February as confidence has been dented by the Iran conflict.

But hopes of a peace agreement and lower swap rates may now be filtering into the housing market and mortgage pricing, helping to boost demand.

Amanda Bryden, head of mortgages at Lloyds, said: "Recent price trends continue to reflect wider economic uncertainty, including the impact of global events on inflation and interest rate expectations."

Affordability remains stretched for many buyers, said Bryden, but this has been mitigated by mortgage rates easing from their recent highs.

"While latest industry data shows the number of new mortgage approvals dropped in May, this wasn’t unexpected given the spike in rates seen earlier this year, and we ’d expect to see activity recover assuming borrowing costs continue to fall," Bryden added.

Where are house prices rising?

The housing market has been quieter in recent months as the volatility caused by geopolitical tensions has pushed up swap rates, making mortgages more expensive and hitting buyer demand.

More stock is also on the market, which some attribute to a landlord exodus linked to the Renters’ Rights Act.

Higher supply and reduced demand has pushed price growth down.

But there have been signs of life in the housing market more recently as tensions have eased in the Middle East.

Northern Ireland continues to record the strongest annual house price growth in the UK, with average prices up 7.4% over the past year to £229,000, Lloyds said.

Scotland has the next highest annual growth at +3.9%, with an average price of £223,277.

In Wales , property price growth has strengthened by 0. 9% on annual basis to £ 231,142.

Meanwhile in England, stronger price growth remains concentrated in northern regions. The North East saw prices rise 2.8% over the year to £181,133, while the North West recorded annual growth of +2.4%, with the average property now costing £248,218.

In contrast, southern markets continue to see prices fall. The South East led declines, with prices down 2% year-on-year to £381,654, while London saw average values fall by 1.1% to £534,831 .

Will house prices rise in 2026?

The housing market has struggled to get going in 2026 and while the latest price rise may look good if you are hoping to sell your property, analysts remain cautious.

Amy Reynolds, head of sales at Richmond-based estate agency Antony Roberts, said "On the ground, the picture is more nuanced than national headlines suggest."

While the rate-dependent end of the market is exhibiting caution, well-priced family homes in the right roads are still seeing sustained interest from cash- or equity-rich buyers.

Reynolds suggests there is the familiar pre-summer push from families wanting to be settled before the new school year, but warns that the mood is steady and selective rather than booming or stalling, adding: "We expect a quieter, price-sensitive summer, with activity firming again in the autumn once buyers have more clarity on rates and the geopolitical noise has died down."

Sarah Coles, head of personal finance at AJ Bell, said the small rise in prices in June will owe something to the Iran peace agreement, which lowered inflation expectations and brought mortgage rates down, but warns that one swallow doesn’t make a summer.

"One small bump doesn’t mean the end of tougher times for the property market," said Coles. "There’s still a huge amount of global uncertainty as the peace deal remains fragile. Closer to home, the picture has started to look marginally more positive, with unemployment falling a little and economic growth edging up. But this is unlikely to move the dial just yet."

Coles highlights that unemployment has been trending up for the past four years and while economic growth might be positive right now, real household disposable income still fell in the first three months of this year, so prospective buyers may be feeling overstretched already.

Bryden is a bit more optimistic, saying: "We expect the housing market to continue moving at a measured pace. Lower borrowing costs should provide some support for demand, though affordability constraints remain an important factor. The outlook for house prices will depend largely on inflation continuing to ease and household confidence gradually improving."

Cohabiting couples who are not married or in a civil partnership are set to receive new rights to finances under new rules proposed by the government.

The proposals could see unmarried partners allowed a portion of the proceeds from a house sale, a percentage of a pension, automatic inheritance rights, and more when a relationship ends.

The measures are part of a new framework by the government that aims to bring family law “into the modern age” as more couples cohabit without getting married.

Cohabiting couples who are unmarried have far fewer financial protections than married couples under current laws. This can lead to complications if a relationship ends.

The government says these difficulties disproportionately affect more vulnerable groups such as women, children, and victims of domestic abuse.

The framework for new financial rights is set to establish more concrete rules for how assets should be split when a separation takes place.

The consultation proposes that courts should have access to similar actions that are available in the case of a divorce, though options are set to be narrower to maintain the unique status of marriage in law.

David Lammy, deputy prime minister and justice secretary, said: “We’re launching this consultation to make sure our new family law builds a fair system that offers the most vulnerable protection in the event of a breakup, and at a time where the country is facing cost of living pressures.

“Whether you’ve been left bereaved by the sudden and unexpected death of a partner, or escaped horrific domestic abuse, our laws should work to protect you.”

The consultation launched on 5 June and will run for 10 weeks, closing on 14 August. The government will then use the findings to help inform future reforms, which will be made law “when parliamentary time allows”.

Separating couples could be entitled to a portion of a partner’s pension

The new framework will provide family courts with a number of new remedies they can use when an unmarried couple separates. These mirror the ones available in divorce cases.

Possible remedies include property adjustment orders which can transfer interest or ownership in a property from one party to another, potentially entitling a partner to partial ownership of a house.

Separating couples may be entitled to a percentage of their partner’s pension too under the new rules as courts will have the power to enforce pension sharing orders.

Courts could be granted the power to order one partner to pay a lump sum of money to the other partner.

The government also says in exceptional circumstances time-limited maintenance orders that require one party to provide regular payments to the other may be granted by a court.

Couples would need to cohabit for at least three years or have a child together for the rules to apply to them. Courts must also be satisfied the couple are in an “enduring family relationship”.

The consultation adds that while cohabitants may have access to the same measures as divorcing couples, this does not mean there would be equivalent financial outcomes to divorce.

Prenups and postnups set to become legally binding

Pre-nuptial agreements (prenups) and post-nuptial agreements (postnups) are becoming increasingly common in the UK.

Around 20% of couples sign prenups before marriage today, up from just 8% in the 1990s, according to research by the Marriage Foundation.

Prenups and postnups are written contracts made before a marriage or civil partnership that outline how assets will be split in the event of separation, divorce, or death.

In the UK, these agreements are not currently automatically enforceable by courts in England and Wales. Instead courts are simply told they should consider them unless doing so would be unfair, so long as the agreements were entered into freely and with full understanding.

This means that there is a degree of uncertainty around when the agreements made in prenups and postnups apply and when they do not.

However, as part of this new set of reforms, prenups and postnups are set to become enforceable contracts that “are not subject to substantive scrutiny by the court” as part of the new framework proposed by the government, eliminating much of this uncertainty.

This would allow couples to make legally binding agreements about financial arrangements in the event of divorce, though the consultation adds that safeguards would still need to be met.

Cohabiting couples set to get automatic right to inherit

The new framework is also set to extend new rights to couples when a partner dies without a will.

Under the current rules, when a couple have been living together for years but have remained unmarried there is no automatic right for the surviving partner to inherit a portion of the other’s assets if they die without leaving a will.

However, if the proposed laws come in, qualifying couples will receive an automatic right to inherit parts of their partner’s estate with similar rights as spouses or civil partners even if they are unmarried and have not left a will.

Investment trusts are often a sound investment but picking one that stands out from the crowd can really boost your returns.

So if you’re trying to decide where to invest for the second half of the year it could pay to see which trusts and sectors have outperformed the rest over the last six months.

The top funds and stocks for DIY investors have reflected a slant towards technology so far this year. Investors who followed that trend were rewarded, as technology-focused investment trusts delivered greater returns than any other sector.

According to the Association of Investment Companies (AIC), an industry body representing the UK’s investment trusts, the average investment trust performed better than the UK stock market’s flagship large cap index, returning 9.4% during the first half of the year compared to the FTSE 100’s 5.7%.

Some investment trust sectors generated average returns well above this level.

The top-performing investment trust sectors of H1 2026

Tech was the top-performing investment trust sector, returning over 50% in the first six months of the year.

“The historic boom in AI spending continued to drive returns in the first half of 2026, most obviously in the technology sector,” said Annabel Brodie-Smith, communications director at the AIC.

^{Source: theaic.co.uk / Morningstar. Share price total return in % to 30/06/26.}

Tech and AI might be more heavily represented in the top-performing investment trust sectors than is initially apparent: the theme is also having a significant impact “in Asia and emerging markets where some of the world’s largest AI hardware and microchip manufacturers are based”, said Brodie-Smith.

It has also been a good six months for global small caps, with the sector returning 23.7% on average to make it the fifth-best-performing investment trust sector. The average Japan-focused investment trust, meanwhile, returned 18.2%.

Which investment trusts were the top performers in H1 2026?

While technology was the top-performing investment trust sector overall, the top-performing individual investment trust came from the commodities sector.

Baker Steel Resources (LON:BSRT) returned over 65% in the first six months of the year. The trust is a diversified commodities investment trust; it holds producers of precious metals like gold and silver, but as of 31 March its portfolio has the largest weighting towards tungsten producers – making up 23% of assets.

^{Source: theaic.co.uk / Morningstar. Share price total return in % to 30/06/26.}

Technology is unsurprisingly a recurring sector in the rest of the 10 top-performing investment trusts list. Three of the trusts – Polar Capital (LON:PCT), Manchester & London (LON:MNL) and Allianz Technology (LON:ATT) – are all designated to the technology and innovation sector by the AIC, while Seraphim Space (LON:SSIT) and Schiehallion Fund (LON:MNTN) have significant overlap with technology as a theme.

Asian and emerging market trusts like Pacific Horizon (LON:PHI) also featured amid the AI boom. Pacific Horizon’s top two holdings as of 31 May were chipmakers Samsung and Taiwan Semiconductor.

“The strong performance is extremely welcome, but this is only a snapshot. It is important to remember that investing is a long-term commitment and that any sector or trust should form part of a broader, diversified portfolio,” said Brodie-Smith.

The Magnificent 7 stocks (Mag 7) are starting to look mediocre. The group, which is made up of Nvidia, Alphabet, Apple, Microsoft, Amazon, Tesla and Meta, has been in the vanguard of the AI boom. Between the beginning of 2023 and the start of this year, the seven US technology mega-caps added $15 trillion in value between them and grew to account for a third of the entire S&P 500 by market capitalisation, say Emily Herbert and Tim Bradshaw in the Financial Times. Yet over the past month, they have collectively lost $2.2 trillion in value. Many of these firms are “hyperscalers”, with plans to lavish about $1 trillion on AI data centres. Investors are increasingly sceptical about whether such huge sums will ever generate a meaningful return.

Microsoft's and Meta's shares are in a “bear market”, having fallen more than a fifth from their peak, says David Goldman on CNN. The others are down at least 10%. There are growing signs of nervousness about technology valuations. The Nasdaq index fell every day last week. Korea's Kospi, which plays host to some major AI plays, has been on a wild ride this year, including another 10% plunge on 23 June.

Magnificent 7 stocks decline, but semiconductors soar

Yet while the Magnificent 7 stocks are falling out of favour, a boom in the firms selling computer chips to them at eye-watering prices has “more than made up the difference”. Micron's shares have gained 265% this year, Samsung is up 144%, and Intel has surged 254%. The semiconductor industry alone now accounts for 19% of the S&P 500's market value. The iShares Semiconductor exchange-traded fund (ETF) rocketed a staggering 110% in the first half of the year, says Ines Ferre for Yahoo Finance.

That pushed the US technology sector to its best first-half performance in three years, the slump in the Magnificent 7 stocks notwithstanding. AI data centres require specialised computer kit, but there is now an acute shortage and “it takes years to build new production facilities” for chips, says James Mackintosh in The Wall Street Journal. The result has been soaring prices: Micron's have “quadrupled” in the past year. Consumers have been caught in the crossfire, with Apple hiking prices for its computers. The net effect is “an enormous transfer of cash” from the AI hyperscalers to memory-chip makers. The problem for the AI industry is that firms such as ChatGPT-maker OpenAI were already loss-making (venture capital has been subsidising an expensive grab for market share). Now the maths looks even more challenging for the businesses that started the AI boom.

In retrospect, the best thing to do over the past six months would have been to go long chip stocks while shorting software firms, says John Authers on Bloomberg. Korea's chip-dominated Kospi stock market index has almost doubled since 1 January, while the S&P 1500 software index is down 17.5%. US technology-related capital expenditure is now slightly above the 5% of GDP peak it reached in 2000 during the dotcom bubble. By attracting “more capital than they can productively use”, investment bubbles ultimately “sow the seeds of their own destruction”.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Brits are facing major changes to ISA rules from April 2027 as the government tries to foster a culture of investing in the UK.

The reforms, as confirmed in the 2025 Autumn Budget by chancellor Rachel Reeves, will see a new annual cash ISA limit of £12,000, down from the current £20,000 ISA allowance, for under 65s.

The £20,000 annual ISA allowance – which also covers stocks and shares, innovative finance ISAs and lifetime ISAs – will remain.

A new 22% charge on cash held within stocks and shares ISAs will also apply, while retail investors will be banned from having a stocks and shares ISA made up wholly of money market funds.

Under 65s will also not be allowed to transfer money from stocks and shares ISAs into cash ISAs.

However, how these new “anti-circumvention” rules apply to those aged 65 and over is more nuanced.

How will the new ISA rules apply to 65-year-olds and older?

Government guidance states that the 22% charge on interest earned on cash in a stocks and shares ISA will apply to those aged 65 and over.

Meanwhile, the prohibition on 100% cash-like investments (money market funds) will also remain in place for those aged 65 and over.

However, individuals aged 65 and over will be able to transfer money from stocks and shares ISAs into cash ISAs when the new rules come in from April 2027, unlike those aged under 65.

Jason Hollands, managing director at wealth management company Evelyn Partners, said the new rules were adding an unneeded layer of complexity for all investors and “undermine the tax-free promise”.

He added: “We've never had different rules applying to different people depending on age.”

Hollands welcomed that 65-year-olds and over will be able to transfer money from stocks and shares ISAs into cash ISAs when the new rules come into force, allowing them to free up more liquid cash and avoid paying tax on cash held within stocks and shares ISAs.

A HM Treasury spokesperson said: “Parking cash long term in a non-cash ISA to earn tax-free interest isn't investing. These changes will push more people towards investments that actually grow their money, and industry leaders including Nationwide and the Building Societies Association back us on this.

“Savers can still hold up to £12,000 in a cash ISA, and those 65 and over keep the full £20,000 allowance.”

How exactly do the new anti-circumnavigation rules apply?

The 22% charge on cash held within stocks and shares ISAs will apply to any interest paid on it.

A number of investment platforms such as Bestinvest, AJ Bell and interactive investor, pay interest on cash held within a stocks and shares ISA.

Individuals will not have to declare any interest paid to HMRC as it will be paid by investment brokers.

Cash-like assets, like money market funds, will be allowed within stocks and shares ISAs, so long as they don’t make up 100% of the portfolio.

Investments such as shares, funds, investment trusts, ETFs and bonds, including gilts, will not be treated as cash-like assets under the new rules.

Transfers from stocks and shares ISAs will not be allowed for investors aged under 65, although they will be able to transfer money from a cash ISA to a stocks and shares ISA. This rule doesn’t apply to investors aged 65 or over.

Assuming no Labour MP throws their hat into the ring to challenge him, Andy Burnham looks set to be the UK’s next prime minister – and he could assume the office as soon as 17 July.

You might be wondering what a Burnham administration could mean for your money, in particular your investments. After all, the UK’s stock market has had an eventful year so far: the FTSE 100 reached its all-time high of 10,935 on 27 February, just before the Iran war broke out. It fell off sharply over the following weeks, and while much of the lost ground was recovered by the end of March, it still has not regained its late February highs.

UK stocks have been undervalued compared to international counterparts for some time, and while that’s a positive for value-focused investors, the hope is that something will, at some point, catalyse a revaluation so their prospects rise.

Could the UK’s seventh prime minister in 10 years be that catalyst, or is it more unwelcome news as far as the UK’s stock market is concerned?

“If Andy Burnham does get the keys to Number 10, he'll face a supremely tricky balancing act,” said Susannah Streeter, chief investment strategist at wealth manager Wealth Club.

The apparent prime-minister-in-waiting outlined his vision for the country on 29 June in a speech that majored on strengthening regional autonomy, but was otherwise light on detail.

“Investors will be looking for a clearer roadmap showing how growth can be boosted sustainably without unsettling bond markets or putting further strain on already stretched public finances,” said Streeter.

How UK stocks have reacted to the prospect of prime minister Burnham

There is widespread skepticism about how effectively Burnham can meet these challenges. Equally, it is yet one more source of turbulence for a market that could probably do without it.

