British food marketers have been handed a stark warning after the advertising watchdog banned two high-profile campaigns promoting domestic beef and milk, ruling that the carbon footprint claims at their heart could not be substantiated.

The Advertising Standards Authority (ASA) has upheld a complaint brought by Chris Packham, the broadcaster and environmental campaigner, against the Agriculture and Horticulture Development Board (AHDB) over its taxpayer-funded Let’s Eat Balanced campaign. The decision is likely to send a chill through the marketing departments of food producers, processors and trade bodies that have increasingly leaned on green credentials to drive sales.

At issue were two adverts trumpeting British beef as having a “carbon footprint that’s half the global average” and British milk as producing emissions “a third lower than the global average”. Both campaigns referenced the “full lifecycle” of the produce, a phrase that has now proved their undoing.

The AHDB, which is funded by a statutory levy on farmers and growers, argued that consumers would reasonably have understood the figures to relate only to the journey from farm to retail. The board pointed to independent consumer research, commissioned after the investigation began, suggesting the majority of respondents interpreted the adverts in precisely that way.

The ASA disagreed. The regulator concluded that the adverts implied a cradle-to-grave assessment encompassing farming, retail, consumption and disposal, and that the evidence supplied fell short of supporting claims on that basis. The watchdog acknowledged the practical difficulty of producing post-retail emissions data but said that, where environmental claims are made, the burden of proof rests squarely on the advertiser unless caveats are made plain.

“We acknowledged the potential difficulties in producing post-retail emissions data,” the ASA said in its ruling. “The claims in the ads suggested those emissions were included, and we therefore expected the evidence provided to also include them. We therefore concluded that the evidence presented was insufficient to support the full life cycle claims in the ads, which was how the average consumer was likely to interpret them.”

Mr Packham, the long-standing presenter of BBC’s Springwatch, had also alleged that the adverts misrepresented British beef as typically outdoor-grazed and made claims that could not be substantiated. The watchdog rejected five of his six points, ruling that images of cows in green pastures amounted to a “generic reflection” of British farming rather than a blanket assertion that all cattle live outdoors.

Will Jackson, the AHDB’s director of communications, struck a defiant note in response to the ruling. “Let’s Eat Balanced is doing what it was designed to do, providing clear, factual, evidence-led information about British food, nutrition and farming standards,” he said. He added that the board’s own consumer research “supports our belief that consumers were not misled by the information we shared in these two specific adverts”.

For the wider SME landscape, however, the ruling carries lessons that extend well beyond the farm gate. Small and mid-sized food businesses, from artisan cheesemakers to regional butchers, have increasingly built marketing around lower-carbon, locally produced credentials. The ASA’s intervention signals that broad-brush green claims, particularly comparative ones, will face robust scrutiny regardless of whether the advertiser is a multinational, a government-backed body or a family-run producer.

The decision also lands at a sensitive moment for British agriculture, which is grappling with the phasing out of EU-era subsidies, mounting input costs and growing consumer pressure on the environmental footprint of meat and dairy. Sector bodies will now need to weigh up whether the marketing benefits of headline carbon comparisons justify the regulatory risk, or whether more conservative, narrowly framed claims offer a safer path.

For marketers across the SME economy, the practical takeaway is straightforward enough. Lifecycle language must be backed by lifecycle evidence; comparative claims must be supported by robust, like-for-like data; and where caveats are required, they must be clear enough that the ordinary consumer cannot reasonably misread them. As the ASA has made plain, the test is not what the advertiser intended to say, but what the average reader took away.

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ASA bans British beef and milk adverts after Packham complaint over carbon claims

The share of new-build homes snapped up “off plan” before a single brick is laid has tumbled to its lowest level in more than a decade, in a fresh blow to the government’s ambition of delivering 1.5 million homes by the end of this parliament.

Research published by estate agency Hamptons reveals that just 33 per cent of new properties across England and Wales were sold prior to completion in 2025, down sharply from a peak of 49 per cent in 2016. The slide reflects a perfect storm battering the housebuilding sector, with buy-to-let landlords beating a retreat from the market, stubbornly high interest rates dampening buyer appetite, and construction costs continuing to spiral.

Off-plan sales have long served as the lifeblood of housebuilders’ cash flow, allowing developers to bank deposits and secure financing well before a project reaches completion. Their decline now threatens to push up the cost of capital across the industry at precisely the moment ministers are pressing for an acceleration in delivery.

The contraction has been driven, in large part, by the steady withdrawal of buy-to-let investors who have historically been voracious purchasers of off-plan stock, particularly flats in regeneration areas. The introduction of the 3 per cent second-home stamp duty surcharge in 2016 began the rot. That surcharge was hiked to 5 per cent at the end of 2024, and the Renters’ Rights Act, which came into force this month, has prompted a further wave of landlords to head for the exits rather than wrestle with rising costs and ever-tightening regulation.

First-time buyers, the other traditional mainstay of the off-plan market, are similarly hamstrung. Chain-free and typically flexible on timing, they have historically been natural candidates for purchases months ahead of completion. But higher borrowing costs, coupled with the closure of the government’s Help to Buy equity loan scheme in 2023, have squeezed many of them out of the picture entirely.

The pain is most acute in the flats sector, where investor and first-time buyer demand traditionally overlap. Just 22 per cent of new flats were sold off plan last year, a startling drop from 54 per cent in 2007.

Investors who remain in the game are increasingly looking north, where rental yields comfortably outstrip those available in the southern counties. In Oldham, Greater Manchester, an extraordinary 94 per cent of new flats were sold off plan last year, the highest share of any local authority in the country. London, by contrast, managed 65 per cent.

David Fell, lead analyst at Hamptons, warned that the structural shift away from high-density flats was creating fresh obstacles for ministers. “This move towards lower-density, house-led development is likely to make it harder for the government to significantly ramp up housing delivery,” he said.

Housebuilders, increasingly wary of carrying large blocks of flats on their balance sheets while they wait for buyers, are instead pivoting towards suburban housing schemes that sell more rapidly and limit exposure to rising financing costs. A Ministry of Housing assessment published at the end of March predicted the government would fall short of its 1.5 million target by some 400,000 homes.

The financial mathematics is becoming increasingly punishing for developers. Interest rates on construction loans are typically far higher than those attached to standard residential mortgages, meaning that every week a property sits unsold during the build phase adds materially to the cost base. Hamptons calculates that additional finance costs added £3,125 to the build cost per home last year, up from £2,934 in 2024. Roughly half of that increase, it says, is directly attributable to higher interest rates.

Material costs have piled further pressure on the sector. “Many of the materials needed to build new homes are highly energy-intensive, meaning their costs have risen far faster than wider inflation,” Fell added.

Separate research from the Home Builders Federation underlines the scale of the squeeze. The trade body calculates that the cost of building a new home has risen by an average of £76,000 since 2020, equivalent to 20 per cent of the total cost of constructing the average UK home. Some 40 per cent of that increase, it says, is attributable to government regulations and taxes, with the balance accounted for by material inflation and labour costs.

