Reeves warns UK finances are in worst state since World War II

Good morning. We begin today with Rachel Reeves’ warning that the UK’s new Labour government has inherited “the worst situation since the Second World War”.

Britain’s chancellor vowed to prioritise growth and not block housing developments or the construction of onshore wind farms in his first major speech as prime minister, setting the stage for tough choices on the public finances this year.

“We face 14 years of chaos and a legacy of financial irresponsibility,” Finance Minister Reeves said yesterday as he ordered the Treasury to investigate past spending under the Conservative government.

The Treasury’s analysis of the financial succession from Rishi Sunak’s government is due to be published before Parliament’s summer recess this month.

Reeves said the review would pave the way for “tough choices” to be made in the autumn budget, which is also due to be announced before lawmakers recess for the summer. Read the full story.

Here’s the latest from the Labour government:

Here’s what I’m focusing on today:

• NATO: Member states gathered for a three-day conference in Washington to celebrate the military alliance’s 75th anniversary.

• US Finance: Federal Reserve Chairman Jay Powell will deliver a monetary policy report to the Senate Banking Committee, and Treasury Secretary Janet Yellen will testify at a hearing of the House Committee on the State of the International Financial System.

• Companies: Kinnevik reports half-year results; Hunting, OMV and Vistry Group provide trading updates.

• European Space Agency: Ariane 6 is scheduled to attempt its first flight from French Guiana between 3:00 pm and 7:00 pm local time.

Five more top stories

1. Joe Biden yesterday launched an aggressive effort to retain his party’s presidential nomination.He penned a defiant letter to wavering Democratic lawmakers and appeared on national television to insist, “I’m not going anywhere.” Here’s more on the president’s latest moves, including participating in a strategy call with major donors.

2. BlackRock, Norwegian and GIC are backing a private equity firm run by the founders of Melrose Industries Inc. The listing this week will be a welcome boost for the London market. Rosebank Industries executives are putting up about 10% of an initial £50 million fundraising effort. The company plans to list on Aim and then on the main market soon after it starts making acquisitions.

3. French business leaders are preparing for the end of a decade of business-friendly conditions With President Emmanuel Macron’s early parliamentary elections leaving parliament in limbo, “We’ll have to wait and see, but everyone is worried,” one business lobbyist said. Here’s a closer look at why the political deadlock and rise of the left has sparked concern.

4. Prime Minister Narendra Modi is scheduled to meet Russian President Vladimir Putin in Moscow today. As the Indian prime minister seeks to strengthen ties and stave off concerns about Moscow’s tilt toward China, we take a look at what to expect from Modi’s first bilateral visit since India’s general elections and his first since Russia’s invasion of Ukraine in 2022.

Five. X has stagnated user growthAs the social media platform’s owner Elon Musk faces splitting users and the rise of Meta’s rival platform Threads, X, which had been experiencing double-digit growth for several years before Musk’s acquisition in 2022, reported 251 million global daily active users in the second quarter of this year, up 1.6% from the same period last year. Read the full story.

Big Lead

The deal to allow U.S. investors to redevelop a 1999 NATO bombing site in Belgrade is a case study in how a small, nonaligned country is preparing for Donald Trump’s return to the White House. It also reflects increased Western attention to Serbia at a time when wedging it away from historic ally Russia is a priority.

We are also reading…

Today’s Chart

China plans to make unprecedented investments of over $800 billion in its power grid over the next six years to overcome strains on its energy system as it rapidly transitions from coal to renewable energy. The aging power grid is a major bottleneck for progress on environmental protection, and there are signs of increasing pressure on electricity distribution and transmission.

Take a break from the news

FT Weekend columnist Nilanjana Roy has called for a return to reading as an essential part of development, rather than a niche activity. But for this generation of kids, finding the time and the right books to read is a serious challenge. How do we make reading appealing to kids in the age of smartphones and with library closures widening the equality gap?

Benjamin Wilhelm and Gordon Smith