“I think what the markets would like to see is some stability,” Jo Rands, portfolio manager on UK equity income at asset manager ClearBridge Investments, told MoneyWeek.

It is notable, though, that UK stocks have not reacted strongly (in either direction) since Keir Starmer announced he would step down, and Burnham emerged as his almost nailed-on replacement.

While some sectors have experienced jitters – Rands highlighted potential nationalisation concerns impacting the utilities sector – on aggregate there has been little reaction. The FTSE 100 gained 0.7% on 22 June, the day Starmer announced his resignation, and rose a further 0.6% between then and 30 June.

“The markets have been thinking about this potential change for a while,” said Rands. “Last year we were talking about the risk for UK equities thinking about the local elections, and the implications that could have on the market. So it’s been rumbling away in the background.”

Uncertainty itself, in other words, was already priced in. What is still not certain – and will likely have the greatest impact both on the UK economy and UK stocks – is who Burnham chooses to replace Rachel Reeves as chancellor.

“A week ago, when you looked at the prediction markets, Wes Streeting was the favourite,” said Rands. “Markets quite liked that.” But Ed Miliband appears to have become the more likely candidate in the meantime, and the markets are less keen on the prospect of him in number 11, according to Rands.

Whoever takes the role will be the primary person responsible for executing the precarious economic balancing act that Burnham will face – an unenviable task.

Why UK stocks offer diversification

The good news is that the UK stock market is not the same thing as the UK economy. The large cap stocks of the FTSE 100 are predominantly global companies who derive their revenue from all over the world – so they can perform strongly even if UK growth slows.

“A lot of people conflate UK equities with the UK economy,” said Rands, adding that it’s often more the mid- and small-cap end of the UK market (accounting for around 12% of its total value) that are heavily exposed to the domestic economy.

UK stocks also offer rich sources of diversification. Compare the top ten holdings of the S&P 500 and the FTSE 100:

*Based on weightings in the Vanguard S&P 500 UCITS ETF (LON:VUAG) and the Vanguard FTSE 100 UCITS ETF (LON:VUKG), which track the respective indices, as of 31 May.

Five of the S&P 500’s top ten holdings are designated as Information technology companies – with two of the other five being represented by Alphabet’s two different share classes. But given that all of the exceptions are members of the ‘Magnificent 7’ group of AI-relevant stocks, it’s fair to say that all of them are tech companies in a fundamental sense, if not according to their official designations.

The FTSE 100, meanwhile, has six different sectors included in its top ten companies, none of which include more than two companies.

“Global indices are predominantly US, which are predominantly tech,” said Rands. “In the UK, it’s spread across a number of different sectors.”

Two Premium Bonds holders have woken up millionaires after NS&I revealed the winners of the July 2026 prize draw.

The latest £1 million jackpot winners come from Reading and Warwickshire and won with bond numbers 250TP871786 and 217AV429216, respectively.

The Reading winner bought their bond in July 2015 and has a total holding of £49,931, close to the maximum of £50,000.

The Warwickshire champ purchased their winning bond in January 2014 and holds a total of £14,000 in Premium Bonds.

How many prizes will be issued in July’s monthly draw?

More than 6.2 million tax-free prizes, worth over £433 million, will be paid to Premium Bonds winners in July.

This month, there were more than 136 billion £1 bonds eligible to be picked in the draw. The total value of the prizes dished out since the first draw in June 1957 is £42 billion.

The table below shows the breakdown of Premium Bonds prizes in July:

Credit: NS&I

How to check if you’ve won in July’s prize draw

NS&I’s Agent Million will inform the £1 million jackpot winners in person.

NS&I says bond holders can check if they have won prizes ranging from £25 to £100,000 the day after the first working day of each month.

You can check using the Premium Bonds prize checker app, by visiting the NS&I website or by asking Alexa. For July 2026, Premium Bonds holders can check from 2 July.

The prize checker app and website will show you prizes you’ve won that month, anything you’ve won in the previous six draws and any older prizes you haven’t claimed yet.

Just make sure you’ve got your bond number or NS&I number to hand so you can access your account.

As Premium Bonds do not expire, it may be worth checking if you have any prizes waiting for you even if you bought them years ago.

NS&I says over 99% of prizes have been paid to winners since draws began in 1957, but there are still millions of unclaimed Premium Bonds prizes.

We look at the alternatives to Premium Bonds in a separate piece.

Hundreds of thousands of young people have more than £2,000 sitting unclaimed in Child Trust Funds (CTFs), a type of tax-free savings account for children born between 2002 and 2011.

The government has now launched a taskforce aimed at reuniting people with their money, with ministers teaming up with financial institutions including Nationwide, HSBC and Sheffield Mutual to reconnect savers with their accounts.

Roughly 6.3 million CTFs were opened for children born between 1 September 2002 and 2 January 2011, mostly by parents and guardians but some by HMRC.

The tax-free funds could be opened as cash savings or stocks and shares accounts.

These accounts started maturing in 2020, but due to a number of reasons including difficulty tracing them, people forgetting they have them or deciding to leave the funds invested, more than 750,000 matured accounts still remain unclaimed.

Once a CTF matures, you can no longer add money into it and it is typically moved into a default account paying a weak interest rate.

Rachel Blake, economic secretary to the Treasury, said: “Too many young people are missing out simply because they are not aware of where their Child Trust Fund is or how to access it.

“We are acting to fix that by bringing government and industry together – improving coordination and making it easier for people to find and claim what’s rightfully theirs.”

HM Treasury said the taskforce will “improve tracing approaches, test more effective engagement with young people, and drive practical actions that lead to more accounts being claimed”.

Its launch comes after HMRC wrote letters to thousands of 21-year-olds reminding them to claim the money in their CTFs in April.

HMRC is reminding eligible young people they can claim the funds through online campaigns on social media platforms like X, formerly Twitter.

Antonia Medlicott, founder and managing director at personal finance website Investing Insiders, welcomed the government’s taskforce but said more should have been done sooner.

She added: “Far too many Child Trust Funds are going unclaimed. Some accounts will hold significantly more than the £2,200 average figure that has been circulated, and it’s a shame to see that they have been left until now.”

How to track down lost Child Trust Funds

In the first instance, you should contact the provider the CTF was set up with, who should be able to reunite you with the account.

Alternatively, you can use HMRC’s Child Trust Fund tool to request your CTF details if you’re over 16. Make sure you’ve got your National Insurance number to hand.

You can also use this tool if you’re a parent or guardian of a child under 18. You will need the child’s full name, address and date of birth, and also any previous names you or the child have used.

You may have a CTF under your name even if you or your parents didn’t set one up for you. If an account wasn’t set up for an eligible child after 12 months, HMRC opened one on the parents’ behalf.

Sarah Coles, head of personal finance at investment platform AJ Bell, said: “Of the 6.3 million accounts that were opened, 1.8 million were opened by HMRC, so there’s a decent chance the parents of these children never engaged with where the money ended up.

“For those who did choose where to put the money, so much time has passed that there’s a real risk they moved house and didn’t update their details, and if the paperwork has gone astray, they may have forgotten these accounts entirely.”

What should you do once you’ve tracked down the Child Trust Fund?

Unless you need all the money from the CTF for an emergency, it could be worth keeping some of it invested to grow.

However, it might be worth transferring the remaining funds from the CTF into a Junior ISA.

Coles explained: “Stocks and Shares CTFs tend to have higher charges and less choice than their equivalent Junior ISAs, while Cash CTFs often pay less interest. It means parents should waste no time in tracking the accounts down and deciding whether to move the money into a Junior ISA.”

Grieving families now face paying out more money to help resolve a loved one’s estate after the cost of applying for probate rose by 75% this month.

The Grant of Probate fee - giving someone a legal right to deal with the assets of a person who has passed away - increased on 13 July from £300 to £526.

It has almost doubled since May 2024, when it was £273.

Martyn James, consumer expert, said the hike would leave people “absolutely justified in feeling upset and ripped off”.

He added: “Probate is one of the most antiquated, bureaucratic and complex processes we will encounter – precisely at the point where we need simple and clear help the most.”

A Ministry of Justice spokesperson said the cost helps improve its service.

The spokesperson said:  “We know that losing a loved one is already a difficult time. That’s why it’s vital the probate service remains as smooth, swift and simple as possible. 

“The new fee reflects the full cost of an ever-improving service which enables families to resolve disputes in as little as two weeks. Increasing fees is always a last resort, however the new cost accounts for rising inflation as well as investment in delivering an efficient and modern service.

“The worst off will face no fees whatsoever and anyone struggling can still apply to have the fee reduced or removed entirely through our Help with Fees scheme.”

While the application fee has increased, the charge for copies of the probate documents – when requested alongside the application – has been cut from £16 to £2.

What is probate?

Probate is the legal right granted to someone to deal with and distribute another person’s estate (property, possessions and money) when they die.

You can only apply for probate if you’re the executor of a will or the closest living relative of someone that has died who didn’t have a will in place.

Typically, the next of kin or executors of a will have to apply for probate before they can claim, transfer or distribute a deceased person’s assets.

You don’t always need to apply for probate. You may not need it if the person who died only had savings in their estate. You may also not need probate if they owned shares or money with others, in which case the shares and money go to the surviving owner.

You also don’t need to apply for probate if the deceased person owned land or property as a joint tenant. In this instance, the land or property is automatically passed to the other tenant.

Financial institutions, such as banks and mortgage lenders, have different rules on whether you can access a deceased person’s assets without having been granted probate, so it’s worth contacting them to find out what you need to do.

How do you apply for probate?

You can apply for probate by post or online via gov.uk, which is usually quicker.

If you’re applying by post, the form you need to fill in is different depending on whether the person left a will or not.

If they did, you need to fill in the application form PA1P. If they didn’t have a will, you need to fill in the PA1A form.

The government says the probate is typically granted within 12 weeks of submitting an application.

It’s crucial you do a few things before applying for probate though.

This includes working out an estimate of the value of the dead person’s estate for inheritance tax (IHT) purposes.

Even if no IHT is due, you’ll need the value as part of your probate application.

If IHT is due on the estate, you have to report its value to HMRC within one year via an IHT400 form. You can’t apply for probate until this is done and normally need to start paying any IHT due before you can get probate granted.

If IHT is owed on an estate, you also need to send “full details” of the estate to HMRC within 12 months of the person dying and before applying for probate.

Full details refers to the estate’s assets and debts, any gifts made, and any reliefs and exemptions.

Even if no IHT is owed, you may still need to send full details of an estate to HMRC.

For example, if the person who died gave away over £250,000 in the seven years before they died or if their estate is worth more than £3 million, you will need to contact HMRC.

There is a whole list of reasons on the gov.uk website of why you may still need to send full details of an estate to HMRC despite no IHT being owed.

You don’t have to give full details of an estate’s value to HMRC if all of the following applies:

• The estate counts as an “excepted estate”,
• There’s no IHT to pay, and
• There are no reasons, as per gov.uk, the full details of an estate still need to be sent to HMRC, despite IHT not being due.

An estate is typically classed as excepted if its value is below the nil-rate band (£325,000) or it’s worth £650,000 and any unused nil-rate band was transferred to a surviving spouse or civil partner.

An estate is also classed as excepted if the person who died left everything to a spouse living in the UK or a qualifying charity and the estate is worth less than £3 million.

The last way an estate can be excepted is when the deceased person was living permanently outside the UK when they died and the value of their UK assets is £150,000 or less.

How to help your loved ones with the probate process

You can’t do much about the cost of applying for probate, but Sarah Coles, head of personal finance for AJ Bell, suggests people can ensure their own affairs are in order so it is easier for their loved ones to manage their estate.

This includes making sure your wishes are clear by making a will, make a list of your financial arrangements including bank accounts and pensions and ensure any paperwork for taxes or unpaid debts can be found.

Coles says: “Having to pay a fee for probate is bad enough, given it creates an endless pile of admin for those you leave behind, so a 75% hike in the fee is adding insult to injury.

“For those who can’t afford it, there’s a Help with Fees remissions scheme, to cover the cost.

“For everyone else, this is one more horrible hoop to jump through that makes the paperwork and processes after death such a nightmare. It means we could all benefit from taking steps to make the process easier for our loved ones after our death.”

Chancellor Rachel Reeves looks set to follow her boss Keir Starmer out of government when Andy Burnham becomes prime minister on Monday 20 June.

Though Reeves has been lobbying to keep her job, it seems highly unlikely that Burnham will keep her on – not least because of how unpopular she is.

As a figure so closely associated with the Starmer project, keeping Reeves in No 11 would send the wrong signals to a country that Burnham is promising to change. His platform is much closer to the Labour soft left, and that would not make a good fit for the centrist Reeves.

Choosing a replacement for Reeves will be one of the most important decisions Burnham makes as prime minister, as who he chooses to replace her will reflect the style of economic policy he intends to pursue.

Currently, no official statements have been made by the Burnham camp about who the next chancellor will be, but there are rumours.

Who could be the next UK chancellor?

With Reeves almost certainly leaving, there are several high-profile candidates that could replace her. Who are they?

Shabana Mahmood

The current front-runner is Shabana Mahmood, the home secretary, who is now heavily rumoured to replace Reeves as chancellor after Ed Miliband has fallen out of favour with the Burnham camp.

Mahmood was previously the justice secretary but has not held any economic positions within government.

The closest economic experience she has is when she served as the shadow financial secretary to the Treasury from 2013 to 2015 and shadow chief secretary to the Treasury in 2015 under then Labour leader Ed Miliband. When Corbyn became leader in 2015, she did not join his shadow cabinet.

Mahmood belongs to the right of the Labour party and has been instrumental in pushing through controversial, harsh immigration rules. However, we have little basis to predict what her economic policies may be.

Sarah Coles, head of personal finance at AJ Bell, said that Mahmood “has not spoken out on economic issues since her time in the shadow Treasury, so assessing a potential approach relies on extrapolating from her position as home secretary.

“She is considered to be measured, pragmatic and disciplined over budgets. If this is carried through into economic policy, it could mean steering clear of radical changes and opting for incremental improvements.

“The fiscal responsibility may go down well with markets, which had been worried about borrowing and spending under Burnham.”

Before going into politics, Mahmood was a barrister and specialised in indemnity law. She read law at Lincoln College, Oxford (she was in the year below former PM and chancellor Rishi Sunak), graduating with a 2:1.

Ed Miliband

Energy secretary Ed Miliband has also been tipped as the next chancellor. He was widely anticipated to replace Reeves in Burnham’s cabinet, but his stock has fallen in the past few days.

The reason Miliband was expected to replace Reeves is because he belongs to the soft left of the Labour party, just like Burnham, and has held a number of economic positions both in government and in opposition.

Miliband has by far the most economic expertise of any of Reeves’ potential successors. He worked as a special adviser to Gordon Brown in the Treasury between 1997 and 2002, taught economics at Harvard, then rejoined the Treasury team in 2004.

He also read philosophy, politics, and economics (PPE) at Corpus Christi College, Oxford and went on to get a postgraduate degree in economics from the London School of Economics.

“Miliband’s position on the soft left might raise the possibility of more spending and borrowing,” said Coles.

“However, his experience in senior roles, including as a special adviser to Gordon Brown, may lie behind reports that it was Miliband who helped persuade Burnham of the importance of sticking with the fiscal rules in order to calm the markets.”

Coles suggests that Miliband might turn to progressive taxes, or reviewing tax cuts that mostly benefit higher earners, in order to balance the government’s books.

“He has previously supported a mansion tax. He might also consider more environmental taxes,” said Coles.

Yvette Cooper

Foreign secretary Yvette Cooper could also be a contender for chancellor, and might be well-received by markets, according to AJ Bell’s head of financial analysis Danni Hewson.

“Yvette Cooper is likely to be considered a safe pair of hands, having deftly jumped from domestic to global affairs of state as part of Starmer’s cabinet,” said Hewson.

“She also spent time in the Treasury under Gordon Brown and is considered to be something of a centrist, which could reassure markets nervous about an Andy Burnham premiership that starts with pledges to turn on the spending taps."

Adding to the possible appeal of Cooper is the fact that, as a northern MP, she has a good working relationship with Burnham.

“Her breadth of experience means that she will understand the pressures on the public purse better than many and her seniority could help bring together different factions of the party under a new leader,” said Hewson.

Wes Streeting

Wes Streeting is another contender for the role. Prior to Starmer’s resignation, he launched a bid to replace Starmer as prime minister, but immediately stood down to make way for Burnham on 22 June after Starmer resigned.

