UK chancellor set to disclose £20bn public funding shortfall

Good morning.

Rachel Reeves is expected to reveal a near-£20bn hole in the public finances as the government accuses the Tories of what it says is a “failure” to properly run the government finances. 

On Monday the UK chancellor will outline the results of an audit of shortfalls in funding plans that is expected to pave the way for tax increases later this year.

The figure of about £20bn, which could change as work continues, represents an annual gulf between revenues and funding commitments in areas such as asylum and public sector pay. 

“This is beginning to lift the lid on exactly what they did,” said a Labour source. Read the full report.

Here’s what else I’m keeping tabs on today and over the weekend:

• Economic data: Spain has unemployment data today, while the US publishes the latest personal consumption expenditures price index, the Federal Reserve’s preferred inflation metric.

• Trump-Netanyahu meeting: The Republican presidential nominee meets the Israeli prime minister at his Mar-a-Lago club in Florida.

• Paris Olympics: The opening ceremony of the 2024 Games will be held today. Host country France hopes to reach the top five in the medal tally.

• Venezuela election: Opinion polls have forecast a landslide victory for opposition candidate Edmundo González in Sunday’s presidential vote, but the big question is whether authoritarian leader Nicolás Maduro will accept defeat.

How well did you keep up with the news this week? Take our quiz.

Five more top stories

1. Roberto Cingolani, head of Italian defence group Leonardo, has said he would be “open to” Saudi Arabia joining a tri-national project to build an advanced fighter jet if Britain decides to reduce its commitment. The comments come amid speculation that the Labour party may reduce its commitment to the Global Combat Air Programme with Italy and Japan as it conducts its defence policy review. Sylvia Pfeifer has more.

2. Banco Sabadell’s chief has warned that its would-be acquirer could be forced by regulators to offload part of its business serving small companies, jeopardising the main attraction for hostile bidder BBVA. It is the latest salvo in a contentious takeover battle as Sabadell seeks to fight off BBVA’s bid. Read the full interview with César González-Buenow.

3. Israeli Prime Minister Benjamin Netanyahu met US President Joe Biden yesterday, a day after his polarising joint address to the US Congress that drew boycotts and protesters. The meeting is seen by US officials as a chance to push the Israeli premier on a proposed Gaza ceasefire and hostage deal that he has yet to publicly endorse.

4. The Liberal Democrats are pressing to clinch extra debate days and other parliamentary rights from the Conservatives, arguing that a reallocation is due following their record election result and the Tories slumping to become the smallest official opposition in recent times. Lucy Fisher has the story.

5. The European Commission has shelved an attempted crackdown on the wasteful practice of discarding fish, abandoning moves to take legal action against five member states for allegedly failing to enforce rules against overfishing. The move comes as business groups and member states have in recent years accused Brussels of softening enforcement across the single market.

The Big Read

Rising salaries in Russia’s booming wartime defence industry have forced civilian businesses to follow suit in order to attract workers at a time of acute labour shortages. The explosive pay increase is being felt across the socio-economic spectrum, dramatically transforming life for a swath of blue-collar workers. The result is that the country has unexpectedly found itself in the midst of a consumer spending boom.

We’re also reading . . . 

• Robotics: The world’s biggest tech companies are racing to build an AI “brain” that can autonomously operate robots in moves that could transform manufacturing and healthcare.

• ‘Broken window fallacy’: It is a misconception that every economic activity we witness — think Taylor Swift concerts — is productive and net value-creating, writes Tej Parikh.

• Revolut: The start-up’s journey towards becoming a full-fledged bank in the UK has been rocky, but a recently approved licence could help unlock global growth.

• US election: Vice-president Kamala Harris is polling better than Joe Biden, but she is yet to be in winning territory, writes John Burn-Murdoch.

Chart of the day

The number of workers suffering from the “silent killer” of extreme heat in Europe and central Asia has increased by almost a fifth since 2000, the UN labour agency said, as the world this week experienced its hottest days. This was matched by a rapid 16.4 per cent increase in the proportion of heat-related occupational injuries.

Take a break from the news

The Games are beginning, and the fashion, too, is going for gold. The athletes’ kit bags, from suitcases of team apparel to competition clothes and outfits, including opening and closing ceremony swag, make for intoxicating viewing.

Additional contributions from Benjamin Wilhelm and Harvey Nriapia