The financial consultancy RSM UK is among those calling for ministers to act decisively to revive momentum, with a particular focus on planning reform, lighter regulation and lower taxes on new construction.

Stacy Eden, partner and national head of real estate at RSM UK, said the picture was set to deteriorate further without intervention. “With costs set to escalate further due to the economic impact of the Iran conflict, the real estate industry urgently needs further support from government to make housebuilding more viable,” she warned.

For SME housebuilders in particular, who lack the deep balance sheets of the volume players, the squeeze on off-plan sales risks tipping marginal sites from viable to uneconomic, threatening both jobs and the government’s headline housing ambitions.

Read more:
Off-plan new home sales slump to 12-year low as landlords retreat and rates bite

NatWest Group has thrown its weight behind the North of England, pledging £20 billion of funding over the next decade in what stands as one of the largest single regional commitments by a UK lender in recent memory, and a calculated bet on Britain’s devolution settlement to deliver returns the centre has so far struggled to produce.

The commitment, unveiled by chief executive Paul Thwaite at today’s Great North Investment Summit in Leeds, will channel capital into housing, transport, energy generation, grid upgrades and climate resilience across the region. Convened by the northern metro mayors and sponsored by NatWest, the summit marks the first formal pitch from The Great North partnership, which aims to add £118 billion to UK plc by unlocking the region’s investment pipeline.

For a bank that has only recently returned to full private ownership, the move signals a clear strategic pivot. Where high street lenders have traditionally followed economic gravity towards London and the South East, NatWest is now wagering that the most established mayoral combined authorities, and the deal flow they convene, offer the best risk-adjusted return on patient capital.

A bet on the regions

The funding will be deployed across four priority areas: housing and the built environment, mobility and transport, energy and power systems, and climate resilience. NatWest says it will deliver this through a mix of direct lending, risk-sharing with delivery partners and the mobilisation of third-party institutional money — a coordinating role the bank believes is increasingly necessary as projects grow in scale and complexity.

The £20 billion pledge builds on the bank’s existing £10 billion national lending ambition to housing associations, and forms part of its wider Growing Together plan to back what it calls “powerful regions”. The framing is deliberate. With Westminster’s fiscal headroom narrowing and the Treasury under pressure to demonstrate that regional transport and infrastructure investment can move the needle on growth, commercial banks are being asked to bridge a widening capital gap.

Thwaite struck a notably operational tone. “This commitment reflects our confidence in the North as a growth engine for the UK,” he said. “We can see the strength of ambition across the region, and the scale of projects coming forward in housing, transport, energy and infrastructure. Our role isn’t just to provide finance, it’s to connect capital with local ambition, working in partnership with combined authorities, business and investment partners to accelerate growth.”

The devolution dividend

Behind the headline figure sits a sharper political argument: that long-term private capital follows clear, stable local accountability. New research published alongside the announcement found that nearly two-thirds of senior business decision-makers (65 per cent) believe handing regional leaders more control over funding and investment decisions would boost investor confidence. The same proportion said they would be more likely to commit capital where funding is stable and long term.

It is a finding likely to be welcomed by the northern mayors, whose Great North partnership has spent the past year arguing that the existing devolution settlement remains too tentative for serious institutional investors. NatWest is now publicly endorsing a phased extension of devolved powers, weighted towards those authorities with proven track records of governance and delivery, a position that places the bank squarely behind the Treasury’s emerging direction of travel.

Chair of The Great North and North East mayor Kim McGuinness called the announcement a vote of confidence in the region’s potential. “Across the North, we have the talent, innovation and ambition to lead the UK’s next era of growth and prosperity,” she said. “NatWest Group’s investment and commitment to the North shows us investors see the huge, untapped potential across the North of England and the massive prize on offer from backing our regions.”

Crowding in private capital

Oliver Holbourn, chief executive of the National Wealth Fund, signalled that the state’s principal investor was ready to work alongside the bank. The fund, which under Holbourn’s leadership is targeting more than £100 billion of clean energy and growth investment across the UK economy, has made former industrial heartlands a strategic priority.

“The National Wealth Fund is committed to driving economic growth as we transition to clean energy, while ensuring we develop the businesses, skills and capabilities that will be crucial to unlocking the future of the UK,” Holbourn said. “NatWest Group’s approach very much aligns with these ambitions and we welcome it.”

The alignment matters. With public money increasingly deployed as catalyst rather than primary funder, the NWF’s role is to de-risk projects sufficiently to attract commercial lenders, exactly the gap NatWest’s £20 billion commitment is designed to fill. The bank says it will also act as a coordinator for institutional and private capital, pooling pipeline projects across regions to improve scale and execution.

Bricks, megawatts and tarmac

The early case studies offer a useful sense of where the money is likely to land. NatWest has already provided a £106 million funding package to North Yorkshire’s Broadacres Housing Association, combining long-term lending with a revolving credit facility and a social loan to underpin the delivery of more than 100 new homes in the year to March 2026, of which around a quarter will be social housing. It builds on the bank’s £1 billion housing sector commitment and comes amid mounting evidence, including the British Business Bank’s £5 billion regional lending milestone, that government-aligned finance is increasingly steering towards housebuilding outside the capital.

In infrastructure, NatWest acted as sole debt advisor and top-tier lender on a £364 million sustainable finance package for Newcastle International Airport, including a £15 million green loan that has financed solar generation and an electric vehicle transition as the airport targets net zero by 2035.

Both deals point to the kind of projects the bank expects to scale: assets with predictable revenue, identifiable decarbonisation profiles and the institutional sponsorship to absorb long-dated capital.

What it means for SMEs

For smaller firms across the North, the construction subcontractors, energy services businesses, fit-out specialists, civil engineering consultancies and the housing-sector supply chain, the read-across is significant. A pipeline at this scale generates work for hundreds of regional SMEs that have historically struggled to access growth finance on the same terms as their London peers. If NatWest delivers, and if combined authorities can convert ambition into shovel-ready projects, the multiplier effect on the northern SME base could be substantial.

The harder question is execution. £20 billion over ten years averages £2 billion a year, meaningful, but not transformational on its own. The real test will be whether NatWest’s commitment crowds in the institutional capital that has so far hesitated, and whether the mayoral authorities can match private appetite with the planning consents, land assembly and skills pipelines required to translate finance into delivery.

Following the summit, the bank says it will continue to work with combined authorities and delivery partners to progress priority schemes and bring forward additional private capital. The North has heard plenty of warm words about its growth potential over the past decade. £20 billion of bank balance sheet is rather harder to dismiss.

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Natwest pledges £20bn for the North of England as banks bet on devolution to drive growth

Suzanne Ashman, one of London’s most prolific early-stage venture capitalists and the daughter-in-law of Sir Tony Blair, has been appointed managing partner of the government’s £500 million Sovereign AI fund, a vehicle designed to channel patient capital into Britain’s homegrown artificial intelligence champions and loosen the country’s dependence on Silicon Valley.