“Of the potential candidates, we view Streeting as the most bullish outcome for the pound, given his centre-left pragmatism and apparent aversion to aggressive tax-and-spend policies,” said Matthew Ryan, head of market strategy at financial services firm Ebury.

Susannah Streeter, chief investment strategist at wealth manager Wealth Club, remarked that Streeting appears to be the front-runner for the position on the assumption that Reeves would be “ousted”.

“From any new chancellor, financial markets would initially be looking for stability and signs of action aimed at stimulating sustainable growth, and Streeting [would be] likely to initially try to project reassurance and a business as usual attitude aimed at reassuring investors and keeping a lid on high government borrowing costs,” said Streeter.

Streeting was previously secretary of state for health and social care, before resigning from the position in May.

Could Rachel Reeves play a role in the next government?

While it is unusual for senior ministers to accept demotions, the BBC has reported that sources close to Andy Burnham suggest she could do so, and take up a more junior ministerial role in a Burnham government.

Either way, Reeves is backing Burnham to be prime minister. She told the British Chambers of Commerce annual conference on 25 June that Burnham was committed to following the same fiscal rules that guided her term as chancellor.

“Andy has been really explicit - he backs those fiscal rules,” said Reeves.

“He is a great communicator, he's got a great track record of delivering in Greater Manchester, and I have no doubt he will bring that to the position of prime minister.”

Tech shares have sold off over the past week with SpaceX stock seeing steep declines days after the company’s spectacular initial public offering (IPO).

The Nasdaq 100 – a US index mostly containing technology stocks – fell 2.1% in the week to 23 June and the S&P 500 fell 1.9% over the same period.

SpaceX (NASDAQ:SPCX) also saw steep declines, shedding 26.2% to bring its share price to below the level it closed its first day of trading following its IPO less than two weeks before.

SpaceX is not yet included in either index, but given the immediate success of its IPO its slide reflects a pessimistic shift in the market mood towards tech stocks.

“Investors remain super-cautious, nervous that high valuations could be chipped away at again,” said Susannah Streeter, chief investment strategist at wealth manager Wealth Club. “Even a fresh easing of the energy crunch, with oil prices dipping further, isn’t lifting sentiment much.”

What’s driving the latest sell-off, both for the tech sector and for SpaceX in particular?

Why did tech shares sell off?

Several factors are converging to create a cautious air around technology stocks.

One is the fragility of the peace agreement reached between the US and Iran last week.

“Despite threats over the weekend from Iran that it could re-close the Strait of Hormuz following continued fighting between Israel and the Hizbollah militia it supports in Lebanon, talks continue in Switzerland with the US to turn a memorandum of understanding and a ceasefire extension into something more like a permanent solution to the war that began nearly four months ago,” said Tom Stevenson, investment director at Fidelity International.

Markets are also spooked at the prospect of central banks hiking interest rates in response to rising inflation. While the Federal Reserve and the Bank of England both held rates when they met last week, international counterparts in the EU and Japan both raised their respective rates by a quarter of a percentage point.

Underpinning much of the negativity around tech specifically is a rising concern over whether the artificial intelligence boom can pay for itself.

“With doubts about the returns that can be achieved on investments worth hundreds of billions of dollars, together with a rising challenge to equity investors from rising bond yields, more equity issuance and fewer share buybacks, the boom feels fragile,” said Stevenson.

SpaceX shares fall on debt issuance

Debt issuance is a crucial top for tech investors at present, as SpaceX shareholders found out the hard way this week.

On 22 June, the company announced that it was seeking to raise $20 billion in debt, with the figure rising to $25 billion the following day.

Shares in SpaceX fell 16.4% on 22 June before recovering slightly on 23 June.

“Issuing debt at such a heady valuation raises questions about cash flow for this hugely capital-intensive venture,” said Wealth Club’s Streeter. “SpaceX has come down to earth with a bump, burning off most of its post-launch steam.”

Despite these declines, SpaceX shares closed 23 June 15.6% above their IPO price of $135 and 4.1% above the $150 at which they opened trading on 12 June.

Should you buy tech shares?

There is always a potential buying opportunity when sectors or markets sell off.

Whether you want to take advantage of the recent pull back in tech stocks depends largely on your circumstances and goals. It is worth bearing in mind, though, that the sector is still highly valued, and as recent days have shown it is prone to volatility.

If you are looking to buy tech shares, you could consider the following investment trusts and exchange-traded funds (ETFs) which offer exposure to the sector:

• Allianz Technology Trust (LON:ATT). Top holdings Nvidia, Alphabet, Micron Technology and Apple account for 30% of the portfolio as of 31 May, but the trust trades at a 7.3% discount to net asset value (NAV) as of 23 June, according to data from investment trust industry body the Association of Investment Companies.
• Polar Capital Technology (LON:PCT). Similarly, large tech companies account for most of the portfolio (over 96% of holdings have a market cap above $10 billion as of 29 May), but trades at a 9.2% discount to NAV.
• WisdomTree Space Economy ETF (LON:WSPG). From 29 June, SpaceX will enter the ETF’s portfolio with an initial 5.5% weighting. As of 23 June top holdings include space launch provider Rocket Lab and Japanese industrial firm Mitsubishi Heavy Industries.

The Treasury has revealed plans for a revamped Lifetime ISA (LISA) product that will remove the upper age limit and withdrawal charges but the retirement savings component will also disappear.

Chancellor Rachel Reeves revealed in her 2025 Autumn Budget that the government would launch a consultation on a “new, simpler ISA product to support first-time buyers to buy a home” in “early” 2026.

A consultation released by the Treasury this week said there is evidence that the current product is “not working well for many".

The LISA was launched in 2017, aimed at first-time buyers and pension savers.

Under current rules, you can put up to £4,000 a year into a Lifetime ISA and the government adds 25%, up to a maximum of £1,000 per year. This allowance is included within the overall £20,000 annual ISA allowance.

The money can be used either to contribute towards a deposit on a property worth up to £450,000, or to save the money and withdraw it fee-free once you reach 60 years old.

Critics suggest the price cap and age limits as well as the 25% withdrawal charge for "unauthorised" withdrawals make the Lifetime ISA unattractive.

The Treasury consultation acknowledges this and highlights that the number of unauthorised withdrawal charges is increasing year on year, reaching 8% of all accounts opened in 2024/25.

The document also warns that the LISA "may be diverting people from saving into pension products that may be a more appropriate for them".

The Treasury said: “The government is committed to making the aspiration of home ownership a reality for as many households as possible. However, we recognise that the LISA is not working for everyone, and that when people’s circumstances change, they should be able to adjust their finances accordingly.

“We understand that the complexity of the LISA may have dissuaded many providers from offering it, and savers from taking it up, meaning that it is not as accessible as it could be. That is why we are consulting on the implementation of a new, simpler, ISA product to support first-time buyers.”

The government is now seeking views on a replacement product called the First Time Buyer ISA (FTB ISA).

How would the First Time Buyer ISA work?

The new First Time Buyer ISA (FTB ISA) will solely be for the purposes of buying a first home.

The self-employed who can't access auto-enrolment would need to stick with a LISA or focus on a private pension or self-invested personal pension to save for retirement.

Similar to the LISA, there would be cash and stocks and shares options, money saved into the account would go towards your annual ISA allowance and there would be a government bonus, although the level hasn't been announced.

Accounts can only be open from age 18 and there would be no upper age limit.

Subscription limits, property price caps and the level of the government bonus will be announced at a future fiscal event to take account of market conditions and wider public finance context, the Treasury said.

The document added: “Increases to any of these parameters in isolation would come with a cost. A lower subscription limit and/or property price cap could allow for a higher government bonus and would shift the benefits towards lower income savers outside London and the South East.”

There isn't a launch date yet for the product but the Treasury said it would like it to be available "as soon as practically possible".

What is the difference between the First Time Buyer ISA and the Lifetime ISA?

There are a few differences between the FTB ISA and the LISA, including it only being available to first-time buyers.

Unlike the LISA, which has to be opened by age 40 and the bonus can only be earned until age 50, there will be no upper age limit.

The government bonus will be paid as a percentage of subscriptions made, rather than the value of the account, at the point that an individual withdraws funds to purchase their first home.

This means that the bonus is calculated on what an individual has put into the account, minus any withdrawals made, not on any investment growth or savings interest accrued subsequently.

Under the current system, providers pay the government bonus in a LISA each month, when a contribution has been made in the previous month. For example, if you deposit £1,000 in one month, a 25% bonus (£250) would be added in the following month.

But the new FTB ISA bonus will be paid at the point an individual makes a withdrawal for purchasing their first home.

The Treasury said this removes the need for a withdrawal charge and means a saver can withdraw funds, should their circumstances change, without penalty.

Rachael Griffin, tax and financial planning expert at Quilter, said: “Thousands of savers have been charged for accessing their LISA for an unauthorised withdrawal, often because their financial circumstances changed unexpectedly and they needed to dip into their savings. Allowing people to access their money when needed, while still being incentivised to save towards a deposit for a first home, would be a much better design.

“Equally important is the decision to remove the upper age limit. The average age of a first-time buyer has been consistently on the rise, yet the Lifetime ISA effectively shut the door on those who did not get onto the property ladder prior to turning 40. A reformed product with no age limit would reflect a more modern housing market.”

Rachel Vahey, head of public policy at AJ Bell, said moving away from an upfront bonus should make the system simpler but she has warned that savers will lose out on the investment growth they could have earned on the bonus while building up their deposit.

She highlighted that someone paying in £4,000 each year for five years into a Lifetime ISA with a bonus added each year would have built up £28,165 assuming 4% growth net of charges. Under the FTB ISA, assuming the same terms including payments, and that a government bonus of 25% is added when buying the house, the ISA holder would only have built up £27,532.

Vahey added: “For some first-time buyers, that could mean having less money available when they come to purchase a home.”

Who can use the FTB ISA?

The FTB ISA will be available to UK residents over age 18 looking to purchase their first home.

It can only be used with a mortgage, which excludes cash buyers and you will need to have the account open for at least 12 months to become eligible for the bonus.

What will happen to the Lifetime ISA?  

There is no suggestion currently that the LISA will be phased out so accounts can still be opened and used.

Individuals with funds in a LISA will not be able to transfer their money to the new FTB product as they will have already received the government bonus.

But you will be able to use any funds in your existing LISA and those in the new FTB ISA for the same purchase.

Individuals will be able to hold both the new FTB ISA and an existing LISA, but will only be able to save into one in the same tax year.

Regardless of where the property price cap is set, the FTB ISA, LISA and Help to Buy ISA cap will be aligned so that no account holders will lose out, the Treasury said.

To ensure that holders of the Help to Buy ISA do not lose out, the Treasury is also proposing that holders will be able to transfer their holdings into the new FTB product up to the subscription limits.

Additionally, as part of wider ISA reforms, transfers from a stocks and shares ISA to the new cash FTB ISA will be banned.

Paula Higgins, chief executive of the HomeOwners Alliance, said this is “well-intentioned reform” but warned that unless the property price cap is reviewed, it risks fixing one unfairness while leaving another firmly in place.

She said: “The Treasury should update the cap now and future-proof the scheme by ensuring it rises in line with house prices, rather than allowing it to become outdated again.

“First-time buyers need a product designed for the housing market of the future, not one based on prices from nearly a decade ago.”

NS&I has increased the rates on nine of its savings accounts as it looks to draw in customers and meet its financing target.

The Treasury-backed bank increased rates on one, two, three and five-year fixed bonds and a green savings bond today (23 June).

The rise in the fixed bonds comes as NS&I looks to meet its net financing target for the 2026/27 financial year of £15 billion, up from £13 billion in 2025/26.

The financing target is set by the government, which can influence what rates NS&I offers on its accounts. If the target is higher, NS&I may raise interest rates.

It is the third time NS&I has hiked interest rates on the one, two, three and five-year fixed-rate bonds in 2026.

Sarah Coles, head of personal finance at investment platform AJ Bell, said: “The savings market is impressively competitive right now, and NS&I has entered the fray.

“Banks are pulling out all the stops to compete, keeping fixed rate deals higher and forcing NS&I to raise rates again to attract the cash it needs.”

Which NS&I accounts will pay more?

The interest rates have been raised on the following nine accounts:

Credit: NS&I

You can open one of the eight Guaranteed Growth or Income bonds with a minimum investment of £500 and save a maximum of £1 million.

You can open the Green Savings Bonds with a minimum £100 investment and hold a maximum of £100,000.

You cannot withdraw funds early as all nine accounts are fixed-term while you also cannot access the money until the end of the term.

After the accounts mature, you can withdraw any cash or reinvest it into a new NS&I account.

You can apply for the accounts on the NS&I website.

How do NS&I's savings accounts compare to others on the market?

While the boost in rates is good news for savers, there are slightly better options if you want to get the top rate.

The better deals are with smaller providers, but they are protected by the Financial Services Compensation Scheme (FSCS).

Customers can get a 4.81% interest rate with StreamBank on its one-year bond, as well as 4.8% with Afin Bank.

In terms of two-year fixed-rate deals, Market Harborough Building Society is offering a 4.86% interest rate on its two-year bond while Afin Bank is offering a two-year bond paying 4.85% interest.

Afin Bank is also offering the most competitive rate on three-year fixed-rate bonds (4.85%) while thisbank has a three-year fixed bond paying 4.82% in interest.

Meanwhile, Afin Bank’s five-year fixed-term bond pays 4.9% interest while Atom Bank has a five-year fixed bond paying 4.85%.

NS&I’s Green Savings Bond has shot up the rankings and is now the joint-second best green savings account on the market, according to Moneyfacts, beaten only by Castle Trust Bank’s three-year e-Saver account paying 4.54% interest.

Coles said the significant hike to the rate on the Green Savings Bond suggested “the previous policy of hoping green-conscious savers would be happier to overlook a much lower rate for the bonds just wasn’t working in attracting the cash” NS&I wanted.

Santander has launched a market-leading regular savings account which pays an interest rate of 8%.

The account is open to new and existing customers with a qualifying Santander current account, including: Santander Everyday, Edge, Edge Student, Edge Up and Explorer.

The Everyday and Edge Student current accounts are fee-free while the other three charge up to £17 a month.

You must be 16 or over and live in the UK to apply for the regular saver.

Customers can open Santander’s regular saver with just £1 and save up to a maximum of £200 every month.

The 8% interest rate includes a 5% bonus for the first 12 months. After 12 months, it falls to 3%. The interest rate is variable meaning it could go up or down at any point.

Money can be withdrawn from the account anytime penalty-free.

Jessica Sheldon, MoneyWeek's deputy digital editor, added: "While an 8% interest rate is certainly eye-catching, restrictions on monthly contributions mean savers might not end up with as much interest as they think they would with a regular savings account, so it’s worth considering whether it’s the best option for you.”

“It’s a good idea to regularly check the best rates for savings accounts, and set a reminder to review the account once a bonus rate period ends.”

How does Santander’s regular savings account compare to the rest of the market?

When it comes to headline interest rate, Santander’s regular savings account pays the most on the market as of 23 June.

The next best account in terms of rate is Zopa’s regular saver paying 7.1% interest, followed by The Co-operative Bank’s regular saver paying 7%.

However, you could earn more interest with The Co-operative Bank’s regular saver as it lets you add £250 into the account each month.

Assuming you added the maximum £200 into the Santander regular saver each month, didn’t withdraw any money and the interest rate stayed the same, you could earn £104 in interest over the course of a year.

But, if you paid the maximum £250 per month into The Co-operative Bank’s regular saver, you could earn £114 over the year, assuming no withdrawals or changes to the interest rate.

Is a regular savings account the best option for you?

Regular savings accounts may not be as attractive as they seem, as the headline interest rate only applies to money that is saved for a whole year – meaning the first month’s deposit.

The second month’s deposit is only in the account for 11 months of that year, so you only earn eleven twelfths of the interest rate.

Therefore, on average, you’re effectively getting half the headline rate advertised.

This means, if you already have a lump sum, you could get more interest by putting the money into an easy-access or fixed rate savings account instead.

For example, you would get £104 in interest by drip-feeding £2,400 into Santander’s regular savings account over 12 months, based on no withdrawals being made and the interest rate remaining at 8%.

However, if you added a lump sum of £2,400 into the top-paying easy-access savings account, currently Chase which pays 4.5%, at the end of the year you would have earned £110 in interest.

Speculation has ramped up about who will be the next UK prime minister after Sir Keir Starmer kicked off a Labour leadership election by resigning on Monday (23 June).

Nominations will open on 9 July and end by the summer recess on 16 July.

