Labour stirs concern over potential rise in capital gains tax

Good morning.

Labour has refused to rule out an increase in capital gains tax, sparking warnings that a rise could deter investors from the UK and push entrepreneurs to sell businesses.

The focus on capital gains sharpened yesterday after Labour declined repeatedly to exclude such a move and the Liberal Democrats put a £5.2bn CGT increase at the heart of their manifesto.

Brent Hoberman, executive chair of Founders Forum and former chief executive of Lastminute.com, told the Financial Times that increasing CGT was a “populist trap”.

“If we have policies that are globally uncompetitive, it will cost us more and the country will have to find other ways to pay for the NHS etc,” he said.

Read more on the reaction to a potential CGT tax rise.

Here’s what I’m keeping tabs on today:

• Economic data: Opec issues its June oil market report, while the UK has labour market figures.

• Ukraine aid: German Chancellor Olaf Scholz, European Commission president Ursula von der Leyen and Ukrainian President Volodymyr Zelenskyy attend the Ukraine Recovery Conference in Berlin.

• Results: FirstGroup, Oracle and Oxford Instruments report.

Five more top stories

1. The Federal Reserve will lower interest rates just once this year, according to the latest FT-Chicago Booth poll of academic economists, as lingering inflation forces the US central bank to adjust its schedule to cut borrowing costs. The results of the survey, conducted in the final week of May, come ahead of tomorrow’s Fed meeting. Read more on how economists responded.

• ECB: The European Central Bank could keep interest rates on hold as needed, despite starting to lower borrowing costs for the first time in almost five years, its president Christine Lagarde has said.

2. Apple has partnered with OpenAI to integrate ChatGPT into its devices, the iPhone maker said yesterday as it outlined upgrades to its software ecosystem. The changes aim to leverage artificial intelligence to provide a smarter Siri voice assistant and more personalised features to enhance productivity. Read more about what the company calls “Apple Intelligence”.

3. The UN Security Council has passed a US resolution backing President Joe Biden’s Gaza ceasefire plan, part of an American-led effort to increase pressure on Israel and Hamas to end the war. The UN resolution was non-binding, but its adoption will increase pressure on both sides to respond positively to the three-phase proposal.

4. Private equity groups could soon own 10 of the 30 largest US accounting firms, according to people familiar with negotiations. At least four groups are holding deal talks following this year’s sales of Grant Thornton and Baker Tilly as regulators voice concern about audit quality. Here are the top-30 firms planning deals.

5. Investors are flocking to the local currency bonds of one-time emerging market pariahs such as Egypt, Kenya, Nigeria and Pakistan, attracted by the countries’ economic turnarounds and higher interest rates. The US dollar debt of many of these countries has already rallied as they avoid outright default. Here’s why frontier market bonds are making a comeback.

The Big Read

The stranglehold that greenbelt imposes on housing development in Britain is one aspect of a stringent planning regime that shadow chancellor Rachel Reeves has condemned as “the single biggest obstacle to our economic success”. Labour hopes to shake up the labyrinthine system to improve housing affordability and unlock growth. Could the party’s reform plans finally break Britain’s planning deadlock?

We’re also reading and listening to . . . 

• Political gamble: French President Emmanuel Macron’s surprise call for a snap election is a risky bet on staving off an ascendant far right, writes Leila Abboud.

• US debt: With $1tn of interest payments to service every year and interest rates elevated, the country’s budget is looking more like a leveraged buyout, writes Patrick Jenkins.

• South Africa: Despite losing his parliamentary majority in recent elections, President Cyril Ramaphosa is determined to keep calm and carry on, writes Gideon Rachman.

• Tech Tonic 🎧: China wants to lead the world in AI, but in order to do so, it’s going to need more chips. Can it overcome US restrictions?

Chart of the day

The future of Scotland’s oil and gas industry has taken centre stage in the UK election campaign as parties seek to persuade workers they can prevent mass job losses by delivering a “just transition” to renewables. Industry groups are concerned that as many as 100,000 jobs are at risk because a 75 per cent windfall tax on oil and gas producers brought in by the Conservatives could be increased by an incoming Labour administration.

Take a break from the news

Golf is having a moment. Global participation is at an all-time high, due in part to an influx of younger and more diverse players. The sport’s upward trajectory has also been helped by a handful of brands that have sought to change the game.

Additional contributions from Benjamin Wilhelm and Gordon Smith