Key events
GSK to invest $30bn in US; reaffirms commitment to UK
GSK laid out plans on Wednesday to invest $30bn (£22bn) in research and supply chains in the US over the next five years, in an announcement timed to coincide with Donald Trump’s state visit to the UK.
This includes $1.2bn of new money to build an AI-powered biologics factory in Pennsylvania that will develop treatments for the lung disease COPD and asthma, as well as cancer. It will also fund the roll-out of AI across GSK’s existing five manufacturing sites in Pennsylvania, North Carolina, Maryland and Montana. This will create hundreds of highly skilled jobs, on top of construction jobs, expanding GSK’s 15,000-strong US workforce.
GSK also reaffirmed its commitment to the UK. Its chief executive, Emma Walmsley, said:
Alongside the many longstanding and vital shared interests that connect the UK and the United States, is advancing life sciences to get ahead of disease. This week’s State Visit brings together two countries that have led the world in science and healthcare innovation. We are proud to be part of both.
Here in the UK, we continue to invest in a significant manufacturing base and more than £1.5bn in R&D every year.
Keir Starmer said GSK’s US investment “will change lives on both sides of the Atlantic”.
From new treatments for asthma and cancer to creating hundreds of highly skilled jobs, this major British investment into the US will change lives on both sides of the Atlantic, helping to accelerate the development of cutting-edge technologies to bring faster, more effective medicines to get ahead of disease.
It’s a powerful example of how UK–US collaboration is driving real-world impact – improving people’s health, creating opportunity and turbocharging growth.
Ben & Jerry’s co-founder Jerry Greenfield quits accusing Unilever of silencing social mission
Ben & Jerry’s co-founder Jerry Greenfield has stepped away from the ice-cream brand after nearly 50 years, according to a post by the other founder, Ben Cohen.
Cohen’s post shared what he said was a letter from Greenfield in which he called it one of the “hardest and most painful decisions” he had ever made.
Greenfield accused Unilever of silencing the company, saying its independence to speak up on global issues was “gone”.
Greenfield said:
If the company couldn’t stand up for the things we believed, then it wasn’t worth being a company at all.
The decision came despite a merger agreement meant to safeguard the brand’s social mission, Greenfield added.
Official figures on Tuesday showed the jobs market cooled in July, while economic growth remains weak; adding to pressure on the Bank of England to consider a cut in rates. The ONS will provide updated figures for retail sales and the government finances on Friday. But analysts said concerns remained over stubborn inflation.
Martin Sartorius, the principal economist at the CBI business lobby group, said:
The monetary policy committee [MPC] looks set to keep interest rates unchanged tomorrow and, going forward, the MPC faces a delicate balance between signs of a cooling labour market and the risk of price pressures remaining stubbornly high.
UK inflation is higher than in the US, where it increased to 2.9% in August, and in the eurozone where it rose to 2.1%, just above the European Central Bank’s 2% target. The EU’s statistics office will release its final figures at 10am BST.
Mel Stride, the shadow chancellor, said:
With borrowing costs hitting a 27-year high, working people and businesses are bracing for even more tax rises to pay for Labour’s mismanagement.
Here’s our full story:
The pound is little changed versus the dollar following the inflation data, at $1.3636, but hovering at a two-month high.
Victoria Scholar, head of investment at the investing platform interactive investor, said:
In light of today’s data, it still looks like the Bank of England is on track to keep interest rates unchanged at tomorrow’s decision meeting. While inflation is clearly stuck significantly higher than target, there was nothing too surprising in this inflation report – CPI came in line with forecasts, and consequently there wasn’t much of a reaction from sterling.
Elevated inflation, notably higher than the 2% target makes it harder for the central bank to continue on its monetary loosening path, raising the likelihood of a higher-for-longer interest rate environment which could have negative effects on borrowing and the housing market.
The Office for National Statistics noted that UK inflation has been above that of France and Germany every month so far this year.
The UK’s CPI inflation rate of 3.8% was significantly higher than the first, or “flash” estimate of inflation for France (0.8%) and Germany (2.1%) in August. The UK rate has been above that of the other two countries in each month of 2025 to date.
The Food and Drink Federation is predicting that food and non-alcoholic drink inflation could reach 5.7% by December, from 5.1% in August.