The next prime minister may have different priorities to the current government, which has been working on several tax shake-ups including the mansion tax, cash ISA reforms and changes to pensions and inheritance tax rules.

New Labour MP and former Greater Manchester mayor Andy Burnham is the only candidate to have put his name forward so far, as many expected following his by-election win last week.

Maike Currie, vice president of personal finance at PensionBee, said: “The Labour leadership contest will dominate the summer, with a new prime minister expected to take office when Parliament returns in September. Investors will be looking for a clear handover, a credible economic team and an early commitment to fiscal discipline.”

Who will replace Keir Starmer?

Burnham is the only name officially in the ring so far to become the next prime minister.

He has also been backed by former health secretary Wes Streeting, who was seen as a potential candidate.

No other Labour MPs have confirmed that they will run for the leadership role yet.

Burnham hasn’t confirmed what his policies will be, although he may have to stick to manifesto commitments to not raise income tax, VAT or national insurance.

He has previously backed reforming council tax and stamp duty.

Inheritance tax changes could also be a possibility. As health secretary in 2009, Burnham suggested a flat 10% charge applied to all estates, with the money being used to fund social care for all.

More recently, on BBC Question Time in June, he said he would look at raising the personal tax allowance and also said there was “definitely a case” for the return of a 50% top rate of tax for the wealthiest.

Matthew Ryan, head of market strategy at global financial services firm and FX specialists Ebury, said: "Burnham sits firmly to the left of the Labour Party, and his record as mayor points to a significant step-up in public spending, a higher tax burden and greater gilt issuance.

“This is an experiment that the UK can ill-afford. Debt is at its highest relative to GDP since the 1960s, growth is weak, debt-servicing costs are already vast and the limited fiscal headroom leaves almost no room to manoeuvre, risking a self-reinforcing borrowing and growth trap.”

Susannah Streeter, chief investment strategist for Wealth Club, added that Burnham has tried to reassure markets by signalling that he will largely stick to fiscal rules and take a more cautious approach to spending.

She said: “He appears willing to tackle the UK's large benefits bill, arguing that welfare reform should focus on helping more people into work. Investors will also be scrutinising how Burnham's interventionist instincts translate into national economic policy. He has argued that the government should play a more active role in shaping economic outcomes, particularly through greater investment in regions outside London and the South East.

“He is also expected to push for further devolution of economic powers and has indicated support for a stronger public role in key sectors and infrastructure. However, concerns are bubbling that greater state involvement could deter private investment if it creates additional costs or regulatory burdens.”

Local supporters suggest the regeneration he has brought to Greater Manchester could be replicated nationally.

Property developer Mike Ingall, chief executive of Allied London, who has worked with Burnham on developments in Manchester including the technology and media campus Campfield, said: “He understands investment and that is the only way to get growth rather than just tax and spend.”

There have been rumours in the past that former deputy prime minister Angela Rayner could stand.

Rayner also sits on the left of the party.

Who could be in the new cabinet?

The prime minister is just one role that is likely to be up for grabs in July.

Whoever becomes the next Labour leader and prime minister is likely to want to appoint their own ministers and there are rumours that chancellor Rachel Reeves could be replaced.

Rob Morgan, chief investment analyst at Charles Stanley Direct, said: “Until we know more about the composition of the cabinet and likely policy direction it is hard to draw any firm conclusions from the soundbites heard so far. However, bolder moves on taxation certainly appear to be a possibility, so it’s a time for anyone planning their finances to be on high alert for changes.

“Already the Budget in the autumn looms large as a potentially highly consequential event. Yet given we don't even know the identity of the chancellor at this stage we can make no conclusions.”

Currie said a chancellor with a reputation for fiscal discipline could reassure markets but warned: “A more interventionist appointment, or a candidate perceived to be less disciplined with spending could have the opposite effect.”

Morgan added that there is some comfort in the fact that marked changes to taxation or other policies affecting personal finances rarely happen overnight and usually come with a long lead in time.

He said: “So while vigilance is essential there is likely plenty of time to assess any consequences, good or bad, that fall out of a change of political leadership.”

• The Bank of England’s Monetary Policy Committee (MPC) voted to keep interest rates at 3.75% today.
• The decision was in line with expectations from most experts.
• The MPC seems to be adopting a ‘wait and see’ approach to setting rates, holding off on a hike or cut until we see concrete evidence of how the war is affecting the UK.
• The Bank estimates that inflation will be lower than their previous expectations in 2026.
• The latest inflation data showed prices rose by 2.8% in the year to May 2026, unchanged from April.
• Unemployment fell slightly to 4.9% in the three months to April.

When will interest rates fall further? | Is the UK heading for stagflation? | MPC meeting dates | UK inflation forecast |

Good afternoon and welcome to MoneyWeek’s live coverage of tomorrow’s (18 June) interest rates decision.

The Bank of England’s Monetary Policy Committee (MPC) will meet today to decide where to take interest rates, and the decision will be announced on Thursday.

Follow along for the latest commentary and analysis on the upcoming decision and the breaking news tomorrow afternoon.

What is the Monetary Policy Committee (MPC)?

The Monetary Policy Committee (MPC) is a group of nine experts who are responsible for setting interest rates.

The group is made up of five senior members of staff at the Bank of England, and four external experts who are there to make sure the MPC benefits from expertise outside the BoE. The committee is chaired by Andrew Bailey, the governor of the Bank.

They meet every six weeks and vote on whether to cut, hold, or raise interest rates. If there is a tie, then the Bank of England governor Andrew Bailey holds the deciding vote.

Interest rate decisions are usually announced on a Thursday, though the meeting itself typically takes place on the day before the announcement.

At their last meeting, the MPC voted to hold rates at 3.75%, with the motion passing by eight votes to one.

ONS: Inflation held steady at 2.8% in May

Inflation held at 2.8% in the 12 months to May, as the lowest food inflation in 17 months helped offset high transport prices, the latest figures from the Office for National Statistics (ONS) show.

The figure undershot expectations from many economists who expected inflation to rise.

Although inflation is lower than many had forecasted, it is still significantly above the Bank of England’s 2% target and many economists expect it to rise this year thanks to the economic disruption from the Iran war.

The largest upwards contributor to inflation in May was the transport sector, where inflation was 6.8% in the year to May. Price growth for airfares, vehicle taxes, and motor fuel costs pushed May’s overall inflation up by 0.29 percentage points.

Much of this was offset by surprisingly low food inflation, which was the lowest in May since December 2024. Food prices rose by 2.2% in the 12 months to May, pulling overall inflation down by 0.07 percentage points.

Other notable downwards contributions to the inflation rate came from the housing and household services, furniture, clothing, restaurant, and recreation sectors.

For more detail and analysis on today’s inflation figures, you can read our inflation live report from earlier today.

What’s the link between interest rates and inflation?

Inflation is one of the most important, though not the only, economic indicators used by the MPC to help them set interest rates.

This is because the Bank of England has a mandate to keep inflation at 2%, a level of price growth that economic consensus deems healthy for an economy.

Most Western central banks, like the European Central Bank (ECB) and the US’s Federal Reserve (Fed), have an inflation target of 2%.

The Bank of England can use monetary policy to help keep inflation at the target level. The most important of these levers is the moving of interest rates.

Broadly speaking, when inflation is too high, the MPC will raise interest rates, and when it is too low, it will lower them.

These are not the only two reasons why interest rates are moved. For example, rates might be lowered if economic growth is too slow in a bid to speed up the economy.

Where have interest rates gone in the last decade?

Interest rates are currently at 3.75%, the lowest they have been since February 2023.

Before 2022, rates had languished under 1% for the most part as low interest rates were used as a tool to help stimulate the economy following the 2008 financial crisis and during the covid-19 pandemic.

But high rates have been the norm since 2022, when energy prices exploded in the wake of the Russian invasion of Ukraine. This led to high inflation and the start of the cost of living crisis, which we are still feeling the effects of today.

In order to tame inflation, the Bank of England quickly and aggressively hiked rates, going from 0.5% in February 2022 to 5.25% in August 2023.

Rates have since been gradually lowered, with the bank rate going from 5.25% in July 2024 to 3.75% in December 2025, where they have stayed.

Before the Iran war, most economists expected the Bank to cut rates at least twice in 2026, but few now expect this to happen.

They now either expect rates to stay at 3.75% for the rest of the year, or potentially rise depending on how deep the inflationary shock from the war will be.

What should we expect from tomorrow’s interest rates announcement?

Most economists agree that an interest rate cut is incredibly unlikely tomorrow as global economic conditions make this a risky move. If rates are cut at a time when many expect inflation to rise, it could exacerbate the issue.

Instead, many experts are forecasting that the MPC will choose to hold interest rates at 3.75% for the fourth consecutive meeting.

Today’s inflation data bolsters the case for a hold, as it undershot the Bank’s projection by 0.4 percentage points, helping paint a rosier picture of price growth.

With inflation holding steady compared to the April 2026 figure, the possibility of a rate hike in tomorrow’s announcement also becomes more unlikely, though future hikes are not off the table yet.

Experts at Oxford Economics forecast a hold at tomorrow’s meeting, expecting the MPC to vote 7-2 in favour of a hold.

Edward Allenby, senior economist at Oxford Economics, said: “Although energy prices remain elevated, most MPC members don’t appear close to voting for tighter policy.

“Early warning signs of indirect and second-round effects remain benign, and most members have argued that the weakness in the economy means the risks around the medium-term inflation outlook are two-sided. But these members are still likely to signal that they remain open to rate rises if necessary.”

The economic backdrop to tomorrow's announcement

The economic backdrop to tomorrow’s MPC meeting is a mixed picture. While May’s inflation figures were much lower than most economists expected, the rest of the economic news is not quite so rosy.

The UK economy shrunk in April as the country started to feel the economic disruption from the Iran war, figures from the ONS showed last week.

The economy contracted by 0.1% in the month to April, the first time negative growth figures were seen since August 2025.

The contraction is a far cry from the more positive growth figures in the first quarter of 2026, which showed the economy grew by 0.6%, indicating that the Iran war disrupted the start of an economic recovery for the UK.

Negative growth is a big worry for policymakers as it means the country is getting poorer as a whole.

When periods of economic contraction are prolonged, the effect is worse as firms see revenues dwindle and start to lay off staff – if the economy shrinks for two consecutive quarters, it officially enters a recession.

We are not quite at that point yet, but depending on how the economy responds to the economic shocks coming, we could get closer.

The Bank of England also closely monitors the labour market to help inform their interest rates decision.

The latest figures show unemployment climbed to 5% in the three months to March, bringing joblessness to its highest level in almost six years.

Meanwhile, wage growth is slowing. In the three months to March, wages grew by just 3.4%, also the slowest rate in six years.

Although high unemployment and slow wage growth are bad for individuals, according to the orthodox view of economics, a soft labour market does act as a disinflationary pressure in the economy – if you are laid off, your income falls and so does your spending.

That means that a poor jobs market can help lower inflation, which can in turn help persuade the MPC to cut rates.

Why does conflict in the Middle East mean inflation in the UK?

The war in Iran has caused a significant global economic shock with trade being disrupted since 28 February as hostilities have made transporting goods through the region very risky.

The disruption has been particularly acute because the Strait of Hormuz, a narrow waterway between Iran and Oman through which around 20% of the world’s oil and gas is transported, has remained shut.

With such a large proportion of the world’s oil supply effectively stuck in the strait, oil prices have soared.

The average price of a barrel of Brent crude oil was around $70 before the start of the war, but once hostilities began prices became high and volatile. They peaked at around $114 a barrel in May, but hovered between $90 and $100 for the most part since February.

Following news that a peace deal had been reached between the US and Iran, prices plummeted as traders expect the Strait of Hormuz will reopen and allow the ships stuck there to continue on to their original destination.

But even if this peace deal is signed and comes into full effect, the economic consequences of the war will be felt for some time.

Though the oil supply is set to return to normal, the damage has already been done.

The price of oil impacts how much many everyday items cost. This includes more obvious things like petrol and diesel, but also goods you may not expect like crayons, plastic bags, and iPhones.

With prices being so high for four months, we can expect the hangover effects to last for the rest of the year and potentially spill into 2027. The hard work of restarting the whole process of oil production and distribution takes time.

An additional pain point for the UK from the war is energy prices. The closing of the Strait of Hormuz sent wholesale energy prices flying, and this will be reflected when the next price cap comes in on 1 July.

Millions of households in the UK will be shelling out around 13% more for their energy this summer, and prices are expected to remain broadly at this elevated level until at least 2027, according to most forecasts.

When will the interest rate decision be announced?

The Monetary Policy Committee’s (MPC) interest rates decision will be announced tomorrow (17 June) at 12pm.

Alongside the decision, the Bank will publish the minutes from the MPC meeting, where the committee’s thinking can be seen.

This document also has statements from each MPC member on why they voted the way they did.

Every other meeting, the Bank of England also publishes a Monetary Policy Report that sets out the economic analysis and inflation projections used by the MPC.

There will be no report published alongside the June meeting as one was published in April.

Thank you for following our live coverage of interest rates this afternoon. We will pause the blog for now, but will be back in the morning.

Make sure to come back to this page tomorrow to get the latest breaking news, analysis, and commentary on interest rates when the MPC announces their decision.

Good morning. Welcome back to our live coverage of today’s interest rates decision.

The Bank of England will announce whether rates are falling, rising, or staying where they are at 12pm.

While most economists think the bank rate will remain at 3.75%, there is still a small chance that rates will rise today.

Follow this page to get the news as soon as it's announced, as well as analysis and commentary.

ONS: Unemployment fell slightly to 4.9% in three months to April

Unemployment fell to 4.9% in the three months to April, down from a reading of 5% in the previous month, according to the latest figures from the Office for National Statistics (ONS).

Meanwhile, payrolls rose to 30.3 million in May, up slightly by around 2,000 compared to April.

The figures slightly undershot most expectations from economists, who largely anticipated joblessness to remain at 5%.

Liz McKeown, director of economic statistics at the ONS, said: “The labour market remained broadly stable in the latest quarter, with further softening evident in some numbers.”

The data indicates the jobs market may be strengthening. If this is the case, it would be good news for workers, but potentially mean the Bank of England will be more inclined to keep interest rates high to avoid the inflationary pressures that arise when the jobs market is strong.

The ONS also published provisional data for May, showing the number of vacancies in the UK was down by around 2.6% (19,000 jobs) in the period between March and May, the lowest level since April 2021.

McKeown said the fall in vacancies suggests “firms are becoming more cautious about taking on new staff”.

The provisional figures also showed payrolls rose to 30.3 million in May, up slightly by around 2,000 compared to April.

ONS: Wage growth remains at a near six year low

Public sector wages are growing far faster than those in the private sector, new data from the ONS shows, as overall earnings growth remains at its slowest level in almost six years.

Wages for the average worker in the UK grew by 3.4% in the year to April when excluding bonuses, remaining at the same level as the previous month. When including bonuses, this figure grows to 4.4%.

Liz McKeown, director of economic statistics at the ONS, said: “Regular wage growth in the private sector slowed to its lowest rate in five and a half years, though total earnings are growing faster because bonus payments in March and April are higher than a year ago, particularly in the financial sector.

“Public sector pay growth increased but is once again affected by the timing of pay awards varying this year.”

Public sector workers received the biggest pay bump in the period, with their average wages growing by a rapid 5.1%.

Private sector wages lagged far behind this figure, growing by just 2.9% overall in the same period. When excluding bonuses, earnings grew at their slowest rate since October 2020, during the height of the covid-19 pandemic.

Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said the latest labour market figures “point to a jobs market struggling under the strain of soaring energy bills and employment costs, with more firms limiting hiring and holding down pay, especially for younger workers”.

He said: “Weak wage growth offers a silver lining for rate-setters by raising hopes that any inflationary spillover from the Iran war will be limited, especially as rising unemployment will help keep pay settlements heading downwards.”

He added that the figures “seal the deal” on an interest rate hold today as rate-setters will be reassured that a soft labour market can help mitigate the inflationary shock from the Iran war.

Recap: What you should expect at 12pm

The MPC’s interest rates decision will be announced at 12pm today. We will be covering the result of the decision in this live report.

Most economists think the MPC will keep rates where they are at 3.75% for the fourth consecutive meeting.

They are likely to do this because of the economic shock that is coming from the Iran war. Analysts expect the war to push up inflation in the UK this year, although we are yet to see data that shows how deep the shock is.

While fuel prices are already high because of the war, and energy prices are set to rise from July onwards, overall inflation has been lower than expected in March and April, holding steady at 2.8%.

