The Conservative Party leader has called on Andy Burnham to “rule out any tax rises or increased borrowing” to fund social care reform. In a letter to the Prime Minister, Kemi Badenoch said she would be willing to work with Labour to support reforms, but only if these two principles are followed and the changes are fair to those who have “made provisions and saved up over the course of their lives”. Meanwhile, Mr Burnham is reportedly planning to strip young people of their sickness benefits unless they agree to do training or voluntary work. The move aims to reduce the £333bn welfare bill and raise cash for social care and defence. Currently, some 430,000 people aged 16-24 are claiming sickness benefits with many not required to look for work. Finally, the Times reports that teenagers claiming sickness benefits for anxiety receive £100 a week more than those who take a part-time job on the minimum wage.

Britain’s biggest banks could be the target of windfall tax as the Government looks for ways to raise money. Lloyds, NatWest and Barclays are expected to reveal combined profits of almost £19bn this year, up from just under £16bn in 2025, and Shore Capital has warned that record profits could make the sector a target for tax hikes. The most likely option is an increase in the bank surcharge, currently a 3% corporation tax supplement on banks earning more than £100m. Restoring the rate from its previous 8% level could raise around £9bn over four years. Banks, however, warn that higher taxes could reduce lending, damage growth and hurt the UK’s competitiveness. Banks paid a total of £43bn in tax last year, according to PwC analysis.

Prime Minister Andy Burnham is set to give England’s regional mayors a share of income tax revenue and greater control over spending on local growth, infrastructure and jobs. The plans will expand fiscal devolution without giving mayors new tax-raising powers, marking a major change from the current system where most funding decisions are controlled by the Treasury. Mr Burnham has argued that Britain is one of the world’s most centralised countries, with only 5% of tax revenue currently controlled locally.

Andy Burnham is considering a £500 increase in the personal allowance, which has been frozen at £12,570 since 2021. This could save basic-rate taxpayers £100 annually, but experts warn it may strain public finances. Charlene Young, senior pensions and savings expert at AJ Bell, said: “While this would undoubtedly be immensely popular, it could prove an expensive tab to pick up for new Chancellor John Healey.” The cost of increasing the allowance could reach £5bn annually, but Ms Young points out that, had the allowance risen in line with inflation, it would now stand at more than £16,000.

The Scottish Government’s increase of the top income tax rate to 48% may have resulted in decreased tax receipts, according to lawyer Dan Neidle. His analysis revealed that Scotland collected £22m less in 2024-25, suggesting the country “may have fallen over the Laffer curve.” High earners reportedly adjusted their income strategies to minimise tax liabilities. Neidle’s research indicates a potential loss of up to £30m, while a 1p rise above the UK-wide level of 45% could have generated £53m. A Scottish Government spokesperson defended the tax policy, citing economic growth and increased taxpayer numbers.

Leaders from Aviva and Legal & General have urged the Government to increase minimum workplace pension contributions. Currently, employers contribute 3% and employees 5%. Research indicates that 41% of workers aged 25 to 55 will not save enough for retirement. Amanda Blanc from Aviva and Antonio Simoes from Legal & General advocate for a rise to 12% saying the minimum contributions of 8% was “still not enough to deliver the retirement most people expect.”

Retail sales in the UK increased by 1% in June, according to the Office for National Statistics (ONS). This growth follows a 1.2% rise in May. Online shopping reached its highest share of total retail sales since spring 2021, driven by promotions and warm weather. Non-store retailing saw a significant 4.4% increase, while department store sales fell by 1.7%. Hannah Finselbach, senior statistician at the ONS, said: “Internet retailers did especially well, with business telling us that this was because of promotions and the warm weather.” Fuel sales, however, dropped by 0.8% in June.

The UK economy is projected to experience a “sustained period of weak growth,” according to the EY Item Club. GDP growth is expected to slow to 0.9% this year and further to 0.7% next year, influenced by rising oil prices amid Middle East tensions. The fiscal headroom for Chancellor John Healey may have diminished significantly, potentially forcing tax increases or spending cuts in the upcoming budget. Inflation is expected to peak at 3.5%, with unemployment rising to 5.5%, the forecaster said.

The Bank of England is likely to maintain interest rates at 3.75% this week, despite rising mortgage costs. This comes amid ongoing tensions in the Middle East, with this having impacted the swaps market. Traders anticipate two rate increases this year, starting in September.

Chancellor John Healey and Energy Secretary Miatta Fahnbulleh have instructed energy suppliers to ensure a VAT cut on electricity bills is passed on to consumers. Scrapping VAT on energy bills – currently at 5% – comes as the Government looks to alleviate the cost of living for households and will save a typical family around £45 a year. The measure, costing £850m in 2026/27, will be funded by reallocating savings from a scrapped digital ID programme. Officials are collaborating with Ofgem to ensure compliance from suppliers.

The US is implementing new tariffs of 10% to 12.5% on around 60 trading partners, including the UK, China, and the EU, due to their failure to adequately address forced labour issues. This move follows a Supreme Court ruling that deemed previous tariffs illegal. US Trade Representative Jamieson Greer said the action “will begin to correct what is both a human rights abuse and distortive trade practice.” The Office of the US Trade Representative said the latest tariffs, which aim to protect American workers and ensure fair competition, cover 99.4% of US imports. Economists have warned that the measures may increase prices for consumers. Legal challenges from affected countries are anticipated, with retaliatory duties also possible.

Kanishka Narayan, the new AI minister, has said that chip manufacturing and drones will be central to Andy Burnham’s plan to reindustrialise Britain.

AI usage among UK businesses has surged, with 54% now actively employing the technology, up from 23% three years ago, according to the British Chambers of Commerce. Ruchir Rodrigues, client strategy & commercial director at Lloyds, notes that while many SMEs are investing in AI, only 7.5% feel confident in understanding its benefits. The report says trust issues and data privacy concerns hinder adoption.