Brighter UK economy gives Reeves a springboard for March statement
The economic backdrop to Rachel Reeves’s upcoming spring statement appeared to brighten on Friday after a trio of reports painted a better-than-expected picture of the UK economy,Record monthly public finances, a surge in retail spending and accelerating business activity offered the most coherent picture of recovery since last autumn, economists said, and provided the chancellor with a more positive narrative before her 3 March statement,“It’s been a hat-trick of good economics news for once for the UK,” said Sandra Horsfield, a senior economist at Investec bank,“We had a disappointing end to last year, but as things look, we may be starting 2026 on a much brighter note,”Public sector finances posted their biggest monthly budget surplus since records began in 1993, of £30.
4bn in January, according to the Office for National Statistics.The figure comfortably beat the forecast of £24bn made by the Office for Budget Responsibility, the government’s official forecaster, and was driven by a large increase in self-assessment and capital gains tax receipts.It was double the surplus recorded in January 2025.Retail sales in Britain surged by 1.8% in January, the largest monthly increase in almost two years and partly driven by sales of artwork and antiques sales in January, alongside continued strong sales from online jewellers.
Rounds of heavy discounting and post-Christmas sales drew customers back to bigger-ticket purchases, with furniture and tech among the biggest-selling categories over the past three months.On both fronts there were caveats.January is traditionally a strong month for self-assessed tax receipts, potentially flattering the public finance numbers, while retail sales got an artificial bump from jewellers seeing “unprecedented” levels of demand, the ONS said, amid soaring gold prices.But the figures were further boosted by polling that showed momentum across the UK’s private sector, with a survey showing the fastest rise in activity since April 2024.The flash poll of UK purchasing managers by S&P Global found there was “a robust and accelerated upturn in new work” at UK companies this month, with companies in the manufacturing and services sectors reporting solid rates of business activity expansion.
That work upturn followed a fall in inflation to 3% in January from 3.4% in December, fuelling expectations that the Bank of England will soon cut interest rates again.“The economy started the year looking a lot healthier and will give the chancellor something positive to point to in her fiscal statement on 3 March,” said Paul Dales, chief UK economist at Capital Economics.It adds up to give Reeves more headroom at the spring statement, with government borrowing running about £8bn below the OBR’s full-year forecast and government borrowing costs having fallen since November.Rob Wood, chief UK economist at Pantheon Macroeconomics, said the chancellor could “probably bank on having a bit more headroom than she had in the autumn budget” as a result.
But Wood cautioned that the economic outlook beyond the spring statement was less certain, amid plans to raise fuel duty later this year for the first time in 15 years, with the revenue impact difficult to predict.The government will also have to navigate the Gorton and Denton byelection in Greater Manchester on 26 February, in what will be a significant test for Keir Starmer.“Politically, the situation is still difficult,” said Horsfield.“There are plenty of hurdles yet to be overcome.”While the cooling of inflation has raised hopes of further interest rate cuts from the Bank of England, analysts also cautioned that any cuts would themselves be a product of an economy still struggling for momentum.
