Business

The UK jobs market posted a modest rise in new job adverts last month, suggesting early signs of resilience despite economic headwinds and growing pressure on employers from tax increases.

According to new data from the Recruitment and Employment Confederation (REC), the number of new job adverts rose by 0.3 per cent in May to 726,084, a small uptick that follows a prolonged slowdown in hiring. However, the total number of active job postings fell by 1.8 per cent to 1.44 million, underlining the market’s sluggish pace.

Neil Carberry, chief executive of the REC, said the labour market is “more stuck than going backwards”, noting that the slow growth in postings marks a second consecutive month of slight improvement, rather than a sign of deeper contraction.

“Despite the headwinds of tax rises and lower growth there seems to be some resilience,” Carberry said. “After a long jobs market slowdown, a second month of weak growth in new postings is a sign more of hope than concern.”

The tentative recovery comes against a backdrop of rising employer costs. A recent hike in national employment contributions and new government policies that will expand employee rights — including enhanced sick pay, maternity protections and unfair dismissal safeguards — have prompted employers to review hiring plans.

The government’s move to raise £25 billion in extra revenue through employment taxes has compounded the strain on a labour market already affected by over 15 months of declining vacancies.

Recent figures from HM Revenue and Customs show the number of payroll employees fell by 109,000 in May, the steepest decline since the early days of the Covid-19 pandemic. The unemployment rate rose to 4.6 per cent in the latest quarter, the highest since 2021, according to the Office for National Statistics.

Despite these warning signs, Carberry struck a cautiously optimistic tone.

“While the global growth picture is weaker than anyone would like, the UK is relatively well-positioned to take advantage of what opportunities there are,” he said. “We are past the interest rate peak, the UK looks good value by comparison to the US, has banked progress on trade deals, and has a stable legal and political picture for the next few years.”

The jobs data follows a string of mixed economic signals. While GDP growth slowed in April, there are tentative signs of improving consumer confidence and softer inflation, which could lead to lower interest rates later in the year. However, rising business costs and ongoing uncertainty about global demand continue to weigh heavily on the hiring outlook.

Recruiters say the coming months will be critical in determining whether the recent uptick in postings develops into a sustained recovery or stalls under the weight of policy and macroeconomic pressures. For now, employers appear cautious but not retreating — and that, say experts, may be the best the market can hope for in the short term.

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UK jobs market shows modest rise in new postings as tax pressures weigh

As the long-awaited Oasis reunion tour draws near, the band is cashing in on the hype with a string of official merchandise stores opening across the UK and Ireland — giving fans a chance to stock up on everything from bucket hats to branded cutlery sets.

The first shop opens in Manchester’s Spinningfields on Friday, two weeks before Liam and Noel Gallagher take to the stage together for the first time in 16 years, kicking off the tour in Cardiff on 4 July. Five more stores will follow in Cardiff, London, Birmingham, Edinburgh, and Dublin, all timed to open in tandem with the band’s UK and Ireland tour dates.

Merchandise on offer will include £40 bucket hats, baby grows, shot glasses, jigsaw puzzles, limited-edition vinyls, and even Oasis-themed tote bags. Fans can also use green screens in-store to recreate the iconic album covers of Definitely Maybe and (What’s the Story) Morning Glory?. However, those hoping to score a signature Liam Gallagher parka will have to look elsewhere — they won’t be available at the official shops.

The six retail outlets are part of a wider commercial push surrounding what is already being dubbed the most lucrative reunion tour in British music history. Estimates of the total revenue generated range from £40 million to £400 million, with some predictions suggesting fans could spend up to £1 billion across merchandise, beer, food, and hotel bookings during the tour.

“It’s almost like the experience of the event itself is just not enough,” said Dr Matt Grimes, music business expert at Birmingham City University. “So how do you create other experiences for people?”

Grimes, who has studied music marketing trends, described the Oasis comeback as a global entertainment event on par with the likes of Michael Jackson, Madonna or Taylor Swift. Whether or not the tour has enduring cultural impact, he said, its financial significance is already undeniable.

