7 July 2026: Mann suggests that reduced rate-hike bets boost the action case

Manufacturers are warning of an estimated £85bn hit to the UK economy from lost production if Andy Burnham does not act to reduce industrial electricity prices when he takes over as Prime Minister, as he is widely expected to do.

A report published by the manufacturing sector’s trade body Make UK in partnership with the green energy supplier Ecotricity found that 90% of manufacturers say their energy bills have increased at least moderately since 2022, while more than half of the companies surveyed identify energy costs as their biggest challenge in the coming years.

Further projected rises in energy costs could be life-threatening to operations, according to 13% of firms surveyed. Make UK estimates that a 13% decline in UK manufacturing activity could lead to an annual loss of £50bn across supply chains. Just under half (46%) believe energy costs have increased significantly since the 2022 energy crisis.

Despite these pressures, manufacturers remain committed to net zero and view the transition as a path to greater energy resilience.

Almost three-quarters believe a renewable-led power system is the path to cheaper power, while 71% say net zero is important to their operations.

Nearly 90% have started or are progressing with energy efficiency measures, 63% have taken steps towards electrification, and 87% say they would invest more if the price gap between gas and electricity were reduced. More than a third (40%) say net zero is “very important” to operations.

Independent Bank of England Monetary Policy Committee member Catherine Mann recently said that a reduction in market expectations for BoE rate increases since the June Monetary Policy Committee meeting would be a key factor in her decision on rates at the end of this month.

Speaking at an event hosted by French bank Natixis, Mann said tighter financial conditions following the outbreak of the U.S.-Iran war at the end of February had helped offset the inflationary impact of higher energy prices.

Since its last rate meeting in mid-June, markets no longer fully expect the BoE to raise rates this year and are not pricing in a quarter-point increase until March 2027.

"In June, financial conditions were much tighter than they are now. That will be an important consideration," Mann said in a question-and-answer session after her speech.

Mann voted to keep interest rates on hold at 3.75% last month as part of a 7-2 majority on the Monetary Policy Committee. Still, she views upside inflation risks as more prominent than those of other members who voted to hold rates steady.

A BoE survey of the public's inflation expectations hit a record high in May. The Bank expects inflation to rise to just above 3.25% later this year, up from 2.8% in May, a smaller increase than the 3.6%-3.7% it predicted in April.

"If outturns, especially in expectations, are unfavourable to the underlying inflation process, an activist move can bring inflation expectations and outcomes towards the 2% target," Mann said in written comments released by the Central Bank.

At the event, Mann said research showed that large rate moves were more effective at taming inflation than a gradual approach.

"If you're going to move, move big," she said, as she has on several occasions recently.

Mann said that for the rest of this year, she would focus on how rising inflation affected negotiations for 2027 wage deals.

"Given the seasonality of wage negotiations and their dependence on previous inflation and inflation expectations, data outturns, including expectations for one-year-ahead, in the second half of this year, are particularly important for my future decisions," she added.

Fine-grained labour market data suggested the picture was less weak than the headline unemployment rate of 4.9% implied, she added.

Early yesterday morning was as close to a feel-good nation as England has been for a long while. No matter how far England travels in the World Cup, the grit of that performance, the refusal to be intimidated in the high-altitude furnace of the Mexican stadium, and the spectacle of Captain Kane delivering when needed, time and again, were leadership; they were performance under pressure and skill.

All the things we’ve been told we don’t have.

As Harold Wilson would say, were he still with us, basing the timing of a general election on England’s World Cup performance is high risk. Labour’s football-obsessed leadership still blames England for blowing a 2-0 lead against West Germany in the 1970 quarter-final for their party’s unexpected loss four days later in that year’s election.

There are many reasons that Andy Burnham won’t call a snap election once he is confirmed as Labour Leader and Prime Minister. There are big questions about what Burnham will do as PM. One of his most respected advisers, Jim O’Neill, has signed a letter backing a report calling for radical reforms, urging the next government to scrap council tax and stamp duty and replace them with an annual 1% tax on property value. The letter declared that the report shows how the “failures of the last half century are structural, not moral”. To push through these reforms, Andy Burnham would, in any case, need an electoral mandate.

The pound has come close to recovering the losses it made several sessions ago. Yesterday, it continued its recent rally, reaching a high of 1.3397 and closing at 1.3392.

There’s no direct evidence that Trump’s intervention with FIFA was explicitly intended to bolster his approval rating. Still, the available reporting strongly suggests it aligned with his broader political strategy of projecting influence, energising his base, and dominating media narratives.

It was all to no avail, as the USA lost 4-1 to Belgium yesterday.

Trump’s call to FIFA President Gianni Infantino to review Folarin Balogun’s red card was widely criticised as inappropriate political interference in sport. The reporting consistently highlights three themes: Trump acted personally and publicly, confirming he called Infantino and later celebrated the reversal, while observers saw the move as part of his MAGA political brand, expanding his influence into global football and showcasing his willingness to intervene in non‑political arenas.