However, when the new energy price cap comes in in July, we can expect inflation to rise more significantly.

As the Bank of England has a mandate to keep inflation at 2%, they are highly unlikely to cut interest rates at a time like this, as doing so might exacerbate the problem.

While a hold is the most likely result, the MPC may decide to raise interest rates to help stave off inflation. However, a rate hike is not expected today as the MPC will likely wait and see before taking more drastic action.

Before the war, most experts thought the MPC would cut interest rates twice more in 2026, but most now think they will remain where they are for at least the rest of this year.

BREAKING: Interest rates held at 3.75%

Interest rates are unchanged at 3.75%, the Bank of England has announced.

The hold was widely anticipated by economists, as the Bank’s Monetary Policy Committee (MPC) wait to see how the shock from the Iran war will be reflected in economic data.

Interest rate hold passed by 7 votes to 2

The Monetary Policy Committee voted to hold rates at 3.75%, with seven members supporting the motion, and two members opposing it.

The two members who opposed the hold instead wanted rates to rise by 0.25 percentage points to 4%.

The members voting to raise interest rates were Huw Pill and Megan Greene.

Energy prices were a major concern for the MPC

The minutes of the MPC’s meeting show that the elevated level of global energy prices were a key concern for the committee when deciding where to take interest rates.

They acknowledged that wholesale energy prices have fallen since their previous meeting in April but noted that they still remain higher and more volatile than they were before the Iran war.

They added that the impact of the energy shock on the economy is still uncertain, with concrete data only set to become available in the coming months.

The minutes said: “Monetary policy cannot influence energy prices but is being set to ensure that the economic adjustment to them occurs in a way that achieves the 2% inflation target sustainably.”

Future interest rate decisions set to depend on scale of Iran shock

Where interest rates go next is uncertain and highly dependent on how the economy reacts to the shock from the Iran war, the minutes to the MPC’s meeting showed.

The Bank’s mandate to keep inflation at 2% will require different amounts of intervention from the MPC depending on the rate of inflation later this year.

The minutes show that a potential future rate hike is still on the cards despite more positive developments in the Middle East as the inflationary impact of the war is still set to get worse.

They said: “The policy stance required to achieve this [the 2% target] will depend on the scale and duration of the shock, and how it propagates through the economy.”

Economists at the Bank still expect inflation to accelerate later this year when the effects of higher energy prices pass through to consumers in July through the increased price cap. They are also closely monitoring second-round inflationary effects, which are typically worse the longer higher energy prices persist.

One economic indicator that helps the Bank justify avoiding a rate hike is the softening labour market, which could help “contain inflationary pressures.”

The minutes read: “The Committee will continue to monitor closely the situation in the Middle East and how its impact propagates through the economy. The Committee stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term.”

Bank of England lowers its inflation expectations for 2026

Inflation is expected to remain just below 3% for most of the year, but briefly rise to “a little over” 3.25% in the fourth quarter of 2026, new estimates from the Bank show.

The new estimates are well below the Bank’s April forecasts which expected inflation to peak at 3.6% in their best-case scenario and over 4% in their worst-case scenario.

The downgrade in the Bank’s inflation expectations came after energy prices have fallen since the previous estimates were made, with significant drops coming after it looked like the Iran war was coming to a close.

Lower non-energy prices also helped the Bank revise their inflation forecast down.

BoE: Strong economic growth in Q1 is unlikely to be repeated in 2026

The UK’s strong economic performance in the first quarter of 2026 is unlikely to continue in the rest of the year, the Bank of England has said.

The minutes of the MPC’s meeting showed that this figure overstated overlying economic momentum, which has remained subdued, according to business surveys analysed by the Bank.

April’s GDP figures, which showed the economy shrank by 0.1%, are consistent with this.

Bank staff estimate that underlying GDP growth in Q1 was around 0.2%, and that the economy would continue growing at this rate in Q2.

Base rate held for four consecutive meetings

Today’s announcement that interest rates would stay at 3.75% is the fourth consecutive time the MPC has voted to keep rates where they are.

Compared to interest rates in the last 20 years, 3.75% is relatively high, especially considering rates had been near 0% for years following the 2008 financial crisis.

However, as inflation has remained persistently high since the 2022 energy crisis and the accompanying cost of living crisis, the bank rate has been high for some time. That means that 3.75% is actually the lowest since February 2022.

Bailey: We must tolerate above-target inflation to get back to target

In the minutes of the MPC’s meeting, Andrew Bailey, governor of the Bank of England, justified his vote to hold interest rates.

He argued that the marked fall in energy prices in recent days was a positive sign, especially considering the progress on US-Iran peace talks, but warned “the situation remains unpredictable, and there is clearly a risk that energy prices remain elevated for an extended duration”.

Bailey noted the labour market is showing signs of further softening and said there are further signs of demand weakness in the economy.

He added: “Our remit recognises that attempting to bring inflation back to the target too quickly may cause undesirable volatility in output.

“Given the context at present of softness in the real economy and uncertainty around the scale and duration of the shock to energy prices, tolerating temporarily above-target inflation as part of a return to target is an appropriate way to approach the trade-off, providing inflation expectations remain contained.”

He said that inflation and interest rates risks are on the upside, meaning it is more likely for the bank rate to rise than fall in the foreseeable future.

“I would respond promptly to any signals that an extended period of elevated energy prices could be leading to stronger possible second-round effects,” he added.

Why two MPC members voted to raise interest rates to 4%

While the majority of MPC members voted to keep interest rates held at 3.75%, there were two dissenting voices that wanted to hike rates.

These were Huw Pill, the Bank of England’s chief economist, and Megan Greene, an academic economist and external member of the MPC.

Greene voted to hike rates as she saw the risk of second-round inflationary effects as higher and more uncertain than other members of the committee. To deal with this, she called for the MPC to “pursue a risk management strategy!.

She said the risk of holding rates where they are and second-round effects being more extreme than expected is worse than hiking rates and these effects being as forecast.

She said: “These risks are asymmetric, so we should insure against the possibility of larger second-round effects until we have evidence to determine they are not materialising. A proactive hike now in bank rate should help anchor inflation expectations.”

Pill’s justification was similar, arguing that, with the inflationary outlook so uncertain, raising interest rates to 4% “continues to be the most robust monetary policy response to the intensification of these risks”.

“Global energy prices remain volatile, and elevated compared with their pre-hostilities level, despite the announcement of a new ceasefire. Even with a looser labour market, the risk that second-round effects will create greater intrinsic persistence in UK inflation remains.”

He added that moving the bank rate to 4% now would put monetary policy in a good position to address the uncertainties in the economy.

Deutsche Bank: Interest rates expected to be on “long hold”

Deutsche Bank has said that interest rates are set to stay at 3.75% for a long time, with a lower chance of a rate hike as the economic and geopolitical backdrop has become more favourable and given rise to a wider consensus within the MPC.

Sanjay Raja, the bank’s chief UK economist, said: “For the MPC, recent data outturns combined with an Iran/US deal has meant that the risks around second-round effects have receded. Indeed, while the MPC still sees upside risks to inflation, lower wage and price inflation has given the MPC more confidence that price pressures remain more contained for now.

“Put simply, despite an inevitable inflation wave, the MPC may be willing to tolerate and look through a temporary bump in price momentum.”

Raja added that today’s decision has also helped the MPC keep their options open in the summer, when we will start to see more concrete data about how the Iran war has affected the UK.

“Despite better data and a dramatic fall in energy prices, the MPC avoided sounding too dovish. Instead, it maintained its hawkish bias – keeping flexibility should there be any meaningful signs of indirect and/or second-round effects.

“While financial conditions have tightened since the war began, the MPC's decision today reflects the importance of maintaining some policy restriction in market pricing – allowing it to stick to its 'active hold' strategy.”

As for where interest rates will go next, Raja says the need to act swiftly has reduced as more favourable economic data than expected bought the MPC some extra time to assess the situation.

With that extra breathing space, Raja expects interest rates to stay at 3.75% for the rest of 2026 and adds that Deutsche Bank’s models still see the case for rate cuts in spring 2027.

What does today’s interest rates decision mean for your finances?

Decisions made at the Bank of England to cut, hike, or hold interest rates will affect your personal finances.

This is because the bank rate is the core interest rate in the UK, and is the rate of interest the BoE pays to commercial banks, building societies, and financial institutions that hold money with the central bank.

The bank rate is also the interest rate that the BoE charges on loans made to other financial institutions.

That means that when interest rates change at the BoE, the lending and savings rates offered by retail banks also tend to change.

This is why you may find that your mortgage rate is higher after the bank rate rises, or why you may find your savings are generating less interest when the bank rate falls.

According to data from Moneyfacts, its Average Savings Rate has risen to 3.57%, the highest point since May 2025. “Much of this change to fixed rates is down to speculation that interest rates will remain higher for longer,” said Rachel Springall, finance expert at Moneyfacts.

For more on how interest rates affect your finances, read our article.

MPC remains in ‘wait and see’ mode

Today’s decision to hold interest rates at 3.75% indicates that the MPC is continuing the ‘wait and see’ approach that they have used since the beginning of the Iran war, according to analysis from advisory firm Oxford Economics.

Multiple economic indicators have turned less inflationary in the last few days.

Oil and energy prices in particular are in a better place than any of the BoE’s potential scenarios outlined in their April Monetary Policy Report, with oil and gas futures trending down as the Iran war winds down.

Meanwhile, the labour market has continued to soften, which acts as a further disinflationary force in the economy.

Andrew Goodwin, chief UK economist at Oxford Economics, said that the majority of the MPC who voted to hold rates “appear to take the view that the most likely scenario is that a weak labour market and fragile demand will keep a lid on second-round effects via pay growth and margins. And leading indicators on the strength of those second-round effects will remain key to the MPC’s decision making”.

Like Deutsche Bank, Oxford Economics agree that we are probably going to see interest rates settle at 3.75% until at least next year before a potential cut in late 2027.

Goodwin said: “On balance, we can’t see any reason to change our call that Bank Rate will remain at 3.75% for the rest of this year. The majority of the committee appear content to sit back and see how events play out, and we don’t expect to see leading indicators showing evidence of growing second-round effects that might trigger a change of heart.”

Thank you for following our live coverage of today’s interest rates decision.

We will close our live report now, but make sure to subscribe to MoneyWeek’s newsletters to get a wealth of news, features, and analysis straight to your inbox.

Around £221.5 million was stolen in investment fraud during 2025, as scammers target those trying to get investing.

Across all types of scams, Brits unknowingly handed over a whopping £1.3 billion to fraudsters in 2025, up 4% from 2024, trade body UK Finance found.

Investment fraud was the leading type of authorised push payment (APP) fraud, where criminals exploit online platforms to manipulate victims into authorising payments themselves, making up just under half of all losses of this type.

The vast majority (66%) of all APP fraud, including investment fraud, begins online as scammers are more easily able to cast a wide net to attract victims with get rich quick schemes, UK Finance found.

Other types of APP fraud on the rise include purchase scams, where a victim pays in advance for goods that are never received, which accounted for 71% of all APP fraud. Losses in this category were up 20% to £118.1 million in 2025.

The amount stolen through romance fraud, where victims are persuaded to make a payment to a person they have never met but believe they are in a relationship with, was up 22% in 2025, totalling £39.2 million.

Ruth Ray, managing director of economic crime at UK Finance, said: “Fraud operates on an industrial scale, harming people, businesses and the UK economy, typically funding serious and organised crime in the UK and globally.

“The financial sector invests huge amounts in protecting customers, but we cannot be the only line of defence. Almost £1.3 billion was stolen again last year and it is clear we are not tackling the underlying problem effectively enough.

Ray called for online tech platforms to have “stronger, enforceable responsibilities” to urgently stop criminals profiting from fraud.

AI is making investment scams easier than ever

The rise of AI-generated images and videos has made fraud easier than ever for scammers, as many imitate famous figures in finance to feign credibility. Last year, MoneyWeek found fraudsters using the likeness of investor Steven Bartlett to lure unsuspecting victims.

Since then, similar scams that use the likeness of Bank of England governor Andrew Bailey, and Blackrock CEO Larry Fink, and others have been found.

A survey of fraud-management and financial crime prevention experts showed that AI is making fraud more difficult to deal with.

Around 84% of respondents to the survey by BioCatch, said AI has increased the sophistication of fraud and scam schemes as deepfakes are becoming increasingly difficult to spot.

Jonathan Frost, director of global advisory for EMEA at BioCatch said: “Agentic AI is making fraud faster, more scalable, and harder to detect. Criminals will inevitably use AI, potentially leading to exponential growth in fraud.”

How to protect yourself from fraud

With fraud on the rise, there are steps you can take to protect yourself. These include:

• Never give out your personal information to any organisation before you check they are legitimate. This includes your name, address, bank details, email, or phone number.
• Make sure your personal devices have up-to-date antivirus software so that any malware targeting you can be stopped before it does significant damage.
• Be conscious of phishing attempts where scammers send emails, texts, or phone calls pretending to be an organisation or individual that they are not. They often try to get you to give out your personal details or passwords. Common signs of a phishing message include grammatical errors, urgent language and suspicious-sounding email addresses or numbers.

If you think you have been a victim of fraud, contact your bank as soon as possible. You should also report the crime to Action Fraud.

To prevent yourself from becoming a victim, you should also remember the number 159 – a number you can dial if you get a suspecting call. It will direct you to your bank who can confirm if the caller is legitimate.

• The Office for National Statistics (ONS) has released UK inflation data for May 2026.
• Consumer Prices Index (CPI) inflation stayed at 2.8% in the 12 months to May, the same as in the previous month’s release.
• Economists had previously predicted a rise in inflation compared to the month prior.
• Lower food prices were one of the main counters to higher transport costs in May.
• The Bank of England’s (BoE) Monetary Policy Committee (MPC) meets this week to decide on UK interest rates and will watch today’s inflation data closely when making its decision.

| UK inflation forecast | What is inflation? | When will interest rates fall further? | CPI release dates | MPC meeting dates |

Good afternoon and welcome to live coverage of the upcoming UK inflation data release.

Tomorrow, we’ll find out how prices changed in the UK during May. Last month’s release showed a slowing of UK Consumer Prices Index (CPI) inflation in the 12 months to April, despite higher oil prices resulting from the conflict in Iran.

While oil prices have fallen this week following the announcement of a peace deal between Iran and the US, the expectation is still that the impact of the conflict will have pushed CPI inflation higher in the period the data covers. How great will the impact be – and what could it mean for your money?

When is UK inflation data released?

The Office for National Statistics (ONS) will release May’s UK inflation data at 7am tomorrow (17 June).

We’ll bring you live reporting and reaction following the release, as well as rolling coverage and expert views on what changes in inflation might mean for you.

What do experts predict for May’s UK CPI?

The headline CPI figure took a surprise dip in April, but few experts anticipate a repeat in the May UK inflation data.

Economists at advisory firm Pantheon Macroeconomics expect CPI inflation to have risen to 3.0% in May, due to the impact of recovering air fares and vehicle duty base effects.

“Most of the action comes in services,” said Pantheon Macroeconomics’ chief UK economist Robert Wood and senior UK economist Elliott Jordan-Doak in a report seen by MoneyWeek. “Non-core components should add 1 basis point to inflation in May compared to April, and core goods will shave off 6 basis points.”

Similarly, Sanjay Raja, chief UK economist at Deutsche Bank, expects CPI to rise to 3%, with most of the uplift driven by services inflation.

Both Deutsche Bank and Pantheon Macroeconomics forecast services inflation to rise from 3.2% to 3.7%.

Notably, both organisations forecast a lower rate of UK inflation for May than the MPC itself. In its latest report (published in April), the MPC forecasted CPI to rise by 3.3% in the year to May, driven largely by a 3.9% rise in services inflation.

UK inflation data to be followed by interest rates decision

UK inflation data is released once per month, and the Bank of England’s (BoE) Monetary Policy Committee (MPC) meets every six weeks to set UK interest rates.

This means every other MPC meeting and every third inflation data release coincide. Inflation data is released on Wednesdays and the MPC’s decision is posted on Thursdays, so when this happens the MPC announces its decision the day after inflation data is released.

That’s the case this week; the MPC’s interest rate decision will be announced on Thursday 18 June. The committee will factor tomorrow’s inflation data closely into its decision.

“Absent some huge surprises in this week’s inflation and labour-market figures, we think the MPC will say at Thursday’s policy meeting that they remain prepared to act but feel they can keep rates on hold for now,” said Robert Wood and Elliott Jordan Doak, chief UK economist and senior UK economist respectively at advisory firm Pantheon Macroeconomics, in a note seen by MoneyWeek.