The Gallaghers’ official merchandise deal is reported to be worth £20 million, though details remain under wraps. Artists typically receive around 50% of each sale, Grimes noted, making merch a major revenue stream alongside ticketing and touring.

Some ticket prices — including VIP packages sold for as much as £337.50 through Ticketmaster — caused a stir when sales began. Still, demand has been sky-high, with all dates sold out and further shows added to meet fan appetite.

Sportswear giant Adidas is also riding the Oasis wave, offering a special line of branded gear including £85 football shirts, £100 jackets, and a new take on their classic slogan: “The band with the 3 stripes.”

The fan mania has extended well beyond official channels. According to online wholesale marketplace Faire, sales of Oasis-inspired items from independent brands have soared 150% in the UK and 230% globally since the tour announcement. Bucket hat sales have jumped 275%, and searches for Liam Gallagher-themed goods have increased fivefold. Google searches for “Oasis fashion UK” have risen 180% in the last month alone.

It’s been 16 years since Liam and Noel Gallagher last shared a stage, following their infamous backstage bust-up in Paris before a 2009 gig at the Rock en Seine festival. Since then, reunion rumours have flared and fizzled repeatedly — until now.

In typically unfiltered fashion, Liam dismissed doubts that the tour might not happen. Posting on X, formerly Twitter, he wrote:

“There [sic] not fans there just little dickheads me n Rkid are on it.”

The 41-date world tour will span the UK, Ireland, North America, Japan, Australia, and South America, wrapping up in Brazil on 23 November — assuming the fragile Gallagher truce survives the globe-trotting reunion.

For fans, the countdown has begun. Whether or not the band stays together for the full run, the merch is definitely coming, and Oasis mania is once again in full swing.

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Buy here now: Oasis to open merch stores ahead of reunion gigs

As the Royal Highland Show got underway in Edinburgh, Scotland’s meat and farming industries have raised fresh concerns about the impact of UK trade deals on domestic agriculture, warning that growing meat imports from countries such as Australia, New Zealand and Brazil risk destabilising the home market.

Quality Meat Scotland (QMS), the national marketing and research body for the red meat sector, said that while farmers are not opposed to trade in principle, the “creepage” of imported meat through multiple post-Brexit deals could cumulatively threaten Scotland’s food security and farming sustainability.

“We’re not afraid of trade,” said Sarah Millar, chief executive of QMS. “But it’s got to be done on a fair and equitable basis. All of these trade deals, when they come together, could have a destabilising effect.”

The warning comes amid optimism in other corners of the industry, with new markets opening in regions such as the United Arab Emirates — which began importing Scotch lamb last year — and India, where a recent UK trade deal has halved import duties on Scotch whisky.

However, QMS is urging policymakers to consider the cumulative effect of overlapping trade agreements, rather than assessing each one in isolation.

According to QMS modelling, Scotland would need an additional 79,000 cows by 2030 to replace imported beef with home-grown alternatives — equivalent to adding two animals per herd, per year. That figure would climb even higher if exports were to expand into markets like the United States, which is currently facing a beef shortage due to prolonged droughts.

Yet with Scottish cattle numbers in long-term decline, industry leaders say supply constraints risk undermining any export opportunity gains.

The post-Brexit trade deal with Australia, which came into effect in May 2023, remains a particular sore point for UK farmers. It was the first such agreement signed after the UK left the EU, and many in the sector believe it granted too much access to foreign producers at the expense of British standards.

Since then, agreements in principle have been reached with around 70 countries, prompting renewed scrutiny from farming unions and trade groups.

The Scotch Whisky Association has welcomed the India deal, predicting a £1 billion export boost over the next five years and 1,200 new UK jobs. Meanwhile, Scottish barley growers hope rising demand for malt will increase planting opportunities.

Neil White, a barley farmer in the Scottish Borders, said his operation could almost double barley output if prices improved.

