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Andy Burnham becomes Britain’s 7th prime minister in a decade

Andy Burnham took office Monday as Britain’s new prime minister, promising a 10-year plan to restore political stability and revive the economy while acknowledging that six other U.K. leaders have tried and failed to do so in the past decade.

Speaking outside 10 Downing Street minutes after being formally appointed by King Charles III, Burnham pledged to ease the cost of living for ordinary people, decentralize political power, revitalize industry and end street sleeping by homeless people. He said he would deliver a “circuit breaker” for a system that has taken wrong turns since the 1980s, when public services and utilities were privatized and local government eroded.

“We will take power out of here and carry it into every postcode in the land so that they can do more and in doing more, build a new economy where we put life’s essentials back under stronger public control to make them affordable to you again,” he said.

Burnham said he was “acutely conscious” of the political revolving door he was walking through.

“This is a moment for reflection and new resolution,” he said. “It requires my generation of politicians to raise our game and rise to the new challenge. Britain needs to show the world that we can regain our stability once again, and that is our challenge to make politics work, to make it work better.”

One of Burnham’s biggest tasks on his first day was to appoint a cabinet. The key post of chancellor of the exchequer went to John Healey, the former defense secretary who quit the previous government a few weeks ago over funding plans for his department. His appointment as Treasury chief was a surprise.

Healey replaces Rachel Reeves, the architect of much of the economic agenda of Burnham’s predecessor, Keir Starmer, as well as some of the missteps that ate away at his support. Others leaving the cabinet included David Lammy, who was deputy prime minister.

Energy Secretary Ed Miliband was given the role of foreign secretary. He replaces Yvette Cooper, who was appointed health secretary, a demotion but a hugely important post for the Labour Party’s reelection prospects. Shabana Mahmood remains as home secretary. The full cabinet meets Tuesday.

Burnham became the seventh U.K. prime minister since 2016 in a now well-rehearsed handover after replacing Starmer as leader of the center-left governing Labour Party on Friday. Starmer announced last month that he would resign.

Starmer left office just two years after winning a landslide election victory, forced out by his own party after a series of missteps and U-turns.

Britain’s parliamentary democracy allows governing parties to change leaders, and thus prime ministers, without the need for a general election. The next national poll does not have to be held until 2029, though Burnham can call one sooner if he wants.

Burnham was the only candidate in a contest to become the party’s new leader, securing nominations from 379 of the 403 Labour lawmakers in the House of Commons.

He will confront many of the same struggles as his predecessor: a sluggish economy, a cost-of-living crisis, overstretched public services, concerns about migration and foreign affairs that include wars in Ukraine and the Middle East.

He will also try to navigate relations with U.S. President Donald Trump, who first warmed to, then soured on, Starmer. Burnham’s office said the prime minister spoke to Trump on Monday afternoon and “underlined his commitment to defense and security.”

The former mayor of Greater Manchester previously pledged to make politics “less toxic,” improve living standards across the country and “bring back the hope we have all been missing.”

Burnham said he will set out a 10-year plan for Britain later this year. Before that, he will lay out first steps “to give people some breathing space now, some help with the cost of living.”

“And I will set out some of those measures starting tomorrow, including how we pay for them,” he said.

After his speech, he told reporters that he has “always taken a very prudent approach” to the economy in previous jobs, and will not take any economic risks now.

Tim Bale, professor of politics at Queen Mary University of London, said Labour had backed Burnham “to inject a sense of positivity, of hope, of purpose, a sense of direction.”

Burnham says “he is going to mark a big break, not just with Keir Starmer, but also with what he regards as four decades of the country going in the wrong direction,” Bale said. “But quite what that means in terms of concrete policies, in terms how much he’s going to spend and on what, and how much is going to tax … we’re not sure yet.”

In the rapid-fire world of British political transitions, Burnham entered Downing Street only minutes after Starmer left.

“I go with good grace. I go with a smile, and I go proud of everything that we have achieved,” Starmer said before heading to Buckingham Palace to offer his resignation to the king. It was an offer the king “was graciously pleased to accept,” the palace said in a statement.

