Autumn tax rises ‘increasingly likely’
Despite UK government borrowing slightly undershooting forecasts so far this financial year, tax rises in the autumn are likely.
That’s the view of City consultancy Capital Economics, who told clients this morning:
Despite the overshoot in May, public borrowing was £2.9bn below the OBR’s forecast in the first two months of the fiscal year. That said, the OBR may still revise up its borrowing forecasts from March in the Autumn Budget.
That and already-tight spending plans mean tax hikes later this year appear increasingly likely.
Last week, ther was a flurry of predictions of tax rises after chancellor Rachel Reeves outlines the government’s spending plans for the next few years.
Capital Economics predict the OBR could revise up its debt interest payments and borrowing forecasts in the Autumn Budget, given recent increases in borrowing costs, while the cooling in the labour market means income tax receipts are unlikely to keep exceeding expectations.
They add:
We doubt it will get much better for the Chancellor anytime soon, as her £9.9bn buffer against her fiscal mandate may be wiped out at the Autumn Budget.
The u-turns on benefit and welfare spending, downward revisions to the OBR’s productivity forecasts and higher borrowing costs may mean to maintain her current £9.9bn buffer, Reeves has to raise £13-23bn later this year. And with the gilt market sensitive to significant increases in borrowing, all this means tax rises are looking increasingly likely.
Key events
Closing post
Time to wrap up for the day (and the week! 🎉).
The UK’s grocery industry watchdog has launched an investigation into Amazon over allegations that the retail and technology company is failing to pay its suppliers on time.
The Groceries Code Adjudicator (GCA) said it had “reasonable grounds” to suspect that Amazon had breached a part of the groceries supply code of practice, which mandates that there should not be delays in payments made to suppliers.
The investigation into Amazon comes almost a year after the GCA told the online retailer it needed to take “swift and comprehensive action” to improve its compliance with industry rules designed to protect suppliers.
The GCA is responsible for regulating the relationships between the UK’s 14 largest grocery retailers – including the biggest supermarkets Tesco and Sainsbury’s – and their direct suppliers.
Amazon has promised to co-operate fully with the investigation. A spokesman for the firm added:
“We have already made significant improvements to our grocery supplier experience, including to payment practices, with supplier contacts on this reducing falling year-on-year.
In other news….
Economists have warned that Rachel Reeves may need to raise taxes by more than £20bn in the autumn budget after figures showed the government’s spending deficit reached £17.7bn in May, the second highest on record for the month.
British retail sales volumes have recorded their sharpest drop since December 2023, as demand fell after shoppers splurged on food, summer clothes and home improvements the month before.
Retail sales fell across all sectors in May 2025. This was the largest monthly fall since December 2023.
Retail sales volumes have fallen 2.7% in May 2025, following a rise of 1.3% in April 2025 (revised up from 1.2%).
Read more ➡️ https://t.co/0spSOuwdhv pic.twitter.com/us5TVl1cfl
— Office for National Statistics (ONS) (@ONS) June 20, 2025
Developing countries need a fresh round of debt relief, to prevent money urgently needed for health and education being diverted to creditors, according to a major new report commissioned by the late Pope Francis.
The chief executive of Royal Mail has left after just over a year, weeks after the delivery company’s owner was sold for £3.6bn to a Czech billionaire.
Emma Gilthorpe resigns as chief executive of Royal Mail
The chief executive of Royal Mail has left after just over a year, weeks after the delivery company’s owner was sold for £3.6bn to a Czech billionaire, my colleague Alex Lawson reports.
Emma Gilthorpe, who joined from Heathrow airport in May 2024, left the company on Thursday, and will be replaced on an interim basis by the chief operating officer, Alistair Cochrane, with immediate effect, the Guardian has learned.
Daniel Křetínský completed a deal to buy International Distribution Services (IDS), the owner of the 509-year-old Royal Mail, in April.
A group of existing IDS non-executive directors, including the chair, Keith Williams, resigned earlier this month. However, the company had made no mention of Gilthorpe’s future after the deal.
Wall Street lifted by Trump’s two-week window for Iran decision
The US stock market has opened higher, as investors welcome US President Donald Trump’s plan to decide whether or not the US gets directly involved in the Iran-Israel conflict within the next two weeks.
The Dow Jones Industrial Average rose 119.4 points, or 0.28%, at the open to 42,291.09. The S&P 500 gained 0.3%, while the tech-focused Nasdaq Composite gained almost 0.5%.
Kathleen Brooks, research director at XTB, says traders are pricing out the worst case scenario for geopolitics.
News that President Trump would delay any decision on joining Israel’s attacks against Iran has boosted the market mood at the end of this week.
The risk is that Trump changes his mind. However, like reciprocal tariffs, Trump sets movable deadlines. While the oil price is likely to maintain some geopolitical premium, Brent crude could move back below $75 per barrel, after touching $79 per barrel on Thursday, as fears of a major escalation in the conflict ease.
Technical problems hit Co-op Bank
Shane Hickey
Customers of Co-op Bank were cut off from online banking for up to seven hours today as a result of technical problems.
The bank’s internet banking was down from 5am, prompting complaints from users online.
A message from the bank said there was an “unplanned outage” and apologised to customers. “Please rest assured we’re working around the clock to resolve this as quickly as possible,” it said.
A spokesperson for the bank said the problem had persisted until 11am on the desktop site and midday on the mobile app.
The outage was blamed on an internal technical problem.
“For a few hours this morning, we experienced a technical issue that temporarily impacted our app and online services,” a spokesperson said, adding:
“Payments were not affected – debit and credit cards continued to work as normal in ATMs, online, and in-store. All services have now been fully restored. We’re sorry for any inconvenience this may have caused.”