“I currently grow 25–30% spring barley,” he said. “If the premium was there, I could grow a lot more. It’s a relatively cheap crop to grow, and we’ve got a local, prestige market.”

There is also renewed hope that the EU-UK Trade and Cooperation Agreement, recently updated, could ease red tape at borders and help small food producers and the seed potato industry, which estimates it lost £75 million in sales to the EU over the past five years.

However, some remain cautious about alignment with EU rules without direct UK input into their creation. NFU Scotland said it welcomes the “reset” in relations but warned of future risks.

“Recovering lost markets is crucial,” said Jonnie Hall, NFU Scotland’s director of policy. “But it’s equally important that anything imported into the UK meets the same high production and welfare standards as our home-produced food.”

Hall stressed that any relaxation of food import standards, such as allowing hormone-treated beef from the US, would be unacceptable.

“We’re all doing a bit of crystal ball gazing at the moment,” he added. “We need to see the real detail to understand the implications.”

With meat imports rising and livestock numbers under pressure, Scottish farmers are calling for a joined-up approach to trade, one that supports export ambitions without undermining the integrity and competitiveness of home-grown food. As global deals multiply, the balance between opportunity and risk remains delicately poised.

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Scottish farmers worried over imported trade deal meat

A revolutionary UK-built spacecraft engine that runs on metal is preparing for its first test in space this weekend, in a mission that aims to demonstrate the UK’s leadership in space technology and next-generation satellite propulsion.

The plasma thruster, developed by Oxfordshire-based start-up Magdrive, heats minuscule pieces of solid metal into a high-temperature gas to create bursts of thrust. Though the engine currently relies on onboard metal fuel, future designs could see satellites recycle parts of themselves or repurpose space debris to power their systems — a breakthrough that could lead to longer-lasting and more sustainable satellites.

The launch is scheduled for Saturday at 22:00 BST from Vandenberg Air Force Base in Santa Barbara County, California, and is being carried out with support from both the UK Space Agency and the European Space Agency (ESA).

Magdrive’s co-founder and CEO Mark Stokes said the mission was the culmination of four years of work to deliver something genuinely disruptive.

“We’ve spent four years building something that breaks the mould,” he said. “This launch isn’t just about proving our tech – it’s about proving the UK can lead in space.”

Dr Gianluigi Baldesi of the ESA praised the rapid development cycle from concept to deployment, describing it as an example of the bold innovation Europe is keen to support.

“In less than a year, we have gone from kick-off to launch,” he said.

Dr Paul Bate, chief executive of the UK Space Agency, called the flight a “critical demonstration” of a new kind of propulsion system that could power thousands of satellites in the coming decades.

“We’re proud to support home-grown innovations that push scientific boundaries,” Bate said.

The data gathered during the test flight will be transmitted back to Earth and analysed in August and September, offering key insights into the engine’s performance in space.

The mission is seen as a key stepping stone in the UK’s growing space ambitions. With small satellite launches and low-Earth orbit missions on the rise, Magdrive’s successful demonstration could help place the UK at the forefront of next-generation propulsion technologies, potentially powering fleets of agile, sustainable satellites in future space economies.

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Start-up in bid to prove UK leads in space tech with launch of metal-fuelled engine

Emma Gilthorpe, chief executive of Royal Mail, has stepped down from her role after just over a year in the job, marking the first major leadership change since Czech billionaire Daniel Kretinsky completed his £3.6 billion takeover of the postal group’s parent company, International Distribution Services (IDS).

Gilthorpe’s departure, confirmed just days after the deal was finalised, comes as sources close to the business said the role had simply “not worked out” for her. She will be replaced by Alistair Cochrane, currently Royal Mail’s chief operating officer, who will step into the top job with immediate effect.

Gilthorpe joined Royal Mail in April 2023 following a long tenure at Heathrow Airport, where she had served as chief operating officer and was considered a frontrunner for the CEO position before losing out to Thomas Woldbye. Her move to Royal Mail was seen as a bold appointment, as she took on the task of leading a complex and often troubled transformation programme at one of the UK’s oldest institutions.