Starmer became Labour leader in 2020 after one of the party’s worst election defeats, and he led Labour to a landslide victory four years later. But he was soon defeated by the challenges of governing.

“It has been the privilege of my life to serve you and this great country as prime minister,” Starmer said before leaving Downing Street, hand-in-hand with his wife, Victoria. “I am confident that Britain is now stronger and fairer than it was two years ago.” (JapanToday)

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UK economy sees surprise growth in March despite Iran war

The UK’s economy saw surprise growth in March, despite the month seeing the first impact of the Iran war.

The economy grew by 0.3%, confounding analysts’ forecasts of a small contraction, although the effects of the conflict are expected to hit growth later this year.

The Office for National Statistics (ONS) said there were signs that consumers and businesses brought forward spending in March due to fears over future price rises brought about by the war.

Chancellor Rachel Reeves said the growth figures showed the government had “the right economic plan”, but warned a Labour leadership contest risked “plunging the country into chaos”.

Economic growth in the first three months of the year was 0.6%, the ONS said, led by a rebound in areas such as retailing and construction.

The quarterly growth is the fastest for a year, and is also the highest of all the G7 countries to have reported data so far. Last month, the IMF warned that the UK would be the hardest hit from the war of the world’s advanced economies.

The ONS said there had been signs of so-called front-loading in March, with some businesses it surveyed “cited activity being bought forward in anticipation of increases in costs because of conflict in Iran”.

One such area was car sales and leasing. The ONS said retailers had reported that motorists were stocking up on fuel as prices rose sharply.

Danni Hewson, head of financial analysis at AJ Bell, said some drivers may have been given a “nudge” to buy an electric vehicle (EV) in March because of rising fuel prices.

Yael Selfin, KPMG’s chief economist, said the impact of the Iran war was likely to be more pronounced in the second quarter of the year.

“Households are under renewed pressure as energy and petrol prices climb. Food costs are also expected to rise, with disruptions to fertilisers and other essential inputs,” she said.

“These increases are likely to weigh on disposable incomes, dampening demand and posing a significant challenge to economic activity over the coming months.”

Siblings Kennady and Boston Mace run a play centre in Chelmsford, Essex. They have noticed how families are having to cut down on spending.

“We’ve got our own children so we appreciate how expensive a day out can be,” Boston said.

“Everything’s going up… we’ve got a limit on what we can charge so the profit margin is getting smaller and smaller.”

Kennady added that where families used to use the centre as an all-inclusive venue, there are more visitors paying for activities but not food – “which is understandable … money’s a lot tighter”.

Boston said the centre has endured the Covid pandemic, a fire, a flood and a theft, but “this seems [to be] the most difficult period we’ve had” in their 13 years in business.

Chancellor Rachel Reeves told the BBC the economy “is growing strongly” and that she would set out more support for families and businesses affected by the war next week.

But in a reference to the current speculation about the prime minister’s position, Reeves said: “We shouldn’t put [economic stability] at risk by plunging the country into chaos at a time when there is conflict in the world but also at a time when our plan to grow the economy is starting to bear fruit.”

Shadow chancellor Mel Stride said the “chaos surrounding the Labour leadership is destabilising Britain’s economy”.

“This week, borrowing costs hit their highest level in 30 years as Labour leadership contenders competed to promise even more spending, borrowing and fantasy economics.”

Liberal Democrat Treasury spokesperson Daisy Cooper MP said the latest growth figure was “already in the rear-view mirror” because of the war.

“Instead of tackling the cost of living, the government is consumed by infighting.” (BBC)

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Bank of England cuts rate amid tariff concerns

The Bank of England on Thursday cut its key interest rate by a quarter point to four percent, the lowest level in 2.5 years, as it bids to boost a UK economy threatened by US tariffs.

Alongside the expected decision, the BoE forecast British economic growth to hit 1.25 percent this year, slightly better than the central bank’s previous estimate of one percent.

“The direct impact of US tariffs is milder than feared, but more general tariff-related uncertainty still weighs on sentiment,” the BoE said in a statement after studying data gathered by UK businesses.

