Michael Simmons

Rachel Reeves has been warned again that the slim headroom against her ‘ironclad’ fiscal rule could be wiped out if growth prospects worsen. The Organisation for Economic Co-operation and Development (OECD) said in its latest economic outlook for the UK that ‘very thin fiscal buffers could be insufficient to provide adequate support without breaching the fiscal rules in the event of renewed adverse shocks’. The OECD also downgraded Britain's growth forecast. It predicted the economy will grow by 1.3 per cent in 2025 and then just 1 per cent next year – a fall from their previous forecast of 1.4 and 1.2 per cent. The OECD said this downgrade was caused by continuing uncertainty surrounding trade caused by Donald Trump’s tariffs and high interest rates.

Changes to how inheritance tax and trusts are treated for non-doms have already put the nation’s finances on shakier ground – something I revealed in a cover story last month. Now, a new report suggests these anti-business Treasury policies may risk killing off Britain’s family firms too. Fresh analysis by the CBI’s economics consultancy, commissioned by Family Business UK, warns that these changes to inheritance tax could jeopardise more than 208,000 full-time jobs over the course of this Parliament. That’s more than the entire construction workforce in London. The report says that as small firms retreat from long-term investment, the wider economic consequences could be severe.

Overnight three federal judges on the United States Court of International Trade ruled that Donald Trump’s worldwide tariffs are unlawful and blocked them from going into effect. A group of businesses had taken the President’s administration to court, successfully arguing that the tariffs announced on ‘Liberation Day’ were beyond the powers of the presidency.The ruling made clear that the US Congress has sole authority on passing legislation affecting cross-border trade. The White House immediately appealed and argued that the court does not have the right to rule on the matter.

Figures just released by the Office for National Statistics (ONS) show the UK unemployment rate has risen to 4.5 per cent, the number of people on company payrolls has dropped by 63,000 over the past year, and there are 131,000 fewer job vacancies than at this time last year. Today’s employment data covers the period up to March – before the rise in the minimum wage and the Chancellor’s £25 billion national insurance hike took effect. The fact that the labour market was already faltering beforehand shows how deeply businesses were bracing for impact. It’s now the third consecutive month in which firms have shed jobs, and April's data could turn out even worse.

The White House has announced a breakthrough in trade negotiations with China following two days of talks in Switzerland. Yesterday, Treasury Secretary Scott Bessent said the two sides had made ‘substantial progress’. This morning, he said that the US would lower tariffs on China to 25 per cent from 145 per cent for 90 days, and that China would lower tariffs on the US to 10 per cent from 125 per cent for 90 days. Trump’s trade chief Jamieson Greer (who gave his first European interview to Unherd last week) said yesterday it had been a ‘very constructive two days’. He added: ‘It’s important to understand how quickly we were able to come to agreement, which reflects that perhaps the differences were not so large as maybe thought.