In a statement, Martin Seidenberg, CEO of IDS, paid tribute to her work: “Emma has worked tirelessly to drive forward Royal Mail’s transformation and I would like to extend my personal thanks to her for the significant contribution she has made to the company. On behalf of everyone at Royal Mail and IDS, we wish Emma all the best for the future.”

He welcomed Cochrane’s promotion, calling him an “exceptional leader” with deep knowledge of the logistics sector, and praised his work at Parcelforce and within the broader Royal Mail business.

Gilthorpe said she remained proud of her time at the company: “I will always be incredibly proud to have led Royal Mail and I would like to thank all 130,000 colleagues for their support as we worked together to deliver our ambitious transformation programme.”

“I look forward to seeing Royal Mail continue to transform in the years ahead, ensuring a stronger and more sustainable future for this great British company.”

Her departure comes at a pivotal moment for the 500-year-old postal service, as Kretinsky — dubbed the “Czech sphinx” for his elusive public profile — moves to modernise and streamline the business. The billionaire industrialist’s EP Group now holds majority control of IDS and is expected to play a more active role in shaping the future of Royal Mail.

Kretinsky’s acquisition has raised hopes of investment and reform, but also unease among some politicians and unions about the strategic importance of the UK’s national postal operator falling under foreign ownership.

Gilthorpe’s exit signals both a changing of the guard and a new chapter for Royal Mail, as the company attempts to reposition itself in a challenging logistics landscape marked by declining letter volumes, intense competition in parcel delivery, and pressure to improve efficiency and financial performance.

As Royal Mail prepares for deeper reforms under its new leadership, the focus will now shift to Cochrane’s strategy — and whether he can deliver where his predecessor’s efforts stalled.

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Royal Mail boss quits after just one year as new owner takes over

People with Down’s syndrome and other learning disabilities say the lack of visible role models in the workplace is one of the biggest barriers to finding employment, according to a new survey that highlights the urgent need for greater inclusion in customer-facing roles.

While there are around 1.3 million people with learning disabilities in the UK, only 5 per cent are employed, a figure that has remained stubbornly low for years. But new research suggests that seeing others with similar conditions thriving in the workplace would significantly boost confidence and encourage more applications.

The poll, conducted by Savanta for the Hilton hotel group, found that three-quarters of respondents with learning disabilities would feel more confident applying for jobs if they saw people like themselves in hospitality roles. Yet just 16 per cent of those already in work said they had someone they could look up to with a similar disability in their workplace.

“When people with learning disabilities see others like themselves thriving in customer-facing roles, it inspires confidence and ambition,” said Mark Costello, principal at Aurora Foxes, a hospitality college for young people with learning disabilities.

The survey also polled 2,000 members of the general public, with over 90 per cent saying it was important to see people from diverse backgrounds — including those with learning disabilities — in visible frontline roles. Three-quarters of consumers felt that not enough people with learning disabilities were represented in the hospitality sector.

The research highlights both the lack of representation and the potential benefits of greater inclusion. Only one in four carers said they had ever been served by someone with a learning disability — a telling sign of how rarely these individuals appear in customer-facing positions.

For those who do manage to find meaningful work, the impact can be transformative.

“Having a job helps people with learning disabilities feel valued and shows others what we can achieve when given the chance,” said Sam Innes, a food and beverage assistant with Down’s syndrome at The Waldorf Hilton in London.

“It’s boosted my confidence and helped me become more independent.”

Stephen Cassidy, senior vice-president of Hilton UK & Ireland, said the company’s goal was to foster a culture where everyone — regardless of ability — could thrive.

“Representation matters — seeing people like yourself succeed at work builds confidence and opens doors to opportunity,” he said.
“By providing the right support and fostering an inclusive environment, we empower individuals to reach their full potential and show that inclusion is a powerful driver of success in hospitality.”