The appointment, confirmed on Tuesday, places Ashman at the helm of one of the most closely watched pots of taxpayer-backed money in the UK technology ecosystem. Launched in April, the Sovereign AI fund is chaired by James Wise, a partner at Balderton Capital, and is tasked with co-investing alongside private backers in companies the Treasury views as strategically important to Britain’s long-term competitiveness.

Ashman, who married Euan Blair in 2013, has cut her teeth at two of the capital’s most respected seed and growth investors, LocalGlobe and Latitude, where she sat as a general partner. In its statement, Sovereign AI described her as “one of the most respected venture investors in the UK”, crediting her with “a decade backing the founders who have come to define a generation of British technology”.

Her track record at LocalGlobe and Latitude offers a window into the kind of bets the new fund is likely to favour. She led the firms’ investments into Motorway, the used-car marketplace now valued at more than $1 billion, and into Open Cosmos, a fast-growing satellite manufacturer and operator working on Earth-observation missions. Both are textbook examples of the scale-up stage British venture capital has historically struggled to finance without bringing in American or Asian lead investors.

The family dimension to the appointment is hard to ignore. Euan Blair has himself become a fixture of the British technology scene since founding Multiverse, now the country’s largest apprenticeship provider, in 2016. The combination of a high-profile political surname and one of the most active venture investors in London moving into a government-funded role will inevitably attract scrutiny, even though Ashman’s investment record stands comfortably on its own.

Ashman arrives just as the fund discloses its third investment. Sovereign AI has joined the latest funding round for Isomorphic Labs, the London-headquartered drug discovery business spun out of Google DeepMind in 2021 by Sir Demis Hassabis. Isomorphic announced it had raised $2.1 billion from a syndicate that includes Thrive Capital and Abu Dhabi’s MGX, alongside existing backers Alphabet and Google Ventures.

Isomorphic said the proceeds would underpin an aggressive hiring drive and help it commercialise its “drug design engine”, which uses AI to predict how candidate medicines will behave in the human body, a process the company believes can compress years out of the conventional drug development timeline. The Sovereign AI fund declined to disclose the size of its cheque, though the vehicle typically writes tickets of between £1 million and £20 million.

Ruth Porat, president and chief investment officer at Alphabet and Google, said: “Isomorphic Labs has already made extraordinary progress in harnessing AI to accelerate drug discovery and we are excited by this momentum and the early promise of the technology platform.”

For SME-watchers, the Isomorphic deal is a useful indicator of how the fund intends to deploy its money. Joséphine Kant, head of ventures at Sovereign AI, said: “Isomorphic is one of the most consequential companies being built anywhere in the world today and it’s being built in Britain. Sovereign AI exists to invest in the companies that will shape what this country becomes next.”

The political stakes are equally clear. Liz Kendall, the science and technology secretary, called Isomorphic’s work “AI at its very best”, arguing that it could “reshape completely how medicines are discovered, cutting years off development and giving real hope to people living with devastating diseases”.

Whether the Sovereign AI fund can move the needle for Britain’s wider population of AI-first SMEs, those without a DeepMind pedigree or a billion-dollar valuation, will be the real test of Ashman’s tenure. With £500 million to deploy and a remit to back companies the private market alone is unlikely to scale, the new managing partner has both the firepower and the political weight behind her. The question now is whether the fund can identify the next generation of British technology leaders before American capital does it first.

Read more:
Blair family link as Suzanne Ashman takes the reins at £500m Sovereign AI fund

Britain’s bond market delivered its sharpest rebuke yet to Sir Keir Starmer’s premiership on Tuesday, with 30-year gilt yields climbing to their highest level this century as the prime minister stared down a growing chorus of Labour MPs demanding he step aside.

The sell-off, which dragged sterling and equities lower in lockstep, wiped out the relief rally that followed Starmer’s defiant intervention last week. Tuesday’s cabinet meeting, at which the prime minister once again refused to countenance resignation, did little to settle nerves. Investors are now openly pricing in the prospect of a leftward lurch in Labour policy, with the attendant risks of looser fiscal rules, higher gilt issuance and a further squeeze on the cost of capital for British business.

For the country’s 5.5 million small and medium-sized enterprises, the implications are far from academic. Higher long-dated gilt yields feed directly into the swap rates that underpin commercial lending, business mortgages and asset finance, raising the prospect of yet another leg up in the borrowing costs faced by Britain’s corporate backbone at a time when many are still nursing the legacy of post-pandemic debt.

The 30-year gilt yield rose 13 basis points to 5.81 per cent, the highest since May 1998. The benchmark 10-year yield gained 10 basis points to 5.1 per cent, within a whisker of breaching the post-2008 peak it set earlier this month. Bond prices move inversely to yields.

“A new Labour leader may face pressure to ease the fiscal rules and raise gilt issuance,” warned Jim Reid, analyst at Deutsche Bank, capturing the City’s central concern that any successor would lean towards higher spending and heavier taxation of the very businesses the Treasury is counting on to drive growth.

Sterling’s slide alongside government bonds will draw uncomfortable parallels with the dark days of Liz Truss’s mini-budget. When a currency weakens in concert with rising borrowing costs, it is the trading pattern of an emerging market that has lost the confidence of foreign capital, not that of a G7 economy. The pound fell 0.64 per cent against the dollar to a two-week low of $1.352, and shed 0.21 per cent against the euro to €1.152, its weakest since mid-April.

Some of the pressure is undeniably imported. Bunds, OATs and BTPs all sold off as President Trump declared the Iran ceasefire was “on life support”, sending Brent crude up 2.8 per cent to $107.17 a barrel and reigniting inflation fears across advanced economies. The Strait of Hormuz, through which a fifth of global oil and gas once flowed, remains largely shut. Germany’s Dax bore the brunt of the European sell-off, falling more than 1 per cent. But gilts underperformed by a substantial margin, marking out Westminster’s political turmoil as a uniquely British risk premium.

Mohit Kumar, chief European economist at Jefferies, urged clients to short sterling, arguing any change in the composition of government “would likely be left-leaning”. Anthony Willis, senior economist at Columbia Threadneedle Investments, cautioned that the bond market was unlikely to settle “until greater clarity emerges”.

Equities followed suit. The FTSE 100 surrendered 0.3 per cent having opened the week with a 0.4 per cent gain, while the more domestically focused FTSE 250 dropped 211 points, or 0.9 per cent, extending its losing streak to a second day. Mid-cap stocks, dominated by UK-facing businesses, are the clearest read on how the City judges Britain’s economic prospects.

