American businesses are increasingly hesitant to invest in the UK, with confidence levels dropping to 6.4, according to the BritishAmerican Business (BAB) transatlantic business confidence index. This follows Labour’s perceived failure to deliver on growth promises, including lower energy bills and increased housing. Duncan Edwards, BAB chief executive, commented: “The reality is that the marginal benefits in the UK are either narrowing or disappearing.” Meanwhile, UK companies show improved confidence in the US, rising from 7.5 to 8.1. Overall foreign direct investment in the UK fell by £14bn last year.

The UK may be experiencing a productivity boom, with output per job increasing by 1.4% in the year to June, according to the Office for National Statistics (ONS). This follows a change in measurement methods, which previously indicated a mere 0.2% growth. Economists, including John van Reenen from the London School of Economics, suggest that artificial intelligence (AI) is driving this recovery. However, the long-term impact of AI on jobs and productivity remains uncertain, with ongoing debates about its effects on the labour market.

Investors have reacted to surging oil prices by selling off government bonds, raising borrowing costs. Oil prices jumped 6% to over $107 due to concerns about Houthi rebels threatening Saudi exports. In the UK, 10-year government bond yields surged above 5.37%, the highest since 2007, complicating Chancellor John Healey’s upcoming Budget. In the US, long-term borrowing costs surged to their highest level in nearly 20 years, with the 30-year bond yield reaching 5.35%. The European Central Bank (ECB) raised interest rates from 2.25% to 2.5%, but the Bank of England is expected to keep its rate at 3.75% next week. The US Federal Reserve is expected to join the ECB in raising rates.

The Prime Minister Andy Burnham and Chancellor John Healey have been warned against using an “accounting trick” to increase borrowing amid volatile bond markets. Analysts at Oxford Economics predict the Government may resort to extra borrowing through public financial institutions (Pufins) to fund infrastructure and housing investments. However, this could jeopardise fiscal credibility and cost the Government up to £9bn more due to rising gilt yields.

Despite Labour backbenchers and businesses warning that new tourist taxes will damage the economy, Labour mayors across England are planning to impose a 5% levy on overnight stays in hotels, holiday lets and bed and breakfasts, according to the Telegraph. UKHospitality estimated the tax would cost the industry at least £1.6bn. Emma Lewell, the Labour MP for South Shields, described the move as “anti-growth” while hotelier Sir Rocco Forte called the policy a “disgrace”. Ten Labour mayors have said they will impose the tax, while two Conservative and two Reform mayors have said they will not.

According to a Gartner survey, 93% of 161 chief audit executives reported using AI, yet 60% lack a formal strategy. Only 15% have defined use cases for the technology. James Bourke, director analyst at Gartner, said: “To move beyond fragmented adoption and realise the full value of AI, audit leaders must develop a clear, formal strategy that aligns AI initiatives with audit’s core objectives.”

The Tony Blair Institute (TBI) has urged the UK Government to enhance the country’s manufacturing capacity to capitalise on the artificial intelligence (AI) boom. The institute recommends increasing manufacturing’s share of gross value added from 8% to 10% by 2031, aiming for a 20-year high, with a future target of up to 14%. It warns that physical inputs for frontier technologies like AI and robotics will become critical bottlenecks.

Delays in upgrading Britain’s £70bn electricity grid could lead to higher household bills, according to the National Audit Office (NAO). The NAO’s report highlights that Labour’s decarbonisation policy adds £1.9bn annually to energy costs due to payments for wasted wind power. These constraint costs could reach £12.7bn by 2030. The report also criticises the lack of accountability in managing grid upgrades and the slow response from energy regulator Ofgem.

The City of London Corporation is considering allowing companies to display their logos on office buildings, potentially reversing rules protecting the district’s historic character for more than a century. Councillor Shravan Joshi said the change could help keep the financial district competitive and give firms greater visibility. Heritage campaigners, however, fear prominent signage could erode the City’s distinctive character and affect views of listed buildings such as St Paul’s.