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Five categories saw inflation in double digits last month: beef and veal (24.9%), butter (18.9%), chocolate (15.4%), coffee (15.4%), and whole milk (12.6%).
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Prices fell the fastest for: olive oil (-12.5%), flours (-5.9%), sugar (-3.8%), and pasta (-2.8%).
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While the price of olive oil is falling year-on-year, it’s still over 120% higher than it was at the start of 2020.
Karen Betts, the chief executive, said:
It’s concerning seeing food and drink inflation rise further, to 5.1% in August, when commodity and energy prices are fairly stable. There are still notable pressures on coffee, cocoa, olive oil and dairy prices, but otherwise the continued rise is explained by regulatory and tax costs. This year’s increases to employer national insurance Contributions, the new packaging tax, business rates rises and the cost of border checks including to Northern Ireland are heaping costs on our sector.
We need government to bring down the cost of regulation – so it’s better designed, easier to implement, and better sequenced so it doesn’t all land at once on companies struggling to cope. Manufacturers are looking to the chancellor in the budget to ensure we have proper policies and incentives in place to drive productivity growth across food and drink, to offset regulatory and tax costs, and to boost the employment and prosperity that food and drink manufacturing provides in communities up and down the country. She must resist bringing in new costs to ensure the UK is an attractive place to invest.
‘Sticky UK inflation leaves November rate cut hanging in the balance’ – ING
At 3.8%, the latest UK inflation data certainly isn’t welcome news for the Bank of England ahead of its decision on Thursday, where it’s widely expected to leave rates on hold, said James Smith, developed markets UK economist at ING.
Yet the latest data doesn’t dramatically move the needle one way or another on the prospect of a further rate cut later this year.
Inflation is more or less at a peak, though it’s likely to stay in the 3.5-4% area for the rest of this year.
Rising food inflation is a particular bugbear of the Bank of England. Yet we aren’t in the camp that thinks rate cuts are over, given the prospect of further progress in services inflation and wage growth.
Food inflation nudged above 5%, as both we and the BoE had anticipated. That’s a particular bugbear of officials right now, given the formative role food prices play in inflation expectations, but also because of the correlation with restaurant/café prices.
Catering makes up 40% of the Bank’s preferred measure of “core services” inflation, which gauges the segment of the inflation basket most intrinsically linked to the underlying performance of the UK economy. Inflation in the hospitality sector has been stuck around 4% this year, which we think is linked to pressure from April’s payroll tax and National Living Wage hikes.
While services inflation slowed to 4.7% from 5%, this was mainly because of volatile air fares. The core services basket stayed at 4.2%, Smith calculated.
However, we think there is still scope for services inflation to undershoot the Bank’s forecasts further in the next release for September. And more broadly, we are seeing a significant easing in rental growth, which is set to be a significant source of service sector disinflation over the coming months.
If we’re right about that, it would tip the balance slightly more in favour of a November rate cut, which we still narrowly expect. Certainly, we aren’t in the camp that thinks rate cuts are over. Services inflation should show more visible progress next spring, while wage growth should ease below 4% by year-end. Add in the fact that the late-November autumn Budget is likely to be dominated by tax rises, and we think there’s still a decent case for UK interest rates to fall two or three more times by next summer.
Price growth for services, which is closely watched by the Bank of England, has slowed to 4.7% from 5% in July, while goods inflation ticked up to 2.8% from 2.7%.
Sanjay Raja, chief UK economist at Deutsche Bank, said:
The good news is that August inflation data has corrected some of the upside surprise we saw last month. The bad news is that CPI has maybe a little further to go before hitting its peak. Indeed, food inflation continues to push higher – though survey data suggest that we may be nearing the peak on this front too. And despite better services data this morning, inflation in the largest basket remains sticky. To be sure, there are some encouraging bits of information in today’s report – and we will need to see more of this for the Bank of England to cut Bank Rate again.
This is why we continue to see a slightly longer pause when it comes to the Bank’s next rate move. For us, the MPC [monetary policy committee] may want to wait for a larger accumulation of evidence before dialling down restrictive policy again. Seeing the downtrend in CPI begin could assuage fears on the committee that the hump in inflation is not turning into a plateau.