London and Washington reached an agreement in May to cut levies of more than 10 percent imposed by US President Donald Trump on certain UK-made items imported by the United States, notably vehicles.

The quarter-point cut on Thursday was the BoE’s fifth such reduction since starting a trimming cycle in August 2024.

“Interest rates are still on a downward path, but any future rate cuts will need to be made gradually and carefully,” its governor, Andrew Bailey, said following Thursday’s decision.

The BoE voted 5-4 for the reduction, but not before an unprecedented second vote owing to a three-way split among its nine policymakers that prevented a necessary majority result.

Initially, four members voted for the reduction and four for no change. One member called for a larger cut of 0.50 percent, before switching in favour of a quarter-point drop, as voted for by Bailey.

It was the first time since the BoE became independent of the UK government in 1997 that a second vote had to be held.

“Looking ahead, interest rates are expected to be 3.5 percent in a year, which is slightly higher than before the (latest) meeting,” noted Kathleen Brooks, research director at XTB trading group.

Expectations that the rate will remain at four percent for longer boosted the British pound.

The BoE’s main task is to keep Britain’s annual inflation rate at 2.0 percent, but the latest official data showed it had jumped unexpectedly to an 18-month high in June.

The Consumer Prices Index increased to 3.6 percent as motor fuel and food prices stayed high.

The BoE on Thursday predicted that the annual inflation rate would peak at four percent next month.

Latest official figures show that Britain’s economy unexpectedly contracted for a second month running in May, and UK unemployment is at a near four-year high of 4.7 percent.

This is largely down to Prime Minister Keir Starmer’s Labour government increasing a UK business tax from April, the same month that the country became subject to Trump’s 10-percent baseline tariff on most goods.

Finance minister Rachel Reeves welcomed the latest rate cut, saying in a statement that it helps to “bring down the cost of mortgages and loans for families and businesses”.

The US Federal Reserve last week kept interest rates unchanged, defying strong political pressure from Trump to slash borrowing costs in a bid to boost the world’s biggest economy.

Asked about US tariffs following the decision, Fed Chair Jerome Powell told a press conference: “We’re still a ways away from seeing where things settle down.”

The European Central Bank is meanwhile widely expected to keep rates unchanged at its next meeting, with eurozone inflation around the ECB’s two-percent target.

But that could change, according to some economists, based on how Trump’s tariffs affect the single-currency bloc. (Punch)

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UK to spend £1.5bn on six new weapons factories

The government will spend £1.5bn on at least six new munitions and explosives factories to “better deter our adversaries”, Defence Secretary John Healey has said.

The factories will support up to 7,000 UK-built long-range weapons and create about 1,800 new jobs, the Ministry of Defence (MoD) said.

The announcement is part of the government’s strategic defence review (SDR), which is due to be published on Monday.

The Conservatives said they welcomed investment in new munitions but shadow defence secretary James Cartlidge called for “greater ambition for the pace and scale of rearmament our armed forces require”

The war in Ukraine has highlighted serious deficiencies in the West’s ability to produce weapons and munitions, and senior British military officers have long warned about the UK’s depleted stockpiles.

As part of its review, the government said it would build new factories to make key munitions and explosives as part of its plans to have an “always on” munitions production capacity that could be scaled up quickly.

It also said the UK would purchase more than 7,000 British-built long-range weapons, including drones and missiles, over several years.

According to the MoD, the new funding will see UK munitions spend hit £6bn during this parliament.

Ministers said the extra investment – which came after Healy said that UK defence spending would rise to 3% of GDP by 2034 at the latest – would strengthen the armed forces and boost British jobs.

Chancellor Rachel Reeves said: “A strong economy needs a strong national defence, and investing in weaponry and munitions and backing nearly 2,000 jobs across Britain in doing so is proof the two go hand-in-hand.

“We are delivering both security for working people in an uncertain world and good jobs, putting more money in people’s pockets.”

Healey said the UK’s defence industry would become an “engine for economic growth” and would “boost skilled jobs in every nation and region”.

“The hard-fought lessons from [Russian President Vladimir] Putin’s illegal invasion of Ukraine show a military is only as strong as the industry that stands behind them,” he added. (BBC)