Why small changes in inflation make big differences to your finances

Inflation measures the rate at which prices rise or, from another perspective, the rate at which money falls in value. One pound today buys less than it did ten years ago.

The MPC targets a 2% rate of inflation. This is generally viewed by economists as a healthy rate of inflation (too little inflation or, worse, deflation are signs of a weakening economy).

The difference between 2% inflation and 3% might sound trivial, but over the long term it has a surprisingly large effect on your money.

“People often assume there isn't much difference between low rates of inflation, but the rule of 72 shows how it can mount up,” says MoneyWeek’s editor Andrew VanSickle. “At 4%, your money takes only 18 years to halve in value. At 3%, 24 years. At 2% – the Bank of England's target – 36 years.”

UK inflation data history

The peak for UK inflation in recent history came in October 2022, when the headline CPI inflation measure hit 11.1%.

CPI inflation fell below the Bank of England’s 2% target in September 2024, before rising steadily over the next year.

Until the war in Iran broke out, inflation had been trending downwards. The war’s outbreak, though, pushed UK inflation to 3.3% in March this year – ahead of the dip in April.

Could the Iran ceasefire ease UK inflation in time to avert rate hikes?

The MPC will look closely at tomorrow’s UK inflation data when it meets this week. But this data is backward-looking – reflecting what happened to UK prices in May. The committee will also pay close attention to what is likely to happen to inflation going forward.

With that in mind, the ceasefire between the US and Iran, and the resulting re-opening of the Strait of Hormuz, could have come at the perfect time for rate-setters who had appeared set to decide between hiking rates, which risks stifling an already weakening economy, and cutting or holding them which could risk letting inflation get out of control.

“Falling oil prices have arrived at a convenient moment, giving both the [Federal Reserve] and the Bank of England something to work with ahead of their meetings this week,” said Chris Beauchamp, chief market analyst at investing and trading platform IG. “Cheaper energy takes pressure off inflation, and that should allow both central banks to strike a more measured tone than some of the more excitable commentary and market pricing seen since the US and Iran went to war.”

Your personal inflation rate

CPI inflation is just one way of measuring inflation. It is the headline rate measured by economists and policymakers largely because, of all the metrics, it is one of the easiest to compare internationally. For more information on different inflation measures, see our explainer on CPI vs RPI inflation.

All inflation measures have one thing in common: they distil an immensely complex combination of goods and prices across the whole economy into a single number. While that number in theory represents the economy as a whole, different people with different spending patterns will experience inflation differently from one another.

Everyone has their own personal inflation rate. You can calculate yours by answering a series of questions at the ONS’s personal inflation rate calculator.

“My personal inflation benchmark is the peppermint Aero,” says MoneyWeek’s editor Andrew VanSickle. “I paid 22p in 1988. Now it's 63p or so.”

Thank you for following today's live reporting ahead of tomorrow's UK inflation data release. We're pausing coverage here for this evening, but we'll be back live tomorrow morning to bring you the May inflation data as soon as it breaks at 7am.

Good morning, and welcome back to our live coverage of the upcoming UK inflation data release.

As a reminder, the Bank of England most recently forecasted a rise in Consumer Prices Index (CPI) inflation to 3.3%, though some economists believe that inflation will have been cooler at 3.0%.

We'll bring you the headline figure as it happens, as well as rolling reaction and analysis following the release.

UK inflation data release imminent

The May UK inflation data release is just minutes away. Will inflation have risen, and by how much if so?

BREAKING: UK inflation stays at 2.8% in May

UK inflation as measured by the Consumer Prices Index (CPI) stayed constant at 2.8% in the 12 months to May 2026.

Lower food prices lead to surprisingly flat UK inflation

UK CPI inflation, which was expected to have risen in the 12 months to May compared to the previous month, has instead stayed flat with lower food prices counteracting increased transport costs.

“After last month’s slowdown, inflation held steady in May as various price movements offset each other,” said Grant Fitzner, chief economist at the Office for National Statistics (ONS).

“The main upward movement came from transport with airfares, vehicle taxes and petrol prices all pushing up inflation,” Fitzner continued. “These were offset by lower food prices, with decreases in inflation seen across a range of meat, dairy and vegetable items compared to last month, as well as the cost of domestic heating oil, which fell back after climbing in recent month[s].”

UK inflation in detail

Let’s have a look at some of the other UK inflation figures beyond that headline 2.8% rate of annualised CPI inflation.

While annualised CPI inflation held steady in May, on a monthly basis the metric increased by 0.2% from April, the same rate as in May 2025.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 3.0% in the 12 months to May 2026, unchanged from the 12 months to April.

CPIH also rose by 0.2% in May 2026 – the same monthly rate as in May 2025.

Core CPI (CPI excluding volatile goods like energy, food, alcohol and tobacco) rose by 2.6% in the 12 months to May 2026, up from 2.5% in the 12 months to April.

As had been predicted, CPI services inflation rose from an annual rate of 3.2% to 3.7% between April and May.

Could the Iran inflationary shock be short-lived?

When looked at in historical context, there is very little sign of a bump in inflation linked to the Iran war.

“UK inflation was flat during May, coming in below expectations despite higher energy prices continuing to weigh on UK households and businesses,” said Scott Gardner, investment strategist at J.P. Morgan Personal Investing. “This reading will provide some hope that any rebound in UK inflation could be short-lived after the announcement of a framework deal earlier in the week between the White House and Iran to stop fighting.”

Other experts are striking a more cautious tone, though.

“Despite energy prices having fallen recently, there is more inflationary pressure to come for the UK, when the Ofgem price cap moves higher next month,” said Luke Bartholomew, deputy chief economist at asset manager Aberdeen.

Rachel Reeves: Economic plan is controlling inflation

The chancellor of the exchequer Rachel Reeves has responded to today’s inflation figures.

“While the war in the Middle East pushes prices up globally, we have got the right economic plan and inflation has held steady,” said Reeves.

“We’re protecting families and businesses from rising costs, with cuts in energy bills and freezes in fuel duty and rail fares.”

Reeves’s statement drew attention to measures that the government has brought in including targeted support on heating oil, reduced tariffs and an extension of the fuel duty cut to December 2026.

Which categories had the biggest impact on UK inflation?

Different categories of goods and services had contrasting effects on UK inflation during May.

Transport had the largest upward impact on an annualised basis, rising 6.8% in the 12 months to May and contributing 0.29 percentage points to 12-month CPI inflation. On a monthly basis transport costs increased by 0.4% in May, having fallen 1.8% in April.

Conversely, the price of food and non-alcoholic beverages fell 0.1% during the month, which led to this category lowering annualised CPI inflation by 0.09 percentage points. While furniture and household goods prices increased 0.8% between April and May, they fell by 0.1% over the preceding 12 months, meaning this category reduced annualised CPI inflation by 0.04 percentage points.

Unchanged UK inflation suggests price pressures are ‘finely balanced’

The easing of food price pressures indicates that, beneath the headline impacts of higher energy prices, there is a longer-term disinflationary trend at play, according to Richard Flax, chief investment officer at wealth manager Moneyfarm.

“It was a modest positive surprise to see UK headline inflation hold at 2.8% in May, as consensus expectations had pointed to a move closer to 3%,” said Flax. “This suggests underlying price pressures remain more finely balanced than anticipated.”

Middle East disruption could still lead to higher UK inflation

Experts are warning UK consumers not to get carried away with the idea that the UK has escaped the inflationary risks resulting from the war in the Middle East, even following the peace deal negotiated between Iran and the US.

“Despite a peace deal being reached, disruption to global energy markets and related supply chains is yet to work its way through the system,” said Rob Morgan, chief investment analyst at wealth manager Charles Stanley. “Households still need to brace themselves for pricier shopping baskets and energy bills in the coming months.”

Despite this the reopening of the Strait of Hormuz “is undoubtedly good news for consumers, business owners and central banks alike”, Morgan added. “It means that the price jolt won’t be as ferocious as it might have been, and it could give way to a calmer inflationary setting next year… it’s far from a ‘worst case’ inflationary scenario for UK households and businesses.”

UK inflation outlook looks softer, says Deutsche Bank chief economist

Investment bank Deutsche Bank’s chief UK economist, Sanjay Raja, has highlighted the benign outlook for UK inflation implied by today’s release.

“Outside of services CPI, headline, core, and food prices [inflation] all undershot our expectations,” said Raja.

“Driving some of the downside in price momentum was a combination of weaker core goods prices and food prices. Indeed, despite rising energy costs, retailers remain hesitant to price in any cost pass-through.”

The easing of pricing pressures on these goods coincides with the apparent resolution to the conflict in the Middle East, which has already seen oil prices fall to around 10% below last month’s market assumptions.

“This will slowly flow through the inflation data over the summer and winter,” said Raja. “And, in even better news, the fall in oil prices has coincided with a fall in gas prices. It’s looking increasingly likely that the Ofgem Price Cap could be lower as opposed to higher come October 2026, bringing some much-needed relief for UK households and businesses.

“Altogether, the sting from the Iran conflict looks less than markets initially assumed,” Raja added. “The peak in CPI could end up well below what we saw last year.”

UK inflation recap

Here’s a recap of the main talking points from this morning’s UK inflation data release:

• CPI inflation was 2.8% in the 12 months to May, unchanged from the previous month.
• While transport costs rose, food prices fell month-to-month which contributed to the lower-than-expected figure.
• CPI services inflation rose to 3.7%, maintaining upward pressure on UK inflation more broadly.
• CPI rose by 0.2% on a monthly basis.

What does inflation mean for your money?

You’ll have already felt the impact of the May inflation figures the ONS has announced today when you bought travel tickets, food and drink or petrol last month. Inflation figures are backward-looking and reflect what people across the economy spend on everyday goods and services.

But beyond straining your monthly budget there are indirect consequences for your money when inflation runs above the 2% level that the Bank of England (BoE) targets.

First and foremost among these is the impact on interest rates. The BoE’s Monetary Policy Committee is meeting this week to decide on interest rates. Higher inflation incentivises central bankers to raise interest rates, which would increase the interest you pay on any debt (including your mortgage) but would also increase the amount of interest you could accrue on savings and cash.

Higher inflation also puts up any utility bills you have that are inflation-linked. Many contracts have a clause allowing them to increase by the rate of annual inflation (often this is based on the Retail Prices Index (RPI) rather than CPI).

State pensioners also potentially stand to benefit, as the triple lock means that state pension payments increase by whichever is highest out of CPI inflation, average wage growth or 2.5%.

Inflation reality checks

UK inflation undercut expectations in May and that’s a cause for optimism in many respects. Before we get carried away though, various experts have cautioned that the trouble may not be over yet.

“On the face of it, a flat 2.8% reading on headline UK inflation, against a 3% expectation, and almost all of which attributed to transport costs, is good news,” said George Lagarias, chief economist at financial consultancy Forvis Mazars. But despite this and the anticipated impact of a peace deal between the US and Iran, Lagarias warned that “businesses should not casually overlook the jump in services inflation from 3.2% a month ago to 3.7%.”

Sarah Coles, head of personal finance at investment platform AJ Bell, also highlighted that some categories such as motor fuel and pet ownership have seen significant inflation, while cumulative impacts of inflation can mount up over time.

While the US-Iran peace deal could mitigate inflation in future, “there are no guarantees that the deal will hold, and even if peace endures, price rises are already baked in through higher input costs”, said Coles.

Those on lower incomes are also disproportionately impacted by things like higher energy costs, as a greater proportion of their household income goes on energy-sensitive spending.

“The ONS Family Spending figures out last week showed that the 20% of households with the lowest disposable income spent 15.2% of their budget on food and drink – compared to 7.9% among the highest 20%. They also spent 7.8% on gas and electricity, compared to 3.9% among the richest fifth, and 2.5% on petrol, diesel and motor oils, compared to 2.1%,” said Coles.

What does the latest UK inflation data mean for interest rates?

The biggest question from here is what impact today’s inflation data might have on UK interest rates.

The Bank of England’s Monetary Policy Committee (MPC) is meeting this week, and tomorrow it will announce its latest interest rates decision.

We’re ending live inflation coverage here – but don’t worry, we’ve got a separate live report covering the MPC’s decision. Keep a close eye on that today and tomorrow as we bring you rolling news, insight and analysis of the announcement.

Pensioners who were in certain pension schemes of failed companies are in line for a share of almost £2 billion in top-up payments.

The Pension Protection Fund (PPF) – the industry-funded rescue fund for defined benefit pension schemes – will begin writing to in excess of 300,000 former staff of collapsed firms from July. Payments will be made from January 2027.

These pensioners missed out on inflation protection which they should have been entitled to as part of their payments from their company pension schemes – meaning their pension should have risen in line with prices but didn’t.

Defined benefit pensions pay a regular guaranteed income based on a worker’s salary and length of service. Many are closed to new members but are particularly valuable because of the inflation protection which boosted the retirement income.

However some pensioners were denied this valuable benefit before 1997 by their former employers, in firms that later went bust.

A recent rule change now means they will get the money they are owed. In April, the Pension Schemes Act became law, allowing the PPF and the Financial Assistance Scheme (FAS) to make the additional inflation-linked payments.

The PPF protects millions of UK defined benefit scheme members if their employer becomes insolvent. The Financial Assistance Scheme (FAS) is a separate but similar government-funded scheme designed to help those whose employers became insolvent between 1997 and 2005. Both are administered by the PPF.

A PPF spokesperson said: “Supporting our members is central to the PPF's role. The government's decision to enable us to pay inflation increases on pre-97 compensation will strengthen outcomes for many PPF and FAS members.

“Implementing this change requires significant work and we’re making good progress to be able to start paying these increases to eligible members from January 2027. We will continue to keep members fully informed throughout."

Who will get payouts?

The change in the law applies to PPF and FAS members whose former pension schemes promised to pay its members pre-1997 inflation-linked increases in their retirement payments.

Prior to 1997 – long before the PPF and FAS were set up – the law did not compel employers who provided defined benefit scheme pensions to also provide inflation protection for their members’ retirement income.

In practice the majority of defined benefit pension schemes did, in their scheme rules, provide inflation protection, but not all.

When the PPF and FAS were set up, the founding legislation (Pensions Act 2004) did not allow these lifeboat funds to pay pre-97 inflation-linked increases to all their members.

Now, however, the change in the Pension Schemes Act applies to PPF and FAS members whose former schemes promised pre-97 indexation as a right.

The PPF has, in the past months, reviewed the scheme rules of all 2,000 schemes which have transferred to the PPF and FAS.

Having completed this exercise, the PPF has determined that in excess of 300,000 members will be eligible for pre-1997 inflation-linked pension increases in the future.

Affected pension scheme members don’t have to do anything. The PPF will write to those eligible from next month.

The average asking price for a property fell in June, dipping by 0.6% (equivalent to £2,113), as historically high stock and low buyer demand have kept them on ice.

It marks the largest fall recorded in June for 14 years, and may be a result of the May heatwave distracting buyers from house-hunting, according to the latest house price index from Rightmove.

The dip means the average asking price for a property in the UK is now £376,191, around 0.5% lower than this time last year.

While summer tends to be a slower season for the housing market, this June has been particularly difficult for prices, which typically rise modestly in the month.

The recent slowdown may be a result of the high level of competition and low demand in the market, according to Rightmove.

Housing stock is still at a historic high, and sellers are responding to this by cutting asking prices more fiercely in an attempt to make their homes more attractive to buyers.

Buyer demand was down 10% year-on-year in May. One reason for this larger-than-normal dip in demand could be higher mortgage rates.

Rates have been high since the beginning of the Iran war on 28 February, the effects of which are expected to weigh heavily on the UK economy.

Inflation in particular is expected to rise, it’s unlikely the Bank of England will cut interest rates in 2026. That, in turn, means mortgage rates are set to stay high for the foreseeable future.

Rightmove adds that slumping demand may be worse this year as heatwaves and the World Cup are set to distract buyers for the next few months.

Colleen Babcock, property expert at Rightmove, said: “It’s unusual to see a price fall of this size in June, as we would normally expect to see modest price growth at this point in the year.

“What’s different this time is a combination of factors, including wider economic uncertainty, the timing of the May bank holiday and unusual heatwave, and the high number of homes on the market, which together appear to be bringing forward the traditionally slower summer market.”

