The Telegraph reports that Shabana Mahmood previously backed increasing the top rate of income tax to 50p, raising fears Andy Burnham’s likely pick for Chancellor will support plans to break Labour’s manifesto and raise taxes on workers again. The news comes after Mr Burnham admitted he “may have to ask for a little more” to balance the books. Ms Mahmood also opposed reducing Capital Gains Tax when George Osborne cut the main rate from 28% to 20% and has backed a mansion tax, windfall taxes on oil companies and levies on tech giants. The paper profiles Mahmood, noting that she served as a shadow Treasury minister under Ed Miliband before briefly becoming shadow chief secretary to the Treasury. She’s instinctively interventionist and although the City prefers her to Miliband, finance bosses question her lack of financial experience. The Guardian and the Times report that some Labour MPs are also concerned about Mahmood’s lack of experience while one Ed Miliband supporter said she would not be “intellectually in tune” with the Labour Left’s hopes of “rolling back 40 years of neoliberalism.”

Rain Newton-Smith, the chief executive of the CBI, has cautioned Andy Burnham against creating a “summer of speculation” regarding tax and spending as he assumes Labour leadership. She stressed the need for a stable fiscal plan, saying: “What business wants to see is evolution, not revolution.” Newton-Smith pointed to the importance of addressing business costs, particularly high energy bills, and suggested public-private partnerships for funding projects. She also noted that UK electricity costs are 45% above the G7 average, urging Burnham to consider the impact on businesses while navigating his new role.

The Centre for Policy Studies (CPS) has warned against increasing Capital Gains Tax (CGT), stating it could reduce Treasury revenue. A proposed 10% rise in CGT could cost £3.6bn over three years, as wealthy taxpayers relocate. Daniel Herring, Head of Economic and Fiscal Policy at CPS, noted that 32,000 taxpayers contribute 80% of CGT, with 5,000 responsible for half. Incoming Prime Minister Andy Burnham hinted at potential tax increases for the wealthy, stating that fairness may require asking more from taxpayers. He faces pressure from Labour to equalise CGT with income tax.

Steve Rotheram, the mayor of Liverpool and a close ally of Andy Burnham, has downplayed concerns that a wealth tax would drive the super-rich out of the UK. Rotheram said: “We get this all the time… these threats happen all the time.” He acknowledged the poor optics of wealthy individuals leaving, but argued that as long as their business interests remained in the country it was ok.

The International Monetary Fund (IMF) has warned Andy Burnham against increasing public spending due to the challenging UK outlook. The IMF’s annual health check highlighted the need for a “cautious approach” to fiscal pressures, urging the Government to focus on reallocating resources rather than raising total spending. The IMF also warned that tax increases on higher earners would harm work incentives and even reduce receipts. The fund also suggested reforms to VAT and property taxes to address short-term fiscal gaps. The IMF’s warning came a day after the OECD said Britain’s record tax burden meant the new Prime Minister would have to focus on spending cuts to balance the books.

Britain’s economy grew by 0.1% in May, according to the Office for National Statistics (ONS), despite rising fuel prices due to the Iran conflict. This follows a 0.1% decline in April, marking a rebound.. Services drove the growth, increasing by 0.3%, while construction fell by 0.8%. Yael Selfin, chief economist at KPMG, said: “The warmer weather in May provided a welcome boost to businesses, with stronger consumer spending helping to drive growth in consumer-facing services. However, while this should provide a tailwind for the services sector, it may not be enough to offset weakness across other parts of the economy.”

Growth expectations among small and medium-sized enterprises in Britain have fallen to their lowest level in over a decade, according to the Federation of Small Businesses. Only 16% of small businesses anticipate growth in the next year, while nearly 30% expect to shrink, sell, or close. The survey of 1,113 business owners highlighted economic conditions, taxes, and labour costs as significant barriers to growth. Tina McKenzie, policy chairwoman, commented: “We cannot and must not accept a new normal where more small firms believe they will shrink, sell up or close than anticipate growing.”

The UK is experiencing a surge in venture capital investment, writes Nicole Lowe in City AM. KPMG’s UK head of emerging giants says it is important that this momentum is maintained to avoid complacency. AI start-ups are driving the boom and if the UK can remain an exciting option, “innovators will break through, succeed and help the UK to cement its place as the best destination for global investment for many years to come.”

Fewer than 25% of employers anticipate providing above-inflation pay rises this year, according to a poll by the Work Foundation. Only 22% of business leaders plan to increase wages, with small firms particularly affected – just 16% expect to offer raises that exceed inflation. This contributes to stagnating living standards for most workers. Ben Harrison, director of the Work Foundation, commented: “Repeated periods of stagnant wage growth and sustained increases in the cost of essentials have left many households with little financial resilience.”

The UK job market recorded 1.7m job adverts in June, a 9% increase from May and an 11% rise year-on-year, according to the Recruitment and Employment Confederation (REC). Notable increases were seen in vacancies for delivery drivers, entertainers, and pest control officers. Lorraine Laryea, REC’s chief standards officer, stated: “There is a clear uptick in firms taking action on long-held hiring plans.” However, she warned that “real recovery relies on an economic plan that sustains growing confidence, not action that once again deflates it and derails companies’ plans.”

Andy Burnham is preparing to announce new drilling for oil and gas in the North Sea within days of taking office, Bloomberg reports. The incoming Prime Minister will also take the heavily indebted Thames Water into public control. Which oil fields are approved for new drilling will depend on who Burnham installs as Energy Secretary as project approvals are not a cabinet decision. Thames Water has been trying to negotiate a rescue deal but talks between Ofwat and senior creditors are on hold whilst power transitions to Burnham. He may prefer a temporary solution in the form of a special administration or opt for mutualisation, making the company a not-for-profit cooperative. The FT also reports on expected policy announcements, including plans for a free national care service that could cost up to £18bn a year.