Melinda French Gates, the philanthropist and former wife of Microsoft founder Bill Gates, has criticised the tech billionaires who now support president Donald Trump, having criticised him duing his first term.
In an interview with Bloomberg, French Gates also argues history will not look favorably on the rollback of diversity and inclusion initiatives. She says:
“People who used to say one thing have absolutely shifted.
“A democracy is made up by our beliefs and our investments and our values, and we, of all times right now, should be living those values out, not pivoting to what some comms person tells us is the right thing to do.”
Several companies, such as Facebook-owner Meta, have bowed to Donald Trump’s anti-diversity drive and abandoned their diversity goals since he won re-election.
Back in the UK, luxury goods maker Mulberry has announced plans to raise £20m to fund its growth strategy.
Mulberry, which fought off a takeover approach from Frasers Group last year, is aiming to grow annual revenues to £200m and lift its profits margin to 15%.
It says its majority shareholder, Challice, would be willing to underwrite the fundraising in full if required. But, the company believes its prospects are stronger if its other major shareholder, Frasers, takes part too….
Mulberry has also reported that it expects to make a loss of £23m in the last financial year (the results are being audited now), on revenues of around £120m.
Over in the US, factory activity in the Philadelphia region remained weak.
The latest Manufacturing Business Outlook Survey, produced by the Federal Reserve Bank of Philadelphia, shows that general activity in the sector fell again this month.
The new orders index fell but remained positive, and the shipments index improved, turning positive, but manufacturers also cut jobs at the fastest rate since May 2020.
June Philadelphia Fed Manufacturing Index at -4 vs. -1.5 est. & -4 prior … new orders down to +2.3 vs. +7.4 prior; workweek down to -1.6 vs. +2 prior; shipments up to +8.3 vs. -13 prior … notable decline in employment, down to -9.8 vs. +16.5 prior pic.twitter.com/lXIMQBjGJ5
— Liz Ann Sonders (@LizAnnSonders) June 20, 2025
Back in the world of economics, JPMorgan has slashed its forecasts for Israel’s growth, due to the conflict with Iran.
JP Morgan has also revised up its projections for Israel’s budget deficit.
Reuters has the details:
The U.S. investment bank’s economists said they now expected Israel’s GDP to grow 2.0% this year down from 3.2% previously, while the budget deficit is likely to be 6.2% versus a previous estimate of around 5%.
It added the war would lift inflation too and force the central bank to delay the start of an interest rate cutting cycle until November compared to a prior expectation of September.
JPMORGAN SLASHES ISRAEL 2025 GDP FORECAST TO 2.0% FROM 3.2% PREVIOUSLY, LIFTS BUDGET DEFICIT FORECAST TO 6.2% FROM AROUND 5%
WAR SHOCK WILL ADD TO ISRAEL INFLATION AND DELAY CENTRAL BANK INTEREST RATE CUTTING CYCLE, FIRST CUT NOW EXPECTED IN NOVEMBER VS SEPTEMBER, SAYS JPMORGAN
— PiQ (@PiQSuite) June 20, 2025
Amazon has pledged to co-operate with the investigation, while insisting it does comply with the UK’s grocery code.
An Amazon spokesman says:
“Amazon takes the Groceries Supply Code of Practice incredibly seriously and we will co-operate fully with the adjudicator as he carries out his investigation.
“While we are disappointed with this decision, we welcome the opportunity to further demonstrate our ongoing compliance with this particular section of the code.
“We have already made significant improvements to our grocery supplier experience, including to payment practices, with supplier contacts on this reducing falling year-on-year.
Amazon are now being investigated by the UK Groceries code adjudicator.
Centering on deductions and delays in payments to suppliers.
— Steve Dresser (@dresserman) June 20, 2025
Suppliers who want to contribute to the investigation into Amazon can complete the GCA’s confidential questionnaire.
Alternatively, they could email the regulator, at enquiries@GroceriesCode.gov.uk
Or, they can write to:
Groceries Code Adjudicator
7th Floor, The Cabot
25 Cabot Square
Canary Wharf
London
E14 4QZ
The Groceries Code Adjudicator launched its investigation into Amazon after suppliers warned that the retail giant was failing to stick to the Code.
A survey conducted in 2024 found that supplies had raised more issues with Amazon than with other retailers:
Amazon was also bottom of the table when it came to suppliers’ assessment of compliance with the Code:
UK grocery watchdog probes Amazon over alleged supplier payment delays
Britain’s grocery regulator has launched an investigation into whether Amazon is failing to pay its suppliers on time.
The Groceries Code Adjudicator (GCA) says it has “reasonable ground” to suspect Amazon has breached paragraph 5 of the Groceries Supply Code of Practice, which mandates prompt payment to suppliers.
Last summer, the GCA told Amazon to take “swift and comprehensive action” to show it was complying with the Code.
The regulator is now calling for evidence from suppliers, and hopes they will share their experiences of supplying Amazon.
The Adjudicator Mark White says:
Delays in payment can significantly harm suppliers. The alleged delays could expose Amazon suppliers to excessive risk and unexpected costs, potentially affecting their ability to invest and innovate.
I decided to launch this targeted investigation based on the range of evidence I have seen from multiple sources. It will allow me to determine whether Amazon has breached paragraph 5 of the Groceries Code and the root cause of any breach.
I encourage all direct suppliers and other stakeholders to respond to my call for evidence and provide information about your experiences with Amazon. All responses will be completely confidential.
Personal insolvencies also rise
There’s also an increase in the number of people entering insolvency.
Last month, 10,014 individuals entered insolvency in England and Wales. That’s 5% higher than in May 2024.
The individual insolvencies consisted of 648 bankruptcies, 3,783 debt relief orders (DROs) and 5,583 individual voluntary arrangements (IVAs).