The grim verdict from Andrew Goodwin, chief UK economist at Oxford Economics, is that there is little prospect of meaningful relief. He expects 10-year borrowing costs to remain stuck above 5 per cent for the remainder of the year, regardless of who occupies Number 10. “Markets clearly perceive the UK has a bigger inflation problem and that tighter monetary policy will be needed to limit second-round effects from the energy shock, while political uncertainty has added to pressures at the long end,” he said.

Even were Starmer to dig in, Goodwin argued, the bond market would have little to celebrate, with the prime minister’s “attempts to regain popularity, or, more likely, from a successor implementing more costly left-wing economic policies” weighing on sentiment. “If Starmer sets out a timetable to stand down, the uncertainty premium will persist.”

For owner-managers already navigating a punishing cost base, a softening consumer and the fallout from this spring’s National Insurance changes, the message from the bond vigilantes is unambiguous: brace for borrowing to stay dear, and for political risk to remain firmly on the balance sheet.

Read more:
Gilts plunge to 28-year low as Starmer clings on, leaving SMEs braced for borrowing squeeze

For all the hand-wringing over privacy, Britain’s high streets, gyms and offices are about to be flooded with cameras hiding in plain sight.

The latest generation of so-called smart glasses, most notably Meta’s Ray-Ban range, has become one of the fastest-selling consumer electronics products in history, and the world’s largest technology companies are queuing up to follow suit.

The commercial momentum is undeniable. Meta has now shipped more than seven million pairs of its Ray-Ban smart glasses, made in partnership with Franco-Italian eyewear giant EssilorLuxottica, and the device accounts for more than 80 per cent of the global AI eyewear market, according to Counterpoint Research. Mark Zuckerberg, Meta’s chief executive, told investors earlier this year that the glasses were “some of the fastest-growing consumer electronics in history”, a rare bright spot for a company that has spent tens of billions of dollars chasing the metaverse with limited return.

But the same product line is now sitting at the centre of a rapidly widening privacy row that could shape regulation, workplace policy and consumer trust for years to come, and which British SMEs, from beauty salons to cafés, are already being forced to think about.

A camera in every frame

The appeal of the device, on paper, is straightforward. The Ray-Ban model carries an almost invisible camera in the frame, small open-ear speakers in the arms, and a discreet indicator light. Wearers can take a photo, capture video, place a phone call or summon Meta’s AI assistant with a tap on the temple. For early adopters such as Mark Smith, a partner at advisory firm ISG, the attraction is mundane rather than futuristic. He wears his every day, he says, because they let him take a call or listen to a podcast while washing up without blocking out the room, and spare him from pulling out a phone to capture a moment while travelling.

The problem, as Smith himself concedes, is that nobody around the wearer can tell. The recording light is dim in daylight and easily missed. To the casual observer, the glasses look like any other pair of Wayfarers.

That ambiguity is now generating an uncomfortable run of headlines. Women have reported being approached on beaches, in shops and on the street by men wearing the glasses, who film their reactions to scripted pick-up lines or intrusive questions and then upload the clips for clicks. Victims often only discover the footage exists once it has gone viral — and any subsequent abuse with it. As photography in public places is broadly lawful in the UK, legal recourse is limited. One woman who asked for her secretly recorded video to be removed told the BBC she was informed by the poster that takedown was “a paid service”.

Lawsuits, content moderators and a Kenyan flashpoint

The reputational pressure on Meta has been compounded by the working conditions of those who train the AI behind the product. Content moderators in Kenya, tasked with reviewing footage captured through the glasses to build training data, alleged they had been required to watch graphic material including sexual activity and people using the lavatory. Two lawsuits followed from owners of the glasses themselves: one group claiming they had no idea such videos had ever been captured, another that they had not realised the footage was being shared back to Meta for human review.

The company has pointed to its terms of service, arguing that the possibility of human review in certain circumstances had been disclosed. A Meta spokesman, Tracy Clayton, told the BBC: “We have teams dedicated to limiting and combating misuse, but as with any technology, the onus is ultimately on individual people to not actively exploit it.”

That defence is unlikely to satisfy the regulators now circling the category. Meta is reportedly preparing to add facial recognition to a forthcoming version of the glasses, according to The New York Times, a feature that would allow wearers not just to record passers-by, but to identify them in real time.

The rest of Silicon Valley piles in

For all the controversy, the rest of Big Tech sees a market it cannot afford to miss. Apple is widely reported to be developing its own smart glasses, with Bloomberg suggesting a launch as soon as next year. Snap has confirmed a new, lighter pair of its Specs for 2026. Google, more than a decade on from the spectacular failure of Google Glass, pulled within two years of launch amid a furious privacy backlash, is preparing another attempt under its Android XR platform.

Analysts at Citigroup and researchers at UC Berkeley reckon as many as 100 million people could be wearing AI-enabled glasses within a few years. For investors, that points to a genuinely new product category, the first since the smartwatch. For regulators, public bodies and small businesses, it raises a far thornier question: how do you enforce existing rules against recording in courtrooms, hospitals, changing rooms, museums, cinemas and bathrooms when a meaningful slice of the population is wearing a camera on their face?

David Kessler, who leads the US privacy practice at international law firm Norton Rose Fulbright, says corporate clients are already wrestling with it. “There are some pretty dark places we could go here,” he said. “I’m not anti-technology in any sense, but as a societal matter… will I need to think [of being recorded] anytime I go out in public?”

What it means for British SMEs

For owner-managers in the UK, this is no longer a Silicon Valley curiosity. Anecdotes are mounting of customers and staff being caught off guard: the online influencer Aniessa Navarro recounted feeling “sick” when she realised mid-treatment that her beauty technician was wearing Meta’s glasses. The technician insisted they were neither charged nor recording, and were needed for prescription lenses — but the reputational risk for the salon is obvious.

Smaller businesses in hospitality, retail, healthcare, fitness and personal services should expect to revisit their acceptable-use policies, customer-facing signage and staff training. Under UK GDPR, covert recording of identifiable individuals on a business’s premises is likely to fall on the operator as well as the wearer once that footage is processed for any purpose beyond purely personal use. Insurers and trade bodies are likely to start asking questions.

Meta markets the product under the tagline “Designed for privacy, controlled by you”, and tells wearers not to record people who object and to switch the glasses off entirely in sensitive spaces. Those suggestions, by the company’s own admission, are honoured more in the breach than the observance. A growing genre of “prank” content sees young men in Ray-Bans persuading retail workers to smell candles laced with foul odours, getting members of the public to sign fake petitions, or filming themselves snatching food at drive-throughs.

A Google Glass moment, or a tipping point?

Andrew Bosworth, Meta’s chief technology officer, was asked on Instagram about “the stigma around people wearing smart glasses every day”. His answer leant heavily on the sales figures, arguing that the sheer volume shifted “suggest these are widely accepted”.

Not everyone is convinced. David Harris, a former Meta AI researcher now teaching at UC Berkeley and advising policymakers in the US and EU, believes the category is heading for the same wall that flattened Google Glass. “Technology like this is fundamentally an invasion of privacy and it’s really going to face more and more backlash,” he said.