Hilton says team members with learning disabilities now contribute in a wide variety of roles, including front-of-house positions like reception and concierge, as well as behind-the-scenes departments such as kitchens, housekeeping, and revenue management.

As awareness grows, advocates are calling on more employers to follow suit by investing in inclusive hiring practices, providing workplace support, and creating environments where people with learning disabilities are not only welcomed, but actively represented.

The message from jobseekers like Sam is clear: “We want to work. We just need to see that it’s possible.”

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Lack of role models holding back jobseekers with Down’s syndrome, study finds

GB News has surged to become the UK’s fourth largest news brand, according to the newly released Reuters Institute Digital News Report 2025, marking a major milestone for the self-styled “People’s Channel”.

The report, widely regarded as the most authoritative global study on news consumption, found that GB News has jumped from eighth to fourth place based on weekly reach across radio, TV and print — overtaking Channel 4 News, Channel 5 News, and CNN in the UK. Online, GBNews.com is now tied as the sixth most-visited UK news website, on par with The Telegraph, and ranked ahead of The Sun, The Times, ITV News, Mirror Online, Yahoo News, and CNN.

The annual report, produced by the Reuters Institute for the Study of Journalism, is based on YouGov polling of nearly 100,000 respondents across 48 countries. It highlights rapidly evolving media consumption trends, including a global pivot toward social and video platforms and the increasing dominance of influencer-led news.

Reacting to the findings, Mick Booker, GB News’ Editorial Director, said: “This report is a must-read for anyone interested in how the consumption of news is changing across the globe. To see GB News and GBNews.com recording such positive growth is a reflection of the tireless efforts of our award-winning team to provide the very best journalism.”

“As Reuters’ report lays bare, our unstoppable growth is continuing, and soaring numbers of people are turning to the People’s Channel because they value the fearless journalism our team relentlessly provides.”

The report also found that GB News is more trusted than both the Daily Mail and Daily Mirror, highlighting its increasing credibility among viewers even as debates around impartiality and broadcasting standards continue.

Overall, trust in news globally remains low but stable at around 40%, down sharply from earlier highs of 60%, with wide variations by country. Finland maintains the highest trust level at 69%. In the UK, news avoidance has risen to 46%, with many audiences turning away from traditional outlets altogether.

The Reuters report points to a global shift in news consumption habits, particularly among younger users. In major markets such as the US and Australia, social media is now the primary news source, with platforms like YouTube, TikTok, Instagram, WhatsApp and X (formerly Twitter) reaching over 10% of users weekly. This has accelerated the fragmentation of audiences, with many turning to independent creators and influencers for news content.

Creators such as Joe Rogan and Tucker Carlson now command audiences that rival — and sometimes surpass — traditional news organisations, particularly among under-35s.

Video continues to capture attention: two-thirds of global respondents watch short-form news videos weekly, and about half watch longer news content, primarily through third-party platforms rather than publishers’ own websites.

Artificial intelligence is beginning to enter the news ecosystem, with 15% of under-25s using AI chatbots such as ChatGPT or Gemini weekly for news. However, public trust in AI-generated news remains low, especially for coverage of “hard” topics like politics and conflict.

Meanwhile, subscription growth has stalled, with only 17% of users in advanced markets paying for online news. Publishers are responding by experimenting with bundled services, events, philanthropic funding, AI integration, and diversified revenue streams to stay afloat.

GB News’ rise underscores the changing dynamics of media trust, reach, and influence in the UK. Its success coincides with the broader decline in traditional broadcast viewership and a growing demand for alternative voices in the public discourse.

As the news industry continues to grapple with misinformation, shifting audience expectations and economic pressures, the 2025 Reuters Digital News Report paints a picture of a sector in rapid transformation — and GB News is positioning itself as a major player in this evolving media landscape.