The backlash was global, with UEFA, Belgium’s federation, journalists, and political figures condemning the intervention as undermining the integrity of the World Cup and characterising it as politically aligned with his established pattern of high‑visibility interventions.

The US ISM Services PMI edged down from 54.5 to 54.0 in June, missing expectations of 54.2 but remaining comfortably above the 50 threshold that separates expansion from contraction. The report pointed to continued growth in the services sector, although activity and demand moderated slightly from the previous month.

Business Activity/Production eased from 57.7 to 55.4, while New Orders slipped from 57.3 to 55.1, indicating that growth remained solid but had lost some momentum. A notable bright spot was the labour market, with the Employment Index rising sharply from 47.9 to 51.2, marking the first return to expansion in four months. ISM noted that a Services PMI reading of 54.0 is historically consistent with annualised real GDP growth of about 1.9%.

Inflation pressures also showed signs of easing. The Prices Index fell from 71.3 to 67.7, dropping below 70 for the first time since February, although it has remained above 60 for 19 consecutive months. ISM said some respondents reported lower gasoline and diesel costs, but petroleum-related products continued to see price increases as earlier oil shocks worked through supply chains.

Those pressures are expected to ease later this year if recent progress in restoring oil flows through the Strait of Hormuz continues.

Fed Governor Christopher Waller says forward guidance remains a valuable policy tool when used flexibly, in contrast to Chair Kevin Warsh's more cautious approach, as markets await tomorrow's minutes for clues on further changes to communications.

Waller's remarks add to signs of an unusual public divide within the Fed over how much the Central Bank should say about its future rate path, at a moment when Warsh has already stripped forward guidance language from the post-meeting statement.

Markets will likely watch the publication of the minutes from Warsh's first meeting for further clues on how far that communications shift extends, particularly regarding quarterly rate projections and press conferences.

Waller's point that clear guidance can pull forward the effect of policy, as seen in the sharp rise in short-term Treasury yields between September 2021 and February 2022, underscores the risk that a less communicative Fed could slow policy transmission rather than speed it up. With officials currently split over whether inflation or employment poses the bigger risk, any ambiguity in messaging could add to rate volatility around future meetings.

Leaving the market to determine the Fed’s intentions could cause further general volatility and lead to misunderstandings.

The dollar index continues to correct, although there appears to be significant buying interest ahead of the pivotal 100 level. Yesterday, the Greenback fell to a low of 100.84 and closed at 100.87.

German industrial orders rebounded unexpectedly in May, official data published yesterday showed, but the Government warned of ongoing headwinds from "geopolitical uncertainty" stemming from the war in the Middle East.

New orders, a key indicator of future business activity, rose 1.9% in Europe's largest economy from the previous month, according to preliminary figures from the statistics agency Destatis.

This beat analysts' forecast of a 1% fall, as surveyed by financial data firm FactSet, and followed a sharp drop in April.

"Incoming orders in the manufacturing sector appear to have resumed the upward trend that began in the second half of 2025," said the economy ministry in a statement.

On a day of unexpectedly positive data, investor confidence in the Eurozone also improved sharply in July, extending its recovery for a third consecutive month, according to data released on Monday by Frankfurt-based research firm Sentix.

The Sentix Overall Investor Confidence Index for the Eurozone rose 10.3 points to minus 3.1 in July, up from minus 13.4 in June.

The reading came in well above market expectations, which had forecast the index at minus 3.4.

The improvement was driven mainly by a sharp rebound in expectations. The Expectations Index, which measures investors’ outlook for the next six months, climbed to 9.3 points from minus 6.5, while the Current Situation Index improved to minus 14.8 from minus 20.

Sentix said in an official statement that the Eurozone economic outlook is “brightening noticeably,” supported by a strong rise in expectations and improving investor confidence.

Analysts credited the apparent end of hostilities between the U.S./Israel and Iran as the prime reason for the improvement.

ECB Executive Board member Isabel Schnabel warned over the weekend that inflation in food, goods and services faces upside risks, even as the US-Iran ceasefire eases energy price pressures, and called for further rate hikes.

Schnabel's remarks confirm that she is not treating the Hormuz ceasefire as an inflation off-ramp.

Her explicit warning that the strait will reopen only gradually, and that energy costs are already feeding into supply chains and manufacturing pass-through, signals that the hiking cycle has further to run, regardless of any near-term crude price softness.

Eurozone inflation data due this week, expected to be at 3.0% with core holding at 2.6%, will be the immediate test of her expectations. With consumer inflation expectations already rising and the ECB having only just resumed hiking earlier this month after a multi-year pause, markets pricing a quick pivot are likely wide of the mark.

The financial stability flag, citing stretched risk-asset valuations and rising leverage, adds a secondary concern that rate normalisation could surface vulnerabilities that have accumulated during the low-rate era.

The Euro continues to move back into a more familiar range. It climbed to a high of 1.1445 and closed at 1.1441.

Have a great day!