The macro work

Andy Burnham may hold the keys to Number 10, but the bond market holds the purse. Britain now spends more than £110bn a year servicing its debt — more than it spends on defence — so gilt investors, not voters, set the limits for new Chancellor John Healey. The sums are grim: Healey inherits a £22bn hole, with a third straight year of tax rises near-certain as Reeves' manifesto lock ties his hands. June's inflation dip to 2.6% is a trap, a flattering first-week headline set to reverse toward 3.5% as the energy cap climbs. And households already feel it — nearly a million more Britons fell into higher tax bands this year as frozen thresholds quietly do the work no politician wants to announce.

The corporate calls

The corporate week had its own drama. Segro rejected a £13.5bn takeover from Prologis for a third time, betting its AI-ready land is worth far more than the US warehouse giant's £9.93 a share. The Iran war left its mark on earnings, too: Ryanair's profit dropped 36% to €593m as unhedged jet fuel spiked to $150 a barrel, even as passenger numbers rose. HSBC kept simplifying, selling its Singapore insurance arm to Allianz for £1.6bn while pocketing a £1.4bn gain and staying on to distribute the policies. And in fintech, Wise was denied a US banking licence months after shifting its listing to Nasdaq to chase America — a rare stumble for the $240bn-a-year money-mover.

Burnham holds the mandate; the bond market holds the veto. Somewhere in between sits your tax bill. Now, to the rest of the issue.

Britain now spends more than £110bn a year just servicing its debt — more than it spends on defence, and the size of a whole government department. That single figure is why the bond market, not the ballot box, sets the limits for any Chancellor. For John Healey, Britain’s surprise new Chancellor — himself a former defence secretary — the first job is not winning voters, but keeping a few thousand gilt investors calm.

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Defence stocks do not usually cheer a change of chancellor. But this one is different. John Healey quit the last government over defence funding — and now he controls the Treasury. Babcock (LON: BAB) surged more than 6.5% and Rolls-Royce (LON: RR) hit 1,369p as investors piled in to buy, betting the man who resigned over military spending will finally open the taps.

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One had a dedicated owner. Resolution rate: 48.9%. One didn't: 0.38%. See the full breakdown.

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History has a dry sense of humour. Half a century ago a Chancellor named Healey flew to the IMF, hat in hand, after a run on the pound. Britain now has another Chancellor named Healey, another gaping hole in the books, and the same nervous glance at the bond market. Names repeat; so, apparently, do problems. — MJB.