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GB News is now the UK’s fourth biggest news brand, Reuters report reveals

Wine drinkers could face supermarket shortages this summer after workers at the UK’s largest wine bottling plant voted to go on strike in a dispute over pay and conditions.

The Encirc plant in Bristol, which bottles nearly 300 million litres of wine a year and supplies all major UK supermarkets, will see industrial action from Thursday until July 5, union Unite has confirmed. The site handles around 40 per cent of the UK’s wine bottling, including products for 18 of the top 20 wine brands sold in Britain—such as Hardys, Villa Maria, McGuigan, and celebrity-backed labels from Graham Norton and Sarah Jessica Parker.

The strike will involve 200 workers, with Unite organising staggered walkouts across different parts of the business to maximise disruption. While immediate shortages are unlikely due to stockpiling and industry lead times, insiders warn that if the dispute is prolonged, wine containers arriving at UK ports could start backing up, with supply disruptions expected later in the summer.

John Sweeney, regional officer at Unite, said: “There is no doubt that this action will hit supermarket shelves. While shortages may be frustrating for customers looking to enjoy a bottle of wine this summer, the situation is entirely of Encirc’s own making.”

At the heart of the dispute is a 3.2 per cent pay rise offer from Encirc, owned by Spanish parent company Vidrala, alongside proposals to link future pay increases to inflation and remove collective bargaining rights—moves the union says would allow the company to impose terms without negotiation.

Unite’s general secretary Sharon Graham described the company’s stance as a case of corporate greed rather than financial necessity.

“Encirc’s meanness to its workers is all about greed and not need,” she said. “We will not stand idly by and allow Encirc to steal our members’ hard-won rights. Encirc workers deserve better and they have our full support throughout this dispute.”

The Encirc plant plays a crucial role in the UK wine supply chain, especially for new world wines, which are imported in large shipping containers and bottled locally to reduce both costs and carbon emissions. The company’s Bristol facility is regarded as one of the most sustainable of its kind globally, operating with zero waste and powered by 100 per cent renewable electricity.

In a statement, Encirc said it was “incredibly disappointed” with the strike and defended its pay offer, noting that the current proposal would mean wages had risen by over 16 per cent in less than two years at the Bristol site.

“We have worked hard to not only uplift pay and conditions, but to create a truly great place to work,” the company said. “We remain open to dialogue with the union in good faith and are doing all we can to mitigate any impact on supply.”

Industry insiders say rival bottling facilities — such as Kingsland and Greencroft — may be able to ramp up production to reduce pressure, but it remains unclear whether they can fill the potential gap if the strike is prolonged.

The Wine and Spirit Trade Association and several major supermarkets have been approached for comment. For now, retailers and consumers alike are watching closely — with summer wine shelves potentially at risk of running dry.

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Wine shortage fears after bottling workers go on strike at key UK facility

Retail sales across the UK fell sharply in May, recording their steepest monthly drop in 18 months, as consumers scaled back spending on essentials such as food and clothing, official figures show.

According to data released by the Office for National Statistics (ONS), retail sales volumes declined by 2.7 per cent last month — significantly more than economists had forecast. It marks the largest monthly fall since December 2023, and comes in contrast to a 1.3 per cent rise in April, which was revised upwards from a previous estimate of 1.2 per cent.

The ONS attributed much of the slump to weaker performance by food retailers, particularly supermarkets, which saw a notable drop in alcohol and tobacco sales. “The monthly fall was mainly due to a dismal month for food retailers, especially supermarkets,” said Hannah Finselbach, senior statistician at the ONS. “Feedback suggested reduced purchases for alcohol and tobacco with customers choosing to make cutbacks.”

Analysts had expected warmer weather and two May bank holidays to boost consumer activity, but that failed to materialise. “For the first time this year retail sales fell more than expected,” said Oliver Vernon-Harcourt, head of retail at Deloitte. “Two bank holidays and further good weather were not enough to entice spending.”

