Reeves warns against risking economic stability with leadership battle, after UK growth beats forecasts in March – business live
Posted on Thursday May 14, 2026

Chancellor says UK is in ‘a stronger position’ to deal with the costs of the Iran war, and warns against plunging the country ‘into chaos’ with leadership battle

• UK economy records surprise 0.3% growth despite Iran war

• Analysis: Reeves says ‘if economy ain’t broke, don’t fix it’

Rachel Reeves has also suggested she’ll announce details of help with the cost of living crisis next week.

Speaking to BBC News this morning, the chancellor says:

Next week I’ll be setting out more detail on how, because of the numbers that we’ve seen today, we’ll be able to put more money in to support people – familes and businesses – with the conflict challenges that we know we’re facing.

GDP rose by a bumper 0.6% q/q in Q1 (consensus and CE forecast 0.6%), but this will be the high point for the year given the effects of the war in Iran will sap growth from Q2. In our baseline scenario, the economy doesn’t grow at all in Q2 and Q3. Prolonged political instability is an extra downside risk to our forecasts.

Risks remain clearly tilted to the downside moving forwards, principally as a result of the ongoing Middle East conflict, and subsequent surge in energy prices, which will in turn impact the economy in the manner of a significant negative demand shock, over the next couple of quarters.

Added to which, renewed political uncertainty in Westminster is also likely to act as a significant headwind to the economy at large, not only delaying major investment decisions, but with said uncertainty having also resulted in considerably tighter financial conditions as a result of the recent sell-off in gilts across the curve.

The UK economy outperformed in the first quarter of this year with growth reaching 0.6% quarter over quarter, despite being at odds with lacklustre survey indicators during this period. This continues the recent pattern of unexpectedly strong growth in the first quarter of the year, while stockpiling of some goods ahead of anticipated shortages arising from the Iran war lifted demand in March.

“Nevertheless, recession risks have risen, and we now expect the UK economy to contract mildly in the second and third quarters of this year. The main driver is a prolonged energy price shock pushing headline inflation above 4.0% in the coming months, and the resulting pressure on the Bank of England to raise interest rates to counter emerging ‘second-round’ effects.

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‘Inevitable’ jet fuel shortages will drive up air fares this summer, says Willie Walsh
Posted on Thursday May 14, 2026

Impact of disruption from Iran war may be felt into 2027 even if strait of Hormuz reopens, says aviation body boss

Increases in air fares for travellers in Europe are “inevitable” over the peak summer period because of the high cost of jet fuel, according to the head of the international aviation body.

While some airlines faced with weak demand have reduced their European fares recently, Willie Walsh, the former British Airways boss who leads the International Air Transport Association, said there was no way carriers could absorb the extra costs in the long run.

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US Senate confirms Kevin Warsh as Federal Reserve chair, replacing Jerome Powell
Posted on Wednesday May 13, 2026

Warsh will serve four-year term as chair, taking over amid rising inflation and pressure from Trump to lower rates

The US Senate confirmed Kevin Warsh as chair of the Federal Reserve, one of the most powerful roles in the federal government that holds enormous sway over the economy.

The 54-45 Senate vote on Wednesday was split along party lines, with the exception of the Democratic senator John Fetterman from Pennsylvania, who joined the Republican majority. It was most divisive confirmation vote for the position in history.

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‘There’s a risk of another Liz Truss moment’: City raises spectre of bond market meltdown again
Posted on Thursday May 14, 2026

As Keir Starmer’s leadership totters, investors warn a Labour leadership contest ignoring public finances and market realpolitik could be disastrous

• Business live – latest updates

• UK economy records surprise 0.3% growth despite Iran war

• Analysis: Reeves says ‘if economy ain’t broke, don’t fix it’

A rise in borrowing costs and warnings to avoid a “Liz Truss moment”. As Keir Starmer faces a potential leadership challenge, the spectre of the bond market looms large.

Amid febrile conditions in Westminster, the prospect of Britain switching prime ministers for a sixth time in seven years has fuelled a sharp sell-off in the market for UK government debt.

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Datacentres using 6% of electricity supply in UK and US, research says
Posted on Wednesday May 13, 2026

Industry body says energy consumption driven by AI up 15% globally in two years as it warns of societal backlash

Datacentres are consuming 6% of electricity in the UK and US, with the growing strain of AI on energy supplies prompting community resistance, according to research.

The proportion of electricity used by vast warehouses stacked with microchips to power AI and the internet has risen 15% worldwide in the past two years as annual global investment in datacentres approaches $1tn (£740bn) – nearly 1% of the global economy, according to the International Data Center Authority (IDCA).

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‘There are no rules’: spotlight on Gossip Goblin as AI film-making enters new era
Posted on Thursday May 14, 2026

Defying criticisms of ‘slop’ and ‘theft’, the growing culture of AI-powered creativity is attracting interest from Hollywood

In a former hemstitching workshop where artisans sewed pleats for Stockholm’s 19th-century bourgeoisie, a distinctly 21st-century craft is taking root: AI film-making.

One day last week, an actor, director and composer squeezed into a tiny studio booth to record a voiceover for their next AI release. Critics disparage AI movies as “automated slop” or cheating, and fume at what they claim to be industrial-scale copyright theft. But this had a distinctly homespun feel, the little team fussing over a monologue by a poetic Scottish gorilla inhabiting a transhumanist cyberpunk universe. It was a bit like recording the Archers, one of them joked.

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‘Disgusting’: Hearts see off Falkirk but McInnes fumes as late Celtic penalty tilts title race
Posted on Wednesday May 13, 2026

Hearts players and supporters had this much in common; they did not have a clue how to act or react. For eight minutes, with this game already at an end, the scene promised to be a euphoric one. Hearts, having swept Falkirk aside, were staring at the prospect of travelling to Celtic Park on Saturday needing only to avoid a three-goal defeat to win the league.

A twist lay in store. Deep in stoppage time at Motherwell, the controversial awarding of a penalty to Celtic and subsequent conversion materially altered the Hearts position. The whiff of cordite has been added to the mix. Derek McInnes, the Hearts manager, was so enraged by the Celtic call as to label it “disgusting”. He added: “I heard there was a 96th-minute penalty. I didn’t need to ask who for.

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How hot will it be at the 2026 World Cup and is it dangerous for players and fans?
Posted on Thursday May 14, 2026

Researchers warn of a ‘real risk’ of unsafe conditions, with matches in Miami most likely to be affected, but the picture is mixed across the 16 stadiums

It’s set to be hot in North America this summer. The “seasonal temperature outlook” for the US, compiled by the National Weather Service, suggests every part of the country will experience temperatures above the historical average in June and July. It’s into this environment that 48 men’s national teams will arrive, all competing to win the World Cup in the US, Canada and Mexico.

As the tournament approaches, the Guardian has taken an in-depth look at the meteorological conditions players could face, how they have changed since the last time the World Cup was held in North America in 1994 (when the US was the sole host nation), and the locations most likely to expose players to stressful levels of heat.

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