The signs are already there. In December, a New York man posted a clip lamenting that a woman he had been filming on the subway had broken his Meta glasses. The internet did not commiserate. It crowned her a folk hero.

For Meta, for Apple, for Snap and for Google, the commercial prize from owning the face is enormous. But for an industry that has spent the past decade trying to rebuild public trust, betting the next platform on a device most bystanders cannot tell is a camera may yet prove the most expensive miscalculation of all.

Read more:
Smart glasses are ‘an invasion of privacy’, yet Meta is shifting them by the million

Sir Keir Starmer has confirmed that British Steel will be taken into full public ownership, ending months of speculation about the future of the loss-making Scunthorpe plant and drawing a line under fraught negotiations with its Chinese owner, Jingye.

In a speech designed in part to head off a brewing leadership challenge after Labour’s bruising local election results, the prime minister told supporters that emergency legislation would be laid before Parliament this week to grant ministers the powers needed to take “full ownership” of the business, subject to a public interest test.

“Public ownership is in the public interest,” Sir Keir said, adding that he intended to prove his “doubters” wrong and that, for the British public, “change cannot come quickly enough.”

The decision marks a significant shift in approach. Whitehall had previously stopped short of full nationalisation, preferring instead to court private investors while keeping the blast furnaces alight through an emergency supervision regime. That regime was imposed last April after the government seized operational control of the Scunthorpe site amid mounting concerns that Jingye was preparing to switch the furnaces off, a step that would almost certainly have ended the United Kingdom’s ability to produce so-called virgin steel.

Virgin steel, smelted from iron ore rather than recycled scrap, is the grade used in heavy infrastructure projects, from new rail lines to large-scale construction. Restarting a blast furnace once it has gone cold is both technically forbidding and extraordinarily expensive, and the loss of that domestic capability has been viewed in Westminster as a strategic red line.

Talks with Jingye, the prime minister confirmed, had failed to produce a workable deal. “A commercial sale has not been possible, and now a public test could be met,” he said.

The response from the steel sector was swift and broadly supportive. Gareth Stace, director-general of trade body UK Steel, said the announcement offered “vital certainty” to the 2,700-strong Scunthorpe workforce, as well as the customers who rely on British Steel for rail, structural sections and specialist products.

“Maintaining domestic production capability for British Steel’s products is essential not only for economic growth but also for our national security and resilience,” Stace said.

However, he was clear that nationalisation alone would not be sufficient. “It is not an end goal,” he cautioned, urging ministers to use the moment as the “beginning of a clear and credible long-term plan for British Steel,” underpinned by a proper investment strategy.

The unions echoed that sentiment. In a joint statement, Roy Rickhuss, general secretary of the Community union, and Unite’s Sharon Graham said they “fully support” nationalisation, arguing that British Steel had a “bright future, with a world class highly skilled workforce making strategically important steels for the UK’s rail and infrastructure.” The pair also pressed the Treasury to mandate that government-funded projects source British-made steel — a long-standing demand of the domestic industry.

Charlotte Brumpton-Childs, national secretary of the GMB Union, said it was “right the government does everything in its power to secure its long term future.”

The Exchequer’s bill for propping up the company has already proved eye-watering. The National Audit Office reported in March that £377 million had been spent in just nine months to fund operations, wages and raw materials at Scunthorpe. Should the present rate of spending persist, the NAO warned, the total could exceed £1.5 billion by 2028, “depending on policy choices that may be taken in the future.”

The BBC understands the government is currently spending in the region of £1 million a day to keep the business afloat. Jingye, for its part, claimed the site was haemorrhaging £700,000 a day and was no longer commercially viable before ministers intervened.

No headline figure has yet been put on the cost of full nationalisation. Officials say an independent valuation of the business will be carried out once legislation is in place, with any compensation due to Jingye to be determined on the basis of that exercise.

It is not the first time the state has stepped in. The Insolvency Service ran British Steel for nine months following its 2019 collapse, at a cost to the taxpayer of around £600 million, before its sale to Jingye.

For the SME supply chain, the fabricators, hauliers and engineering firms clustered around Scunthorpe and across the wider Humber industrial corridor, the announcement removes the immediate threat of a catastrophic shutdown. Many of these businesses operate on tight margins and would have struggled to survive the loss of their principal customer.

The broader question, however, is whether public ownership can deliver the modernisation that successive private owners have failed to fund. Decarbonising primary steelmaking, replacing ageing blast furnaces with electric arc technology, and securing reliable long-term contracts with British infrastructure projects will all require capital commitments measured in billions, not millions.

The public interest test required to complete the takeover will weigh national security, the protection of critical national infrastructure and broader economic considerations. On all three counts, the government appears to have concluded that the case for intervention is now unanswerable.

Read more:
Starmer moves to nationalise British Steel as commercial rescue collapses

Higher gilt yields and a £10.3bn debt servicing bill have wiped further fiscal headroom from Rachel Reeves’s plans, leaving the Chancellor with little wriggle room before the autumn Budget, and SMEs once again braced for the consequences.

Britain’s public finances opened the 2026/27 financial year on the back foot, with public sector net borrowing climbing to £24.3 billion in April, the highest April reading since the pandemic shutdown of 2020 and £3.4 billion above the £20.9 billion pencilled in by the Office for Budget Responsibility.

Figures published on Friday by the Office for National Statistics showed the bill was £4.9 billion, or roughly a quarter, larger than the same month a year earlier, when borrowing came in at £20.2 billion and already prompted warnings about the fragility of the Treasury’s fiscal arithmetic.

The standout figure, however, was not the headline overshoot but the cost of servicing the national debt. Interest payments alone reached £10.3 billion in April, the highest on record for the opening month of any financial year. Britain is now spending more than £100 billion a year keeping its debt pile rolling, broadly equivalent to the annual schools budget for England.

Gilt yields tighten the noose

The figures land at a delicate moment for the gilt market. Yields on 10-year UK government bonds, the standard proxy for the cost of fresh state borrowing, touched a fresh post-2008 peak last week before retreating modestly after Andy Burnham, the Greater Manchester mayor widely viewed as a potential prime ministerial challenger, publicly committed to respecting the fiscal rules should he take the top job.

That intervention steadied nerves in the City but did not undo the damage. Bond market analysts pointed out that the recent yield spike — chronicled in earlier reporting on 10-year gilts breaching the 5 per cent threshold for the first time in 18 years, will work its way into May’s borrowing figures and beyond, since each rise in yields lifts the coupon Treasury must offer on new issuance.

Higher yields will also eat into the £22 billion of headroom the Chancellor restored at the November Budget. As Business Matters has previously reported, that buffer was already exposed to political U-turns, weaker migration assumptions and softer growth, a combination that has historically been enough to push a chancellor towards either tax rises or spending cuts.