While asking prices have dipped, sales activity has remained relatively steady. Though Rightmove’s data shows sales are down 6% year-on-year, 2026’s numbers are broadly in line with those from recent years (about the same as 2024 and 5% more than 2023).

Babcock added: “While the summer market has come a bit early this year, overall activity is still within a typical historic range. What has changed is some buyer behaviour; with more homes to choose from and higher borrowing costs, buyers are deliberating more and taking longer over their decisions.

“Sales activity remains stable, but it’s a very price-sensitive market with buyers looking out for the right property at the right price.”

Asking prices grew in Scotland and London

While almost all regions in the UK saw average asking prices fall, Scotland and London actually saw them rise in June.

The average asking price for a house in Scotland is up 0.8% in June, bringing it to £207,011. Sales in the country are also the fastest in the UK, with the average seller only having to wait 31 days to find a buyer. Overall, asking prices are up by 3.3% on the year.

Asking prices in London have been falling recently, but June’s data has bucked the trend. The average home in the capital is now 0.3% more expensive, with average asking prices coming in at £687,080.

Despite the June bump, asking prices for homes in the capital are still lower today than they were a year ago, slumping by 1.2%.

The poorest-performing region in the UK for asking price growth in June was Wales. The average asking price for a house in the country is now £271,459, down 1.6% this month and 0.3% on the year.

The emerging market (EM) universe is very diverse in terms of what drives individual economies. What does China have in common with India (other than being populous and in Asia) or either of them with Brazil? Yet they are treated as a block, and recent trends are stretching these contradictions further than ever.

A top-down investing strategy often involves assigning things to groups, then buying the most compelling groups or choosing the most attractive within a group. These groups can seem arbitrary – the difference between members can be as big as the similarities. Yet in the investment business, classifications that seem easy to understand can stick around well past the point where they make sense.

Standard rules of thumb for emerging markets would tell you that the last few months have been difficult. Many emerging markets are energy importers, so will suffer from higher oil prices. Markets also tend to be affected by inflows and outflows from foreign investors. If global investors get more nervous, they would be expected to cut emerging-market exposure first and take their money home. Yet the MSCI Emerging Markets index is up by 20% in sterling so far this year. How?

AI stocks are over-represented in emerging markets indices

The explanation hinges on two points. The first is that two of the biggest markets in the index are emerging markets only in one very specific sense. South Korea and Taiwan retain certain restrictions, mostly around their currencies, that MSCI deems incompatible with being in the developed markets group. Yet in many respects, they are both wealthier and more advanced than many developed economies.

The second is that a few huge companies – Taiwan Semiconductor (TSMC), Samsung Electronics, SK Hynix – are huge beneficiaries of the AI boom and are driving their markets even more than the Magnificent Seven drives the US market. Those three stocks account for almost 30% of the MSCI Emerging Markets index. Taiwan and Korea together make up 50% of the index. In turn, TSMC is 55% of the MSCI Taiwan, while Samsung Electronics and SK Hynix account for 60% of the MSCI Korea.

These are eyebrow-raising numbers. They have worked out very well for any broad emerging-market investor. Still, we must remember that if the AI boom ends and the US market slumps, the emerging market index will do the same – it's been a play on the same theme.

If you want diversification, you will only find it in funds whose mandate does not bring in these stocks – BlackRock Frontiers (LSE: BRFI) or Barings Emerging EMEA Opportunities (LSE: BEMO), for example. Of course, these funds have lagged in recent months, held back by the lack of tech exposure or battered by the Middle East crisis. I would not say it is yet time to rotate out of broader emerging market funds. But it is something to keep in mind if the crisis passes and the AI boom falters.

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Sarah Wynn-Williams, a former senior director at Meta, offers in her 2025 memoir Careless People what The New York Times described as “a darkly funny and genuinely shocking” account of one of the world's most powerful companies.

But, thanks to a gagging order imposed by Meta, owner of Facebook, Instagram and WhatsApp (which has frequently invoked the importance of freedom of expression to justify some of the more extreme content on its own sites), Sarah Wynn-Williams was forced at this year's Hay Festival to sit mutely on stage during a panel discussion of her whistleblowing book – on pain of financial ruin. Meta, which calls the book's claims “false and defamatory”, last year won an emergency ruling in the US to stop Wynn-Williams promoting the memoir on the grounds that she had “potentially violated her severance contract”.

This prevents her from saying anything negative about Meta, “potentially for ever”, says The Times. The company asserted that her appearance alongside investigative journalist Carol Cadwalladr and former White House technology adviser Tim Wu – two critics of Meta – also breached a legal ruling. “This amounts to targeting people for the ‘crime' of free association and the public discussion of ideas” at a literary festival “taking place in Hay-on-Wye, not Beijing”. What kind of legally sanctioned madness is this? As Wu observed, it smacks of “medieval” despotism.

It's easy to see why Meta is so “rattled” by the book, which, as well as containing unflattering portraits of senior executives Mark Zuckerberg, Sheryl Sandberg (who quit the board in 2024) and global affairs director Joel Kaplan, provides a detailed account of some of its worst alleged practices. An extraordinary array of allegations ranges from “sexual harassment” and the “deliberate manipulation of vulnerable teenagers” to embedding staff in Donald Trump's 2016 presidential campaign, working “hand in glove” with China's autocratic regime and complicity, in the writer's view, in the 2017 Rohingya genocide in Myanmar. The book is “petty, malicious and tremendous fun”, says The Spectator. It also paints an often horrifying picture of “a supranational colossus untroubled by local laws or ethical codes”, says the Financial Times. The book takes its title from F. Scott Fitzgerald's description of Tom and Daisy Buchanan in The Great Gatsby – a couple who “smashed up things and creatures and then retreated back into their money or their vast carelessness”.

How Sarah Wynn-Williams got involved with Facebook

New Zealand born Sarah Wynn-Williams, now in her mid-40s, had “a front row seat in Meta's growing-up stage”, working in Sandberg's public policy department from 2011-2017, says the FT. After growing up in Christchurch she graduated in law from the University of Canterbury and briefly practised law before joining New Zealand's diplomatic service, which posted her to Washington. She joined Facebook, excited about the potential of the platform. “After years of looking for things that would change the world, I thought I'd found the biggest one going,” she recounts. It didn't take long for disillusionment to set in. In 2017, Wynn-Williams was fired for what Meta/Facebook called “poor performance and toxic behaviour”. She maintains it was after she'd filed a claim of sexual harassment.

“Everyone who cares about free speech” or “the deeds of the powerful and unaccountable” should buy this book, observed The Times after Wynn-Williams' appearance at Hay-on-Wye. It seems readers have taken the message to heart, notes The Bookseller. Sales soared by 305% week-on-week after her very public silencing.

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Global flows into exchange-traded products (ETP) fell slightly during May compared to the previous month, according to analysis from asset manager BlackRock.

Purchases of ETPs – which mostly comprise exchange-traded funds (ETFs) as well as some similar products – fell to $199.4 billion in May, from $212.4 billion the previous month.

The dip was driven mostly by a sharp fall in equity fund inflows, which dropped to $106.4 billion – the lowest month for global equity ETP inflows since January.

Similarly, analysis from investment research firm Morningstar found that European ETF and ETC flows fell from €40.2 billion in April to €38.0 billion in May.

“Investor demand for ETFs remained resilient in May, even as flows moderated slightly from April’s peak,” said Jose Garcia-Zarate, senior principal at Morningstar. “Equities continued to dominate allocations, supported by strong market performance and sustained interest in US exposure.”

Which ETP sectors saw the largest flows during May?

Recent analysis of the most popular funds and stocks with DIY investors on Interactive Investor revealed a split between cautious strategies and risk-seekers, a trend also borne out by BlackRock’s analysis.

While fixed-income ETPs recorded their largest month of inflows on record ($87.7 billion), suggesting a cautious market, within equity ETPs technology was the most popular sector, attracting $14.4 billion of inflows.

Besides tech, the only sectors to record meaningful inflows were industrials ($2.7 billion) and energy ($1.5 billion), according to BlackRock.

Morningstar’s data also pointed towards high demand for tech ETFs. Garcia-Zarate attributed much of this demand to the forthcoming SpaceX IPO.

“VanEck Space Innovators ETF (LON:JEDG) [was] among the top 10 flow-gathering ETFs in May,” he said.

Unsurprisingly given the demand for tech-focused ETFs, funds targeting the US saw the largest inflows. Of regionally focused ETPs, BlackRock’s analysis found only those targeting the US received positive flows – and even these dipped to $103.3 billion, from $121.9 billion in April.

Emerging market equity ETPs saw monthly outflows of $40.4 billion, the largest negative flows of any region’s ETPs.

OpenAI, the company behind ChatGPT, has joined the race between the three tech giants set to list in 2026, each tipped for a landmark initial public offering (IPO).

One week after Anthropic filed its own paperwork to the US regulator, the Securities and Exchange Commission (SEC), and in the same week as SpaceX is expected to float, OpenAI kicked off its own IPO process.

In a brief post on its website on Monday 8 June, OpenAI said: “We recently submitted a confidential S-1. We expect it to leak so we’re just announcing it. We have not decided on timing yet; it may be a while because there are things we want to do that are likely easier as a private company. But it’s a complicated set of tradeoffs and this gives us the option to go public sooner if that ends up being best.”

Filing a ‘confidential’ S-1 form means the SEC can review a company’s financials before having to make them publicly available, which can mitigate the level of market speculation ahead of an IPO.

How much is OpenAI worth?

At the end of March, OpenAI closed its latest funding round, with $122 billion of committed capital co-led by SoftBank, which – post-money – values the AI company at around $852 billion. Dwarfed by the $1.75 trillion SpaceX is said to be valued at, OpenAI ranks behind Anthropic’s latest valuation of $965 billion.

It said it was generating $2 billion in monthly revenue, a growth rate it claims is four times faster than “the companies who defined the internet and mobile eras, including Alphabet and Meta”.

At the time, the company also extended its availability to bank channels in a bid to attract investment from individual investors, which include via several exchange-traded funds (ETFs) from ARK Invest, which own the stock.

OpenAI’s democratic third phase

Alongside confirmation of its S-1 filing, OpenAI said it was entering its third phase.

Having spearheaded the consumer-facing AI boom when it launched ChatGPT in 2022, as of February it had around 900 million weekly active users and more than 50 million paying subscribers.

OpenAI has set out its three main goals: to build an automated AI researcher; accelerate the economy; and give everyone on earth an artificial general intelligence (AGI).

A blog by CEO Sam Altman and chief scientist Jakub Pachocki dated 8 June said its first phase had been about doing research toward AGI, its second began "when our research became relevant to the real world and we became a product company."

"Now we are entering the third phase. The economy is beginning to reshape around AI. The central question now is how to make advanced AI abundant, affordable, safe, useful and easy enough for every person and organisation to benefit from it."

In the article, they said rather than concentrating AI’s power in too few hands, which history shows creates fragility, the future needs a broad distribution of that power, which makes societies more "resilient, adaptable and free".

"That is why access matters. It is also why safety, privacy, affordability, open ecosystems, and public oversight matter," they said.

Younger people should be given the choice to take a year of their state pension early in exchange for working longer, a think tank has said, in a report that takes aim at intergenerational wealth unfairness.

The so-called ‘Citizens Advance’ would give people a choice – receive a lump sum now in exchange for postponing the point at which they start receiving their state pension.

Only those who had built up 10 years’ worth of National Insurance contributions would be eligible.

At the current full new state pension rate for a year, those using such a scheme could be given up to £12,547 decades before state pension age.

The proposal, put forward by think tank the Social Market Foundation and Andrew Lewin, the Labour MP for Welwyn Hatfield, highlights how family wealth levels can “alter the course of people’s lives”.

While only a third of adults expect to benefit from an inheritance, those who do will share in some estimated £5.5 trillion expected to be passed down by Baby Boomers in the “Great Wealth Transfer”.

“As the Great Wealth Transfer takes place, the sense of injustice around wealth inequality may only therefore increase without government action. Something has to give,” said the report’s authors.

Rachel Vahey, head of public policy at AJ Bell, said: “The obvious potential benefit to this particular proposal is it could deliver a much-needed cash boost at a time many people really need it, particularly if they’re trying to repay debt or save for a deposit on a first home.

“The downside is that in doing so they would have one year less of state pension income to rely on in later life.”

We look at how much you need for a comfortable retirement in a separate article.

Early state pension lump sum

Support for the policy suggestion was, perhaps unsurprisingly, strong among 25 to 40-year-olds, who might expect to be the key beneficiaries, according to the report, which surveyed 2,000 adults, did AI-led qualitative interviews with 300 respondents and carried out three focus groups.

Most in the 25 to 40 year old age group were in favour of a Citizens Advance, irrespective of whether they would take it, with 54% positive versus just 6% negative. The rest were ‘neutral’ on the idea.

A majority of this age group said they would take such an advance if it was offered, ranging from 50% to 70% depending on the value of the lump sum, length of state pension given up and restrictions on how it can be spent.

The SMF report suggested an early cash advance lump sum could help revive home ownership dreams among the young – with more than two-thirds of 18 to 40-year-old non-homeowners currently of the view property ownership is a dead idea for their generation.

But the report also finds over-indebtedness is increasingly widespread, and a lack of wealth is holding people back from starting a business or family – debt repayment was the most popular intended use of a Citizens Advance, chosen by 18% of respondents to an SMF survey.

People asked in the SMF survey also described the value of the policy in emotional terms, not just financial, calling it “empowering” and allowing them to take matters into their own hands.

What would an early state pension lump sum cost?

A policy to give a year of state pension early could be delivered for £1.3 billion in year one, depending on how eligibility is set, according to the SMF report.

The size of the lump sum, whether it is taxed, who is eligible and how it is rolled out could all affect how much the policy might cost.

An untaxed £12,500 Citizens Advance would cost an estimated £1.3 billion in its first year if it was only made available to those reaching 10 years of National Insurance credits and born from 1998 onwards – i.e. those turning 28 this year.

If it were implemented, only those who went straight into work would be able to claim the lump sum in year one of the policy, with others in the 1998 cohort becoming eligible in the following years depending on their post-18 educational pathways.

Modelling by the SMF suggests costs would grow towards £7 billion as all groups and younger cohorts become eligible and take the Citizen’s Advance over subsequent years, after which costs would increase in line with the state pension.

Costs would be higher, at least in the first few years, if the policy was made available to multiple age cohorts at once. It would take an estimated £27 billion in year one to offer the lump sum to 28 to 35-year-olds, for example, or over £45 billion for those up to 40.

Tax on proposed state pension lump sum

Annual costs are estimated to fall towards £8 billion a year over time as take-up becomes driven by those becoming newly eligible, according to the report.

Making the lump sum taxable would cut costs by a third, as would restricting it to people

earning under the higher income rate (£50,271). Limiting its uses, such as to housing only, is another way of bringing the upfront costs down.

Vahey from AJ Bell said: “A proposal along these lines would present cashflow challenges for the Exchequer, as it would need to pay the money out on demand to anyone who qualifies, whereas at the moment state pension entitlement only kicks in at state pension age.

“Even if early access was offered on the most conservative basis, this would amount to a rise in today’s government spending which would only be offset in decades, potentially creating pressure on the public finances at a time when they are already stretched to breaking point.”

Santander has launched a new rewards credit card, offering a competitive 3% cashback offer on a range of everyday spending.

Customers can get the cashback by using the card on everyday travel, eating out, and takeaway spending for the first 12 months.

There’s no annual fee and no cap on the amount of cashback you can earn, making it a more attractive deal than some others on the market.

As well as the 3% cashback rate on the above purchases, users can earn 0.25% cashback on all other spending indefinitely.

In your second year after getting the card, the cashback rate on travel, eating out and takeaway spending falls to 0.25%.

The Santander Rewards credit card has a representative 24.9% APR (variable).

Jessica Sheldon, MoneyWeek's deputy digital editor, said: "Cashback can be a helpful reward if you were going to spend the money anyway, but with any credit card, always make sure you can pay off the statement balance in full by the due date."

How does Santander’s Rewards credit card compare to other cards?

Santander’s deal is directly competing with other popular cashback credit cards, like those from Chase, which offers 2% cashback up to £20 a month on certain expenditure,

While Santander’s cashback offer is competitive, it may not make sense for everyone.

The 3% rate is very generous, but remember that you only get this rate on two categories of spending in the first year and get the lower 0.25% on everything else.

That means you may earn more money by using cards paying lower rates of cashback.

The Lloyds Ultra card pays 1% cashback on all spending via the card for the first year.

