UK government borrowing costs jump amid political uncertainty and oil price rise that fuelled inflation worries

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The pound was heading for its worst week in 18 months on Friday as City traders anticipated that the UK prime minister, Keir Starmer, could face a challenge from the Manchester mayor, Andy Burnham, later this year.

After days of uncertainty over Starmer’s future, sterling dropped by almost three cents, or 2%, during the week to $1.336 on Friday, a five-week low. That would be the largest weekly drop against the US dollar since Donald Trump’s election win in early November 2024.

ECB keeps interest rates on hold as growth stumbles and price rises gather pace, up from 2.6% in March and 1.9% in February

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• Air France-KLM cuts forecasts amid $2.4bn fuel bill rise

Inflation across the eurozone soared to 3% this month as the Iran war drove up energy prices and growth stumbled.

Consumer prices rose by 3% in the year to April across the single currency bloc, data from the statistics body Eurostat showed on Thursday morning, up from 2.6% in March and 1.9% in February.

Move comes as airline industry reacts to uncertainty over Iran war and increase in price of Brent crude

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Air France-KLM has cut its capacity growth forecasts for this year as the Iran war drives up its fuel costs by billions of dollars.

The French-Dutch airline expects its fuel bill to increase by $2.4bn (£1.8bn) this year as a result of the surge in costs since the Middle East conflict began. In response, it has trimmed its expectations for capacity growth to between 2% and 4% this year, down from 3% to 5% previously.

Sarah Breeden predicts ‘adjustment’ due to elevated risk including private credit and highly valued AI stocks

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Record-high global stock markets do not reflect the risks in the global economy, and will fall back, a deputy governor at the Bank of England has said.

Sarah Breeden, the deputy governor for financial stability at the Bank, fears that macroeconomic risks are not fully priced into equity markets. She cited concerns about private credit markets, highly valued artificial intelligence stocks, and other “risky valuations”.