Clothing, homeware and DIY retailers also reported declining footfall, reversing the April surge when sunny weather had encouraged shoppers to invest in home improvements. Demand for DIY products dropped back, while fashion retailers saw fewer customers on the high street.

Rising prices in categories such as food, furniture and household goods continued to weigh on consumer behaviour, Vernon-Harcourt added, noting that persistent inflationary pressures were making shoppers more cautious.

Despite May’s setback, retail sales volumes rose 0.8 per cent in the three months to May, compared to the previous three-month period, suggesting a degree of underlying resilience in consumer spending.

Matt Swannell, chief economic adviser to the EY Item Club, urged caution in reading too much into the monthly figure. “May’s lower retailing outturn does not appear to be a major cause for concern,” he said. “Retail sales data is volatile and large month-on-month swings in the series should always be interpreted with caution.”

He added that the underlying trend remains one of modest growth, and said EY expects that to continue, barring a significant change in economic conditions.

The sharp drop in May comes at a sensitive time for retailers, many of whom have been hoping for a summer boost following months of mixed consumer sentiment. With inflation easing but wage growth slowing, the outlook for the second half of the year remains uncertain. Retailers will be watching June’s figures closely to assess whether May’s decline proves to be a one-off — or a sign of renewed caution among shoppers.

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UK retail sales show biggest fall in 18 months as shoppers cut back on food and clothing

The government’s borrowing bill came in lower than expected in May, as higher business tax revenues and falling debt interest payments helped to improve the UK’s public finances.

According to figures released by the Office for National Statistics (ONS), public sector net borrowing fell to £17.7 billion last month — below economists’ forecasts of around £18 billion, and down from £20.2 billion recorded in April, the first month of the new fiscal year.

The fall was largely driven by a £1.8 billion rise in national insurance contributions from employers, following an increase to the rate that came into effect on April 1. The Treasury also benefited from a £700 million reduction in debt interest payments, which dropped to £7.6 billion, thanks to lower retail price inflation (RPI) — a key benchmark for index-linked gilts.

Despite the improvement, May’s borrowing figure was £700 million higher than the same month last year, as the cost of government services and inflation-linked benefit payments continued to climb. The UK’s debt-to-GDP ratio stood at 96.4 per cent in May, reflecting the lingering effects of pandemic-era spending, inflation, and subdued growth.

The modest undershoot in borrowing will be welcomed by Chancellor Rachel Reeves, who has pledged to meet her key fiscal rule of borrowing only for investment by the end of the current parliamentary term. Speaking at The Times CEO Summit this week, Reeves said the fiscal rules were vital to placing the public finances on a “firm footing.”

“It would be great to be in a different world with a debt-to-GDP ratio of 50 per cent,” Reeves said. “But you don’t get to choose your inheritance. This is my inheritance and I am dealing with it.”

Reeves is working with a relatively narrow buffer: in the spring budget, she had just £9.9 billion of fiscal headroom under her primary borrowing rule. The latest borrowing figures may provide some comfort — but challenges remain.

Paul Dales, chief UK economist at Capital Economics, noted that the recent drop in borrowing coincided with a sharp decline in retail sales volumes, suggesting that the economic momentum seen in the first quarter of the year may have already faded.

“The sharp drop back in retail sales volumes in May adds to other evidence that the burst of economic growth in Q1 is over,” Dales said. “That said, consumer spending may still outperform other areas of the economy this year.”

Darren Jones, chief secretary to the Treasury, said the new government had prioritised stability and was now focused on delivery.

“Since taking office, we have taken the right decisions to protect working people, begin repairing the NHS and fix the foundations to rebuild Britain,” he said. “We stabilised the economy and the public finances; now we need to ensure that the British economy delivers for working people.”

While the borrowing figures mark a small but positive shift, economists warn that structural pressures remain — including stagnant productivity, high welfare spending, and the rising cost of servicing debt. As fiscal headroom remains tight, the coming months will test the government’s ability to deliver growth while keeping borrowing under control.

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UK borrowing falls in May after higher tax on businesses