For example, if you spend a total of £1,300 a month (assuming £100 on takeaways, £200 on travel, and £1,000 on everything else), you can expect £13 cashback with Lloyds. With Santander’s Rewards credit card, you’d get £11.50 back.

However, if you adjust the amount spent on these categories, the cashback available via the Santander card may rise.

For instance, if you spent £300 on travel, £200 on takeaways, and just £800 on everything else, the Lloyds Ultra card would pay £13 of cashback, but you’d get £17 with the Santander Rewards credit card.

Before you apply for a credit card with Santander, it is a good idea to look at which categories you spend the most on and work out if your travel and eating expenses are high enough to justify getting the card, or whether you may be better off with a different card.

Santander Rewards credit card: What can you get cashback on?

The Santander Rewards credit card pays 0.25% cashback on all spending for the first 24 months, but you can get a higher 3% rate on certain everyday travel and spending on eating out and takeaways for the first year.

The travel category includes things like buying petrol, diesel, or charging your electric vehicle. It also extends to public transport fares on trains, buses, and the London transport system, as well as taxi spending.

Meanwhile, the eating out and takeaway category includes spending at restaurants, coffee shops, and food delivered to you. Cashback earned is paid monthly.

On top of the cashback, the Rewards credit card can be used abroad without incurring any additional foreign exchange fees.

Unlike some other credit cards that offer cashback, there is no fee for the Santander card.

Who can open a Santander Rewards credit card?

To be eligible for the credit card, you must be a permanent resident of the UK and be over the age of 18.

You must also have a guaranteed annual income of £10,500 or more and have a good credit record. Acceptance for the account is subject to a credit check by Santander, which will determine whether you can be accepted and the maximum credit limit they can offer you.

You can only have one Santander Rewards credit card.

Is the Santander Rewards credit card worth it?

While the 3% cashback rate looks generous, few people will be able to get a truly significant cashback just from spending on travel, eating out and takeaways.

For example, if you commute to work every day and it costs around £10 per day, you will spend around £200 a month on travel. With the Santander card, you will receive 3% of this as cashback, which is just £6.

If you spend an extra £100 on eating out and/or takeaways a month, this will add an extra £3.

If you spend around £1,000 a month on everything else, you will receive 0.25% of this as cashback, or around £2.50.

Together, that means you will receive £11.50 a month in cashback. Assuming that your spending stays the same for a year, you can expect to receive around £138 for the period.

Whether or not this amount is enough to justify setting up a new credit card or shifting where you spend your money depends on your personal circumstances and the current perks you get from your accounts right now.

We compare the best cards for flight points and airline rewards in a separate article.

Planned changes to the mortgage market could make it easier for older homeowners to access tens of thousands of pounds of wealth built up in their property.

The Financial Conduct Authority (FCA) wants to update affordability guidance for retirement interest-only mortgages, as part of a consultation into the wider home borrowing market launched today (9 June).

Rising house prices mean older borrowers collectively have billions of pounds of housing wealth locked up in their homes. But many are reluctant to move. Retirement interest-only mortgages can offer a solution.

To help older borrowers access some of this housing wealth, the regulator is proposing to make changes that would mean affordability for joint retirement interest-only mortgage applications are assessed in the same way as for standard joint mortgages.

In practice this would mean lenders would not be obliged to always consider a sole borrower’s ability to afford the mortgage if the joint borrower passes away.

By removing this rule, lenders would be able to more flexibly determine – based on

their risk appetite and in line with mortgages conduct and consumer protection rules – how to assess whether the surviving spouse or civil partner could still afford the required payments or what their exit strategy may be.

David Geale, executive director for payments and digital finance at the FCA, said: “We’re living longer and how many people work has changed. Our mortgage rules need to keep pace so those who can afford to repay can borrow.

“Stronger protections mean we can now safely widen access to mortgage borrowing for those that may be underserved.”

What are retirement interest-only mortgages?

Retirement interest-only mortgages (RIOs) are designed for borrowers over 50 or 55. You only pay the interest each month, and the loan is only repaid when you pass away, move into long-term care, or sell your property.

RIO mortgages can help older homeowners because it can get harder to get a new mortgage as you get closer to retirement. A RIO lets you mortgage your home in later life or provides an alternative to equity release.

We compare equity release versus downsizing in a separate article.

How does a retirement interest-only mortgage work?

A retirement interest-only mortgage is similar to a lifetime mortgage where the loan is usually only paid off when you sell the house, die or move into long-term care.

But retirement interest-only mortgages have different risks compared to lifetime mortgages. In particular, they do not feature the roll-up of interest, meaning homeowners don’t run the risk of the equity in their home being eroded – allowing them to leave more to their loved ones in the form of an inheritance.

Retirement interest-only mortgages require a borrower to manage the ongoing monthly payments, whereas a lifetime mortgage does not require monthly payments.

Demand for retirement interest-only mortgages

FCA data showed there is demand for mortgage products among older homeowners. Yet sales of retirement interest-only mortgages remain low compared with lifetime

mortgages – 3,002 RIOs versus 26,974 lifetime mortgages in 2025, according to FCA figures.

Firms have told the regulator, including in responses to its discussion paper, that the availability of retirement interest-only mortgages are constrained due to its current guidance being too restrictive.

Richard Pinch, head of banking and credit advisory at financial services consultancy Broadstone, said: “The FCA’s proposals represent a sensible evolution of the mortgage market, recognising that traditional affordability assessments do not always reflect the realities of modern working patterns, income streams and borrowing needs.

“The regulator is seeking to give lenders greater flexibility through affordability assessments that better reflect real borrower behaviour and lifetime earnings patterns. The proposals could be particularly beneficial for groups that have historically found it more difficult to access mortgage finance, including the self-employed, those with variable income and older borrowers.”

Mortgage help for self-employed

The FCA is also seeking to do more to help self-employed people get mortgages. The self-employed have typically struggled to get home loans due to often having inconsistent income, making lenders more reluctant to lend to them, seeing them as more risky.

FCA product sales data from 2025 shows around 6% of mortgage sales included at least one borrower whose employment status was recorded as “self-employed” at application. This compares to around 13% of the workforce who are self-employed, including around 1-2% who are independent contractors or locums.

Proposals include reducing barriers for lenders to offer flexible repayments for people with variable income, like the self-employed, and lend to those paid in foreign currency.

The FCA is also encouraging lenders to assess affordability based on a person’s “full and current situation”, rather than automatically excluding people because of minor or past credit history issues.

Sarah Coles, head of personal finance at AJ Bell, said: “Developing products to better suit people’s lives makes perfect sense. Self-employed people with lumpy incomes have been forced to contort their finances into paying the same sums each month under existing rules.

“A change could allow them to access products that are flexible enough to fit around their lives and their needs instead.”

HMRC is increasingly hitting bereaved families with penalties for filing inheritance tax returns late as they struggle with long, complicated forms, according to data from a Freedom of Information request.

The number of penalties issued by HMRC for filing inheritance tax (IHT) returns late increased 35% from 3,850 to 5,200 over the last five years, data up to the tax year 2024/25 obtained by TWM Solicitors showed.

Fines for late filing rapidly increase over time, from an initial £100 to up to £3,000 after 12 months.

Many families with modest estates have been drawn into paying IHT in recent years, largely because the IHT threshold has remained frozen since 2009. Even an average house can now trigger an IHT bill on its own.

But Duncan Mitchell-Innes, partner and deputy head of private client at TWM, said the increase in late penalties is also being driven by more families attempting to complete IHT returns themselves, without realising the complexity involved.

“People often underestimate the complexity of the UK’s IHT rules. What seems like a straightforward task can quickly become time-consuming and technically challenging, particularly when HMRC requires extensive supporting evidence. This can lead to penalties if deadlines are missed,” he said.

Complex IHT forms

The basic IHT400 form alone has 122 questions, often requiring detailed financial and historical information.

This is the main form families will need to fill in for inheritance tax purposes. But in many cases, it must be supplemented by additional schedules – requests for information – of which there are more than 30, depending on the nature of the estate.

One of the most time-consuming parts of an IHT return, according to lawyers, relates to the valuation of assets. Many assets, such as residential property, need to be valued professionally – market estimates are not enough.

In addition, some assets, such as shares, have specific ways of being valued for IHT purposes. Getting these valuations completed on the correct technical bases can be time consuming without prior technical knowledge.

Delays can also arise where executors struggle to identify all the relevant details needed for the IHT400. This can include tracing all bank accounts, investments and historical gifts, which sometimes go back many years – for instance due to the seven year rule. Many banks only provide this information by post.

Missing out on inheritance tax reliefs

Mitchell-Innes said it can be hard for people handling their loved one’s IHT return on their own to identify all the relevant technical reliefs and exemptions that may apply, together with gathering the evidence to support them.

For example, gifts made out of surplus income or more than seven years before death may be exempt, but finding evidence to support that exemption can take time.

Some families handling their own return even lose out on reliefs and exemptions available to them simply because they do not know they exist.

“Reliefs aren’t applied automatically. People must actively claim reliefs and exemptions and find the evidence to support them where needed, which can be time-consuming. Without proper advice, families risk penalties and leaving valuable reliefs unclaimed,” said Mitchell-Innes.

The number of penalties for late filing of inheritance tax returns is likely to increase further after unused pension pots are brought into the IHT net from April 2027, leading to more families having to submit a return.

The development is expected to increase the demands on personal representatives – those in charge of administering the estate left behind after a death – to get the pension IHT paperwork right, or face potential fines themselves.

Barclays has ditched its monthly fee for retail investors in a major move which could save customers hundreds of pounds a year.

Customers using Barclays Direct Investing, formerly Smart Investor, previously paid 0.25% on balances up to £200,000 and 0.05% on anything more monthly, but will now pay nothing with immediate effect.

The removal of the monthly fee by Barclays means someone with a £300,000 holding will save £550 a year. Stacked up over a number of years and the savings could reach into the thousands of pounds.

The cut applies to the trading platform fee and investors still need to pay FX charges, and fees for telephone trading and buying and selling stocks. Buying and selling funds remains free.

Sasha Wiggins, chief executive of Barclays Private Bank and Wealth Management, said: “By removing our Direct Investing customer fee, we are helping to make it more straightforward for people to take the next step and invest with confidence.”

Barclays’s decision follows several other providers responding to competition in the market by cutting fees.

Some providers have also come under pressure to reduce their fees as consumers wise up to the real impact on returns.

Earlier this year, Hargreaves Lansdown shook up its fee structure, including lowering its annual platform fee from 0.45% to 0.35%, which works out better for some customers.

In February, interactive investor (ii) introduced a new pricing plan which saw flat fees reduced on most accounts depending on their size (though some fees increased).

Holly Mackay, chief executive officer and founder of consumer advice website Boring Money, said the move from Barclays has seen it leapfrog Hargreaves Lansdown, ii, AJ Bell and Fidelity to join Freetrade as the cheapest platform in the UK for those holding funds.

Mackay said that because Barclays already charges no fee to trade funds, removing the account fee means “anyone buying funds who banks at Barclays already and has the app will struggle to make a case to buy funds anywhere else”.

“This is a very big move which will shake up the direct investing market. Barclays is drawing a bold line in the sand which will take the fight to challenger fintechs,” Mackay added.

“I think we’re entering a new phase of very strong competition and I would be very surprised if other big brand platforms didn’t respond.”

How does Barclays compare to other platforms after the change?

How Barclays compares to other platforms following the change depends on your holding and what type of investments you trade in.

According to analysis by Boring Money, for a customer contributing the maximum annual £20,000 into a stocks and shares ISA and buying two funds per year, the lowest cost providers are now Barclays and Freetrade (both £0).

Banks HSBC and Santander would cost £50 and £70, respectively, while Hargreaves Lansdown, ii and AJ Bell would cost £73.90, £79.86 and £53, respectively.

Boring Money also looked at annual costs based on trading ETFs. Based on eight trades per year, Barclays would cost £48 in total. This is based on each trade costing £6 and no monthly account fee.

AJ Bell would cost £82 per year and Halifax £112 per year.

Below is a breakdown of how much your annual platform fee would cost based on eight fund trades per year.

Credit: Boring Money (platform fee cost based on eight fund trades per year)

Do note, it’s worth factoring in other investment costs when deciding which platform is best for you, plus the choice of investments you’ll have on each platform.

While Barclays has ditched its monthly fee, customers have less funds to choose from compared to AJ Bell. Barclays customers can choose from around 2,500 funds but AJ Bell offers over 4,000 to pick from.

Stock markets sold off late last week as strong economic data combined with underwhelming results from one semiconductor giant pushed investors towards the exits.

The S&P 500 fell 2.6% on Friday 5 June, with Broadcom (NASDAQ:AVGO) – the index’s seventh-largest constituent – shedding 7.9%. It marked three consecutive sessions of losses for the company, which is viewed as one of Nvidia’s key competitors in the lucrative artificial intelligence (AI) semiconductor market, during which Broadcom’s shares fell 19.9%.

As can be the way with crowded trades, Broadcom’s woes soon spread to other stocks and funds.

The Nasdaq Composite – which contains all shares on the tech-dominated index – fell 4.3% in the two sessions to 5 June. The iShares Semiconductor ETF, which tracks the NYSE Semiconductor Index, fell 12.3% over the same period.

Which factors have contributed to the stock market selloff?

While the selloff was sparked by Broadcom, more macro factors came into play later in the week.

US labour data was released on Friday 5 June. It showed an unexpectedly strong job market, with 70,000 new jobs added in May (compared to a monthly average of 14,000).

This labour market strength reduces the likelihood of a cut to US interest rates, and in fact increases the chances that the Federal Reserve (Fed) could raise rates amid fears of higher inflation as a result of the war in Iran.

High interest rates are negative for equities, particularly tech stocks, because they tend to restrict the amount of future growth in an economy.

“Friday's US jobs report sparked a firestorm of selling, with big tech bearing the brunt of the wobble in confidence,” said Susannah Streeter, chief investment strategist at wealth manager Wealth Club. “Indices in Asia have been hit by the contagion of pessimism, with semiconductor stocks falling sharply.”

On 8 June, the US tech selloff combined with fears that the fragile ceasefire in Iran might be shattering led to the Korean stock market pausing trading for 20 minutes following a decline of more than 8% – having already had to trigger a circuit breaker in March following the start of the conflict.

Korea’s stock market is dominated by semiconductor stocks SK Hynix and Samsung, both of which fell late last week.

Why did Broadcom’s shares sell off?

On 3 June, Broadcom announced its results for the second quarter (Q2) of the 2026 fiscal year.

Revenue increased 48% year-on-year to $22.19 billion. This was a slight miss on analysts’ expectations; those polled by the London Stock Exchange Group yielded a consensus revenue estimate of $22.27 billion.

This miss was compounded by the fact that Broadcom reiterated its guidance of $100 billion in AI chip sales for 2027.

These might not sound like significant problems, but the market has got used to AI companies exceeding analyst targets and frequently raising their outlooks.

“Although the huge earnings it's raking in are highly impressive, a very high bar has been set,” said Streeter.

Because Broadcom is a supplier to the broader AI industry, the appearance that its growth trajectory might be decelerating led to fears that demand for other AI-related stocks might slow.

Is there an AI bubble, and is it bursting?

Since the explosive growth of AI stocks from 2023, many investors have been wary of the prospect of an AI bubble.

Valuations of big tech stocks, particularly the Magnificent 7 and close competitors like Broadcom, rose rapidly on expectations that the future growth of AI would drive rapid increases in revenue and profits for many years to come.

These heightened expectations leave these stocks susceptible to any slight counter to the narrative of continued, rapid growth. Expectations are very high, and moments like Broadcom’s underwhelming guidance undermine the exuberance that the market has become accustomed to.

“Given how heady tech valuations have become, it's not surprising that investors are reassessing allocations and opting for companies with more reliable income streams and dividends,” said Streeter. “There had already been undercurrents of worry about the surge in tech stock prices and fears that today's insatiable demand for the apparatus needed to support AI products and services would eventually wane.”

Should you join the stock market selloff?

Whether or not you sell stocks following the recent market pessimism is going to be a factor of your current portfolio and risk preferences.

As a general rule, though, it is often best to avoid knee-jerk reactions to short-term market moves.

Making regular investments can help to take the emotion and decision-making out of investing, and can mean you buy stocks at lower prices during short-term downturns.

You could also see the current pessimism around tech stocks as an opportunity to look to other sectors.

“Tech is starting to fall out of fashion, while companies operating in the 'real economy' may be more sought after – those selling consumer staples, providing healthcare, or keeping the lights on through utility services,” said Streeter.