Unemployment rose to a five-year high of 5,2% in the final quarter of last year, particularly among young people, while Friday’s PMI data showed job losses continuing for the 17th consecutive month in February as firms responded to higher employment costs,“One swallow does not make a spring,” said Danni Hewson, head of financial analysis at AJ Bell,“Fundamentally the UK economy remains weak and vulnerable and the high levels of unemployment, particularly amongst the young, hint at a difficult future ahead,”
Nvidia reportedly plans to invest $30bn in OpenAI’s next funding round
Nvidia, the world’s most valuable company, is reportedly planning to invest $30bn (£22bn) in OpenAI’s next funding round, after a $100bn deal between the two dissolved earlier this month.The maker of ChatGPT is expected to be valued at $730bn in the funding round, almost twice the valuation of Anthropic, one of its main rivals, which raised $30bn earlier this month.Nvidia’s announcement of a $100bn investment in OpenAI last September drove the chipmaker’s stock to more than $5tn and led to fervent discussion about circular deals between the largest players in artificial intelligence.The investment, which the chipmaker framed as a “letter of intent”, would have involved Nvidia giving OpenAI money to buy and deploy its chips for its AI infrastructure.That all appeared to change earlier this month, when reports surfaced that Nvidia’s intent was never a firm commitment – and OpenAI was looking elsewhere for chips to power its systems
Mind launches inquiry into AI and mental health after Guardian investigation
Mind is launching a significant inquiry into artificial intelligence and mental health after a Guardian investigation exposed how Google’s AI Overviews gave people “very dangerous” medical advice.In a year-long commission, the mental health charity, which operates in England and Wales, will examine the risks and safeguards required as AI increasingly influences the lives of millions of people affected by mental health issues worldwide.The inquiry – the first of its kind globally – will bring together the world’s leading doctors and mental health professionals, as well as people with lived experience, health providers, policymakers and tech companies. Mind says it will aim to shape a safer digital mental health ecosystem, with strong regulation, standards and safeguards.The launch comes after the Guardian revealed how people were being put at risk of harm by false and misleading health information in Google AI Overviews
West Virginia sues Apple over child sex abuse material stored and shared on iCloud
West Virginia’s attorney general filed a lawsuit on Thursday accusing Apple of allowing its iCloud service to become a vehicle for distributing child sexual abuse material.The state alleges that the company facilitated the spread of child sexual abuse material by declining to deploy tools that scan photos and videos and detect such material in iCloud users’ collections.JB McCuskey, a Republican, accused Apple of prioritizing user privacy over child safety. His office called the case the first of its kind by a government agency over the distribution of child sexual abuse material on Apple’s data storage platform.“These images are a permanent record of a child’s trauma, and that child is revictimized every time the material is shared or viewed,” McCuskey said in the statement
Skiers stranded by California avalanche used iPhone SOS feature to seek help
California’s deadliest avalanche killed at least eight people in a ski group near Lake Tahoe on Tuesday. The six survivors used the iPhone’s emergency SOS feature to help first responders find them as they waited under a tarp and discovered some of the bodies, according to the Nevada county sheriff. Apple’s feature, introduced in 2022, allows users to text law enforcement, even if there’s no cell service or wifi by connecting the phone to a satellite.First responders reached the skiers’ location and learned of the six survivors based on conversations held through the feature, Sheriff Shannan Moon said at a press conference on Wednesday.California office of emergency services law enforcement chief Don O’Keefe said his staff spoke with one of the stranded guides for more than four hours to relay information to the sheriff’s office, which was leading rescue efforts
US builds website that will allow Europeans to view blocked content
The US has built a portal that will allow Europeans to view blocked content including alleged hate speech and terrorism, according to Reuters.The portal, “freedom.gov”, will allow worldwide users to circumvent government controls on their content. The site features a graphic of a ghostly horse galloping above the Earth, and the motto: “Information is power. Reclaim your human right to free expression
Accenture ‘links staff promotions to use of AI tools’
Accenture has reportedly started tracking staff use of its AI tools and will take this into consideration when deciding on top promotions, as the consulting company tries to increase uptake of the technology by its workforce.The company told senior managers and associate directors that being promoted to leadership roles would require “regular adoption” of artificial intelligence, according to an internal email seen by the Financial Times.The consultancy has also begun collecting data on weekly log-ins to its AI tools by some senior staff members, the FT reports.Accenture has previously said it has trained 550,000 of its 780,000-strong workforce in generative AI, up from only 30 people in 2022, and has announced it is rolling out training to all of its employees as part of its annual $1bn (£740m) annual spend on learning.Among the tools whose use will reportedly be monitored is Accenture’s AI Refinery
UK migrant families face giving up vital in-work benefits to avoid being ‘punished’
‘Very dangerous’: a Mind mental health expert on Google’s AI Overviews
Local reporter ‘shocked’ over picture of his face on punchbag at UK town hall
Tech firms must remove ‘revenge porn’ in 48 hours or risk being blocked, says Starmer
NHS to spend more to settle lawsuits over negligence during childbirth after court ruling
Health support needed to tackle joblessness | Letter