Rolling coverage of the latest economic and financial news
There is some encouraging economic news this morning – retail spending across Britain jumped by 1.2% in May.
Hot weather and sales offers encouraged consumers into the shops last month, meaning retail sales volumes more than bounced back after a 1% fall in April. Volumes were 3.2% higher than in May 2025.
“Retail sales volumes rose 3.2% year-on-year, helped by the hottest UK May day on record and a late bank holiday. But, if you look at the three-month trend, sales are up just 0.4%, pointing to a heat-driven spike rather than a turning point.”
“Department stores and online drove the lift. For non-store retailers they saw a 6.1% monthly rise, the largest since February 2025, taking online share to 28.8%. That channel shift is being reinforced by a structural one: our European research shows 38% of consumers now use AI to decide what to buy, with 63% to compare brands, prices and reviews.”
The deficit is still large, debt interest is still absorbing a painful share of revenue, and the tax burden is already heading for post-war highs. There is no easy escape route through either borrowing or taxation.
“That is why Andy Burnham’s by-election victory matters for the public finances. It does not change the arithmetic overnight, but it changes the politics around the arithmetic. A serious Labour leadership challenge would raise a simple question for markets: is the governing party about to shift towards higher spending, looser fiscal rules and a more relaxed attitude to borrowing?
A Burnham premiership might change the language of economic policy, but it would not abolish the arithmetic. The next Labour leader, whoever it is, will still face the same brutal equation: weak growth, high borrowing, expensive debt and very little room for manoeuvre.”
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