Andy Burnham, the leading candidate for Labour Party leader, has demonstrated ambition to replace council tax with a Land Value Tax (LVT) – a change that could significantly impact homeowners, particularly in high-value areas. The proposed LVT would charge based on land value rather than property value, potentially altering property prices. Other potential tax changes under Burnham include hikes to CGT and an “exit tax” to stop entrepreneurs leaving Britain to avoid higher charges. Anna Leach, the chief economist at the Institute of Directors, said the policy proposals swirling around Mr Burnham threaten to unsettle the economy again. “A concern here is we are once again speculating on tax changes that risk damaging growth for the third summer in a row. This cycle must be broken,” Ms Leach said.

Restaurants, pubs and bars have renewed calls for a reduction in VAT after new industry figures showed almost a quarter of venues are now operating at a loss. Under the “VAT’s the problem” campaign, hospitality leaders including chef Tom Kerridge are urging the Government to cut the sector’s VAT rate from 20% to 10%. Trade bodies say rising labour, energy and inflation costs are placing unsustainable pressure on businesses, with one in six warning they could close within a year. Supporters argue the UK rate is significantly higher than many European countries and that a cut would help protect jobs and high street venues.

The Trades Union Congress (TUC) is urging Andy Burnham to implement a significant tax increase on banks, proposing a windfall tax that could raise between £9bn and £60bn over four years. However, UK Finance warns that such measures could lead to job losses and reduced competitiveness in the City. Lord Jim O’Neill, a former Goldman Sachs chief economist who is advising Mr Burnham also warned against further taxes on business.

The UK economy grew by only 0.1% at the end of 2025, a revision down from 0.2%, according to the Office for National Statistics (ONS). Liz McKeown, director of economic statistics at the ONS, noted that services drove growth, but construction and production also contributed. Despite a 0.6% growth in the first quarter of 2026, experts warn that this may be short-lived, as GDP fell by 0.1% in April. Inflation remains a concern, currently at 2.8%, with potential increases ahead. Additionally, households experienced a 0.8% decline in real disposable income in the first quarter of the year due to rising inflation and higher taxes.

The City of London Corporation has revealed plans for a digital identity framework that could potentially unlock over £5bn for the UK economy. The proposed Digital Verification Orchestrator (DVO) aims to streamline identity verification for consumers, allowing them to reuse their verified information across financial services. Developed with EY, Hogan Lovells, and input from the Financial Conduct Authority (FCA), the model could generate £1.8bn and reduce fraud losses by £3bn over five years. Chris Hayward, policy chairman, said: “The need for secure, reliable identity verification has never been greater.”

Andrew Bailey, the Governor of the Bank of England, has said he was “not happy” that inflation is running above the BoE’s 2% target. Speaking to CNBC, Bailey insisted he was not complacent and backed the Bank’s chief economist, Huw Pill, in expressing his view that persistent high inflation was “problematic”. The UK’s CPI rate was 2.8% in April, the same as March, and is predicted to reach 3.2% later this year. The BoE recently kept rates unchanged at 3.75%.

Business confidence has declined sharply, with the Institute of Directors (IoD) reporting a drop in its sentiment index to minus 61 in June from minus 53 in May. Revenue expectations fell to their lowest this year, with a sub-index dropping to 11 from 27. Anna Leach, chief economist at the IoD, commented: “Despite a fragile peace in the Middle East, overall operating conditions worsened for businesses in June.” Additionally, 72% of businesses reported increased energy and fuel costs, with a fifth facing rises of at least 25%.

Sir Keir Starmer’s £298bn defence investment plan leaves Andy Burnham facing a £4.7bn funding gap in his first budget. The Conservatives described the plan as a “delayed-action poison pill” for the former Mayor of Manchester. Meanwhile, Wes Streeting has urged Labour to ramp up oil drilling in the North Sea to boost the economy. This comes despite the former Health Secretary backing a ban when he was in the Cabinet.

The Treasury quietly removed a numerical reasoning test from its graduate scheme in 2020 to improve candidate diversity. Uncovered by The Spectator through Freedom of Information requests, the decision followed a 2019 review suggesting the test had an adverse impact on candidate diversity. While the change successfully increased the diversity of successful applicants in 2020, critics have heavily condemned the move. The Treasury’s policy adviser graduate program previously required this specific test to evaluate basic candidate competency. Dr Zubir Ahmed, who Andy Burnham is reportedly considering to choose as his health secretary, said: “I’m sorry, but this is insane and helps no one.”

The Bank of England, alongside Germany’s Bundesbank and the Bank for International Settlements, is researching ways to combat market volatility caused by AI trading bots. Deputy Governor Sarah Breeden said officials are exploring mitigants, such as circuit breakers or kill switches, to prevent widespread meltdowns if faulty AI models engage in synchronised herding behaviour during periods of financial stress.