Analysts say that climate change is clearly affecting food prices and making them harder to control.
Tom Lancaster, land, food and farming analyst at the Energy and Climate Intelligence Unit, said:
Food price inflation is once again up, after the hottest spring and summer on record has hit UK farmers ability to grow crops and feed their animals, with the UK again facing one of its worst harvests in decades.
Although this extreme weather will only be part of the story in these price rises, the signature of climate change is clear. And it’s not just British grown foods such as beef, milk and vegetables that are rising, but also prices for food and drink like chocolate and coffee too, both driven up by extreme weather linked to climate change.
Central banks are clear that climate change increases food prices in ways they cannot control or predict, creating systemic risk to our food system. There is no monetary policy lever they can pull to address this. Only by reducing our emissions to net zero and bringing balance back to our climate will we limit the impact of climate change on food prices in the future.
Food prices rise at fastest rate since January 2024
Food prices rose for the fifth month in a row – after the hottest spring and summer on record which damaged harvests – to an annual rate of 5.1%, up from 4.9% in July and the highest since January.
Vegetables, milk, cheese and fish became more expensive, while bread and cereals and oil and fats became cheaper.
Air fares rose by less than last year.
Ticket prices were up by 2.1% between July and August, compared with a rise of 22.2% at this time last year. This was due to the different timing of flights in relation to school summer holidays, particularly return flights from Europe. Last year, these return flights from Europe fell during the school term in July, but this year they were during the school holidays in July, making them more expensive this year.
This was offset by higher prices at restaurants and hotels, and fuel costs. Prices at restaurants and hotels rose by 3.8% year on year in August, up from 3.4% in July.
The biggest upward effect came from accommodation providers, especially from overnight hotel stays priced the previous day, where prices fell this year by less than an ear ago. There was also a smaller upward effect from canteens.
The average petrol price rose by 0.3p a litre between July and August to 134.2p, compared with a fall of 2.1p a litre last year. Similarly, diesel prices rose by 0.8p per litre to an average of 142.p, against a 2.6p per litre drop last year.
Rachel Reeves, the chancellor, said:
I know families are finding it tough and that for many the economy feels stuck. That’s why I’m determined to bring costs down and support people who are facing higher bills.
Through our Plan for Change we are taking action — raising the National Living Wage, extending the £3 bus fare cap, and expanding free school meals, to put more money in people’s pockets while we work to build a stronger, more stable economy that rewards hard work.
Introduction: UK inflation stayed at 3.8% in July
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
UK inflation stayed steady last month, keeping households under pressure with petrol prices rising.
The annual rate of inflation, as measured by the consumer prices index, remained at 3.8% last month, the same as in July, according to the Office for National Statistics. This was in line with what economists had predicted.
Air fares rose by less than year while prices at restaurants and hotels, and for petrol and diesel, were higher.
The core rate of inflation, which strips out volatile energy and food costs, fell to 3.6% in July, also as forecast by economists.
With growing inflationary pressures, financial markets are widely predicting the Bank of England will keep interest rates unchanged at 4% on Thursday. Inflation is nearly double the central bank’s target of 2%.
Donald Trump landed at London Stansted last night for an unprecedented second state visit to the UK.
The US president and the first lady, Melania Trump, touched down onboard Air Force One ahead of a series of events over the next two days, including being hosted by King Charles, military parades and a possible flypast by the Red Arrows alongside British and American F-35 jets.
It comes amid criticism in the UK of Trump’s policies and rhetoric, with the Stop Trump Coalition gathering for a protest in Windsor on Tuesday and the group planning another demonstration in central London on Wednesday.
Writing in the Guardian, the London mayor Sadiq Khan accused the US president of doing more than anyone else to “fan the flames of divisive, far-right politics around the world in recent years”.
Later today, the US Federal Reserve announces its latest interest rate decision. It is widely expected to cut rates by a quarter point to 4.25%.
The Agenda
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8.30am BST: ECB president Christine Lagarde speech
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10am BST: Eurozone inflation for August (final)
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1.30pm BST: US Housing starts for August
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2.45pm BST: Bank of Canada interest rate decision
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7pm BST: US Federal Reserve interest rate decision (forecast: quarter-point cut to 4.25%)
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7.30pm BST: Fed press conference