IMF endorsement, but with a warning

The International Monetary Fund, wrapping up its 2026 Article IV mission to the UK earlier this week, applauded the deficit reduction targets baked into the government’s fiscal rules and the recent decision to make the autumn Budget the sole fiscal event. But the Fund also warned that any attempt to dilute the path of consolidation would risk a sharp reaction in the gilt market, precisely the dynamic that has rattled investors over the past fortnight.

For all the pressure on the Treasury, there was a sliver of good news in the data. The ONS revised down its full-year borrowing estimate for 2025/26 by £3 billion, taking it to the lowest level since the pandemic six years ago. Tax receipts were also higher than a year earlier, though the gain was more than offset by additional spending on benefits and other day-to-day running costs.

Grant Fitzner, the ONS’s chief economist, struck a sober note: “Borrowing this month was substantially higher than in April last year and although receipts increased compared with April 2025, this was more than offset by higher spending on benefits and other costs.”

SME implications: cooler tills, costlier money

For small and medium-sized businesses, the read-across is twofold. First, the cost of credit. Gilt yields underpin the swap rates that determine fixed-rate business loans and commercial mortgages, meaning that the higher cost of government borrowing is already feeding through to the lending desks of the high street and challenger banks. Owner-managers refinancing this summer should expect quotes to come in stickier than they would have done in the spring.

Second, demand. Separate ONS data published on Friday showed retail sales volumes contracting by 0.4 per cent in April after a feeble 0.1 per cent gain in March, a reminder that the consumer engine is sputtering even before any further fiscal tightening lands in the autumn. Hospitality, fashion and homewares operators in particular will be watching May’s figures closely.

The political calculus is sharpening too. With the fiscal buffer thinning, the Treasury’s scope to extend business rates relief, freeze fuel duty again or shelter SMEs from further employer National Insurance rises looks more constrained by the week. Whether the Chancellor opts to plug the gap through fresh revenue measures, departmental squeezes or by quietly loosening the fiscal rules will define the autumn for Britain’s 5.5 million small businesses.

For now, the message from April’s numbers is blunt: the debt interest bill is no longer a line item to be glossed over in the Budget Red Book, it is the story.

Read more:
April borrowing surges to £24.3bn as debt interest bill breaks month record

In Can We Be Rich Again? the former chancellor delivers a refreshingly self-aware diagnosis of what has gone wrong with the British economy, and a costed prescription that SMEs, in particular, ought to read with interest.

He could so easily have phoned it in. A bulky political memoir, a couple of nicely judged knives slipped between the shoulder blades of former Cabinet colleagues, an amusing yarn or two from Davos and the IMF spring meetings, and a discreet bit of humble-bragging about steadying the ship after the Truss-Kwarteng mini-Budget. Sir Jeremy Hunt, now liberated from the red box and with rather more time on his hands, could have produced precisely the sort of worthy but unreadable volume that gathers dust on the shelves of every Westminster bookshop.

To his very considerable credit, he has not. In Can We Be Rich Again?, the former chancellor has instead set himself the rather harder task of working out, with disarming honesty about his own role in the muddle, what has gone so badly wrong with the British economy, and how it might still be put right.

A question that should not feel provocative

That the title itself reads as slightly cheeky is, in truth, a damning indictment of where we have arrived. Rich? In an economy where output per person has barely shifted since the eve of the pandemic, the Office for Budget Responsibility’s March 2026 outlook puts real GDP per head growth at an average of just 1.1 per cent a year between now and 2030, against the 2 per cent enjoyed before the financial crisis, the average voter has long since lowered the bar to “not visibly poorer than last year.”

Sir Jeremy will have none of it. “We still have a lot going for us,” he writes, with the breezy confidence of a man who has just remembered he is no longer responsible. Britain, he reminds the reader, retains the integrity of its institutions, robust property rights and a serious legal system. It is the most open of the major economies and houses the third-largest technology ecosystem on the planet, behind only the United States and China. Harness those advantages, he argues, and the British economy can grow again. The diagnosis chimes neatly with the IMF’s own 2026 Article IV concluding statement, which praised the broad direction of the government’s investment-and-reform agenda while warning that “credibility will ultimately hinge on sustained implementation.”

The eight-point plan, costed

What lifts the book above the standard centrist-Tory lament is that Sir Jeremy has done his homework. Each of his prescriptions is tested against an estimated effect on GDP, lending the manifesto a refreshing absence of magical thinking.

The two opening shots are familiar enough: bring taxes down, and adopt a new fiscal rule that compels debt to grow more slowly than output. Then come the supply-side reforms, eight of them, that form the spine of the book. Fix a welfare system that has parked too many working-age adults on long-term sickness benefit. Relax planning rules so that Britain can build something, anything, again. Drive public-sector productivity higher. Hand local mayors the powers and budgets to rebuild their regions. Embrace artificial intelligence rather than regulating it into irrelevance. Restart oil and gas production in the North Sea. Repair an education system that has spent decades failing the 50 per cent of school-leavers who do not go to university. And, perhaps closest to the heart of this magazine’s readership, properly encourage entrepreneurship.

Put the whole package to work, Sir Jeremy reckons, and Britain could add three percentage points a year to its growth rate, a compounded gain of around 20 per cent over a decade. That is not loose change. It is the difference between managed decline and a recognisably advanced economy. For founders and owner-managers, it is the difference between scaling and surviving, a tension Business Matters has chronicled at length in its coverage of SME expansion plans.

Quibbles, mostly minor

It is not difficult to pick at the detail. AI may, in time, prove less revolutionary than its loudest evangelists promise, although the early productivity numbers, Business Matters recently reported research suggesting SMEs deploying AI can unlock productivity gains of between 27 and 133 per cent, argue otherwise. Politicians have been promising to fix vocational training for the best part of a century, generally without troubling the outcomes.

More seriously, Sir Jeremy remains, in temperament, a pragmatic centrist. He instinctively underplays the ferocity of the resistance any reforming chancellor will encounter from what Liz Truss memorably christened “the anti-growth coalition”, that diffuse weave of judges, quangos, NGOs and Whitehall lifers known to its critics as “the Blob”. After five years of a Labour administration that has fed and watered that ecosystem with some enthusiasm, it will be denser, better funded and considerably more confident than it was when he occupied 11 Downing Street.

The book Hunt wishes he had been handed

These, though, are quibbles. Sir Jeremy is unlikely to return to office, and the book never pretends to be a Treasury-ready blueprint. Its real virtue is in marshalling, in one place and with proper analytical rigour, every credible lever available to revive British growth, and in making the unfashionable case that none of this is especially difficult. Read in the context of the optimism filtering back through Britain’s small business community, the message lands harder still: the country wants to grow; it just needs a government that lets it.

By the close of this decade, he warns, Britain will look less like an advanced economy than a developing one. The flipside, he points out with a wry smile audible in the prose, is that emerging economies have spent decades demonstrating that catch-up growth is largely a matter of copying what works elsewhere. “My analysis shows that delivering it may not be easy, but it is not impossible either,” he writes. “All the solutions have been tried in other countries with similar democratic constraints to ourselves.”

The most uncomfortable passage in the book is also the most revealing. “If that’s the answer, why on earth didn’t you do it when you had the chance?” Sir Jeremy asks himself, with the directness of a man who knows the question is coming. “The truth is that no one starting a job can ever know all the answers. In some ways, I wish I had been given this book on the day I became chancellor.”

Whoever inherits the Treasury in 2028 or 2029, and the polling suggests it will not be a Conservative, would do well to take him at his word. Can We Be Rich Again? is, despite itself, the most useful piece of economic writing produced by a former British chancellor in a generation. It deserves to be read, argued with, and, on most counts, acted upon.

Can We Be Rich Again? by Sir Jeremy Hunt is published by Swift at £25.

Read more:
Jeremy Hunt may have just written the growth manual Britain has been waiting for

National Grid has unveiled what amounts to the most ambitious capital programme in its history, pledging a further £70bn over the next five years to rewire the energy systems of Britain and the north-eastern United States.

The FTSE 100 utility, which has spent the past two years reshaping itself into a pure-play networks business, said the fresh commitment would accelerate its march towards a net-zero electricity system on both sides of the Atlantic. The announcement, made alongside its full-year results, builds on a record £11.6bn of capital expenditure in the prior year and signals that the group sees no let-up in the structural demand for grid investment.

Of the headline figure, some £31bn will be funnelled into UK electricity transmission, expanding capacity to absorb the surge of offshore wind, solar and nuclear coming on stream this decade. The company described the spend as the foundation of a “decarbonised electricity network” by the 2030s, and the bill will, in part, be underwritten by Ofgem’s new RIIO-T3 framework, which has formally cleared the way for the heavier outlay.

Across the Atlantic, £17bn has been earmarked for New York and a further £12bn for New England, with around 60 per cent of the US allocation flowing directly into National Grid’s own networks. The group expects a 10 per cent uplift in returns from its asset base by the 2030/31 financial year on the back of the programme.

Zoe Yujnovich, who took the helm as chief executive earlier in the year, said the company was “embarking on the largest investment programme in our history… to modernise and expand energy networks across the UK and the US Northeast, networks that underpin economic growth, strengthen energy security and enable the transition to a cleaner, more flexible energy system.” She added that the group was “building the skilled workforce needed to deliver this investment at pace, creating thousands of jobs across our markets” — a message likely to play well in Westminster and Whitehall, where ministers have been pressing infrastructure operators to demonstrate the employment dividend of the green transition.

The growth ambitions came against a softer revenue backdrop. Total turnover slipped four per cent to £17.6bn from £18.3bn the previous year, a decline the company attributed to storm-related costs and the divestment of its renewables arm and US grain liquid natural gas business. Pre-tax profit, however, jumped to £4.2bn from £3.6bn, while earnings per share rose eight per cent to 78p.

Shareholders were rewarded with a final dividend of 32.1p, taking the full-year payout to 48.9p, a 3.8 per cent increase pegged to UK inflation. The market responded warmly, with shares climbing 1.5 per cent in early trading to 1,297p, leaving the stock up 11.9 per cent since January and comfortably outpacing the wider FTSE 100.

Looking ahead, National Grid expects UK electricity transmission revenue to rise by roughly £850m in the year ahead, with RIIO-T3 doing much of the heavy lifting. In New England, top-line growth of around $450m is forecast, driven by rate resets, though partially offset by the costs of the expanded build-out. New York is expected to follow a similar trajectory.

For SMEs reliant on a stable, predictable power supply, from manufacturers wrestling with energy-intensive processes to data-hungry tech firms, the scale of the commitment is significant. A more capacious, modern transmission network underpins the kind of long-term industrial planning that has been sorely lacking since the energy shock of 2022, and it puts hard numbers behind the government’s grid-connection reforms.

Yujnovich struck an appropriately customer-focused tone in her closing remarks. “Through… transforming our capabilities we will be able to meet the rapidly growing demand and enable a more efficient energy system, one that supports long-term affordability and reliability for customers,” she said.

For investors, the calculation is straightforward: a regulated, inflation-linked income stream married to a multi-decade capex story. For the wider economy, the prize is a grid finally fit for the century it has to serve.

Read more:
National Grid commits record £70bn to power the next decade of energy networks

After years of boardroom whispers, palace-intrigue rumours and one alleged attempted coup, the question of who will inherit Britain’s most famous yellow-painted family business has finally been settled, and it is not the son the City had been quietly pencilling in.

Lord Bamford, the 80-year-old chairman of JCB, has confirmed that his younger son George, not his elder son Joseph (known as Jo), will eventually take the wheel of the Staffordshire-headquartered digger maker. The disclosure, made in an interview with the Daily Telegraph, brings to an end one of the longest-running succession sagas in British family enterprise and reshapes the future of a group that turns over £6.5bn, operates 22 factories across four continents and employs 19,000 people worldwide.

“In terms of us remaining a family business, that is very important, and we do have plans,” Lord Bamford said. “I’m very lucky and highly privileged to be in charge of this business at the moment. I don’t intend to be forever. I am 80, for heaven’s sake.” Asked directly who would step into his shoes, he replied: “It will be George.”

From heir apparent to outsider

For the best part of two decades, Westminster watchers and the wider engineering community had assumed Jo Bamford was being groomed to take over. He joined the family firm in 2004, was appointed to the board in 2006 and rose through a succession of senior roles, including head of major contracts, a brief widely read in the industry as a finishing-school posting for a future chairman.

What changed, according to people familiar with the boardroom, was an episode in which Jo is said to have pressed his father to step aside. Lord Bamford, by all accounts, viewed the approach as an attempted coup rather than a constructive nudge. The fallout has been swift and unambiguous: George, the family’s third child, has since been installed as deputy chairman, a clear public signal that the line of succession had quietly been redrawn.

The succession is yet to be formally rubber-stamped at board level, but few in the sector now doubt the trajectory. For a privately held company of JCB’s scale, the choice of chairman is not merely a question of family harmony; it shapes capital allocation, factory footprints, R&D priorities and the firm’s political voice for a generation.

Who is George Bamford?

If Jo was the obvious candidate, George has been the unconventional one. Best known outside engineering circles for the Bamford watch brand, which he founded and which built a cult following customising Rolex, TAG Heuer and other luxury timepieces, he has spent the past two decades building his own commercial reputation in the lifestyle and luxury goods market.

He will retain ownership of the Bamford watch business, but JCB is now becoming his full-time job. Those who have worked with him describe a brand-builder with an instinctive grasp of design and marketing, attributes that may prove useful as the digger maker leans further into electrification, hydrogen power and the premiumisation of construction equipment.

The inheritance-tax backdrop

The Bamford succession is playing out against a tax backdrop that has rattled family businesses across the United Kingdom. From 6 April 2026, the Treasury’s reforms to agricultural and business property reliefs have introduced a £2.5m 100 per cent relief allowance, with qualifying assets above that threshold attracting an effective 20 per cent inheritance tax charge rather than full exemption.

For the United Kingdom’s 5.3 million family firms, the change has been seismic. As the House of Commons Library has set out, the reforms close what ministers regard as a loophole exploited by the ultra-wealthy, but critics argue that they catch ordinary trading businesses in the same net as estate-planning vehicles.

Speaking at a business conference in April, Jo Bamford warned that the new regime could push the family’s empire abroad. “The family tax… is a real problem,” he said. “It could quite easily become an American business. I love being in Britain. But I would say to a political party of any stripe, look, there’s only so much you can ultimately do.” Lord Bamford, a long-time Conservative donor who has also written cheques to Reform UK, has been similarly vocal about Whitehall’s direction of travel, concerns explored in our recent piece on Lord Bamford’s £300m family windfall and the wealth-tax debate.

A sector-wide reckoning

JCB is far from alone. From Dyson to Global Brands, blue-chip family-controlled firms have warned that the new regime could force restructurings, share sales or outright relocations to safeguard jobs and intergenerational ownership. Business Matters has tracked the broader fallout in its analysis of how the £2.5m cap is reshaping family-business planning, with more than half of surveyed firms already pausing investment.

For Lord Bamford, the calculation has long been about more than tax. JCB’s ownership structure, headquartered in Rocester since 1945, is the bedrock on which the company’s long-term capital expenditure programme rests — including the recent decision to double its Texas plant in response to United States tariffs. A clean succession line gives lenders, customers and 19,000 employees a clearer view of the next chapter.

The lessons for other founders

The Bamford story is unusual in scale but not in shape. Even the most polished succession plans can be derailed by sibling rivalry, mismatched ambitions and an incumbent who is reluctant to let go. As Business Matters has previously explored in our five steps to successful business succession planning, early, candid conversations with successors, ideally years before any handover, remain the single biggest predictor of whether a family firm survives the generational baton change.

For Jo Bamford, life outside the JCB chair is unlikely to be quiet. He has built a substantial second career in clean energy, founding the hydrogen fuel firm Ryze Power and stepping in to rescue Northern Ireland’s Wrightbus from collapse. Few City observers expect him to disappear from the FTSE conversation.

For George, the in-tray is daunting but enviable: a globally respected brand, a balance sheet that has weathered tariffs, war in Ukraine and a cooling construction market, and a workforce that has known only one family at the helm. The yellow JCB livery has carried the Bamford name for three generations. On the strength of his father’s words this week, it is on course to do so for a fourth.

Read more:
JCB succession: Lord Bamford anoints younger son George as heir to £6.5bn digger empire

Britain’s small and medium-sized businesses are once again caught in the political crossfire, with long-term Government borrowing costs vaulting to their highest level in nearly three decades as the City braces for what could prove a torrid week for Sir Keir Starmer.

The yield on the 30-year gilt climbed to 5.772 per cent on Tuesday, a level not seen since 1998, while the benchmark ten-year gilt jumped 0.13 percentage points to trade above 5.1 per cent, territory last visited during the 2008 financial crisis. As bond yields and prices move in opposite directions, the sell-off lays bare the depth of unease among investors. For SME owners watching their overdrafts and refinancing windows, it is a deeply unwelcome turn.

The trigger is Thursday’s local elections, in which Labour is widely tipped to shed well over 1,000 council seats to Nigel Farage’s Reform UK and the Green Party. Should the results prove as bleak as forecast, Westminster watchers expect Sir Keir to face an internal challenge, most likely from the Labour left, with the Manchester mayor Andy Burnham and the former deputy prime minister Angela Rayner among those whose names are circulating in Whitehall and the Square Mile alike.

For investors, the calculation is brutally simple: any successor drawn from that wing of the party is likely to loosen the purse strings further, piling additional borrowing on to an already stretched balance sheet.

“The prospect of a leadership challenge is yet another source of uncertainty for businesses and households that could prompt them to put off investment and spending,” Thomas Pugh, chief economist at RSM UK, told clients in a note. “Financial markets would likely respond by pushing gilt yields higher, as any successor is likely to be more spendthrift than Starmer and [Rachel] Reeves, raising borrowing costs across the economy.”

Analysts at the Japanese investment bank Nomura warned that “low turnout … and voters more willing to register a protest at local vs national elections make this set of elections particularly risky for Labour and the PM in particular.”

The implications for the UK’s 5.5 million small and medium-sized enterprises are sobering. Britain’s borrowing costs are now the highest in the G7, and have climbed sharply since the Gulf conflict erupted just over two months ago. As a major importer of natural gas, the country is acutely exposed to the war’s inflationary aftershocks, and that pain feeds directly through to the cost base of every owner-managed firm in the land, from manufacturers wrestling with energy bills to high-street retailers facing yet another squeeze on consumer wallets.

The pound nudged higher against the dollar to $1.35 on Tuesday, but the FTSE 100 closed more than 1 per cent down as investors trimmed their exposure to UK assets across the board.

Compounding the gloom, the Bank of England is now widely expected to lift interest rates later this year rather than cut them, a sharp reversal from the consensus that prevailed before hostilities began. Last week, Threadneedle Street warned that rates could climb as high as 5.25 per cent if oil and gas prices remain elevated, with inflation potentially breaching 6 per cent in a worst-case scenario, up from 3.3 per cent today. Bank Rate was held at 3.75 per cent at the latest meeting.

Nomura, BNP Paribas and Pantheon Macroeconomics have all torn up their forecasts, now pencilling in rate rises rather than the two cuts previously expected for 2026. For SMEs servicing variable-rate loans, asset finance arrangements or commercial mortgages, that represents a meaningful step-change in the cost of doing business.

Bond markets, normally preoccupied with the minutiae of interest-rate expectations, have grown unusually fixated on Westminster. The fear is that Sir Keir will either be forced into a more expansive fiscal stance to placate his backbenchers, or replaced outright by a successor with an even bigger spending appetite. Either path leads to heavier borrowing at a moment when the public finances are already perilously thin: the debt-to-GDP ratio is hovering near 100 per cent and debt interest payments are projected to exceed £100 billion a year until at least 2031.

In a separate blow on Tuesday, the Bank of England disclosed that the cumulative loss on its quantitative easing programme had widened to £125 billion, up from £115 billion previously, a tab the taxpayer will pick up under the indemnity agreement struck with the Treasury.

For Britain’s business owners, the message from the gilt market is uncomfortable but unmistakable. Whatever Thursday delivers at the ballot box, the cost of capital is heading in one direction, and prudence, on hiring, on capex, on inventory, is once again the watchword.

Read more:
Gilt yields hit 28-year peak as Starmer’s grip slips and SMEs brace for the bill