Inflation

SCORES of drivers face a new charge at a major Scottish airport as a price increase begins today.

New drop-off charges have been rolled out at Edinburgh Airport, Scotland‘s busiest air hub which was used by 17 million passengers last year.

It will now cost £8.50 for a ten-minute slot to either drop-off or pick someone up near the main terminal.

The fees have been hiked by £2.50 and were rolled out today.

Bosses have also scrapped a 50 per cent discount for people driving electric vehicles to the airport.

Instead, more spaces have been added to the free drop-off area – where motorists can park for free for 30 minutes.

The price hike has been blamed on a surge in business rates.

Airport chiefs claim they have been hit by a hit by a 142 per cent rise – an £8million increase – which was branded “simply unacceptable”.

Edinburgh Airport’s chief executive Gordon Dewar said: “This decision to impose an unplanned and wholly disproportionate £8million rates increase has an immediate and negative impact on our business.

“We made this clear in correspondence with the Lothians Assessor, who set the increase, and in discussions with the Scottish Government, which has endorsed it.

“A 142% increase reduces our ability to invest, grow and compete. In practical terms, it equates to funding around 200 jobs, two aircraft stands, or five new security lanes. It is not a cost that can be absorbed; it must be covered, and trade-offs like this are unfortunately unavoidable.

“Like many across the hospitality and tourism sectors who have seen business rates soar, we have no choice but to pass part of this cost on to passengers.

“We had not planned to raise fees this year, but the absence of a transitional relief scheme – equivalent to that available in England and Wales – leaves us with no alternative.

“We have always accepted that, given our size, we should pay more, but the scale of this increase is simply unacceptable.”

Bosses previously wrote to the Convenor of the Lothian Valuation Joint Board, which sets non-domestic rates, as well as the First Minister and the Public Finance Minister, to outline their concerns.

Mr Dewar added: “We have made clear to both the Assessor and the Scottish Government that a system which produces such markedly different outcomes for comparable assets operating within the same national economy cannot credibly be described as fair, proportionate or fit for a modern Scotland. This systemic inconsistency lies at the heart of our concern.”

It comes just months after Glasgow and Aberdeen airports – both owned by AGS – increased their drop off fees.

It costs £7 for people to park for up to 15 minutes at both of the sites.

A Scottish Government spokesperson said: “The valuation of all non-domestic property is a matter for the Scottish Assessors who are independent of central and local government.
 
“The Scottish Government estimates Edinburgh Airport will, with Transitional Relief,  have a net non-domestic rates bill of around £8.1 million for 2026-27, compared to £5.4 million before revaluation.
 
“The Scottish Government’s Revaluation Transitional Relief protects those most affected at revaluation – including airports – and will cap increases in gross liabilities up to the next revaluation in 2029.”

Published on
14/05/2026 – 14:35 GMT+2

Long-term US borrowing costs climbed to levels not seen since before the global financial crisis after the Treasury auctioned $25bn (€21.3bn) in 30-year bonds at a high yield of 5.058% on Wednesday, according to the department’s own data.

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The sale came only hours after the US Senate voted to confirm former Federal Reserve governor Kevin Warsh as the next chairman, succeeding Jerome Powell.

The auction result immediately complicated the backdrop for Warsh’s arrival at the central bank, underlining the pressure facing policymakers as inflation is rising.

At the time of writing on Thursday, US 30-year bonds are trading at 5.02% while 10-year notes are selling with a yield of 4.44%.

US inflation figures released earlier this week showed consumer prices rose 3.8% from April 2025 as the 10-week Iran war pushed energy costs higher and distanced inflation from the Federal Reserve’s 2% target.

Producer price data also pointed to persistent underlying cost pressures across the economy, reinforcing expectations that the central bank may struggle to ease monetary policy quickly.

Rising Treasury yields have broad implications for the economy because they influence borrowing costs on mortgages, corporate debt and other forms of credit.

Higher long-term yields can also increase financing costs for the US government at a time when public debt is nearing $40 trillion (€34.1tn).

Investors are increasingly concerned that a combination of resilient economic growth, elevated energy prices and sustained government borrowing could keep inflationary pressures alive despite two years of restrictive monetary policy.

The yield on the benchmark 30-year Treasury bond being auctioned above 5% is a symbolic threshold last reached in 2007 before the onset of the global financial crisis.

While market conditions today differ substantially from that period, the move nonetheless underscores the sharp repricing that has taken place in global bond markets over the past two years.

Kevin Warsh inherits a difficult policy environment

Kevin Warsh takes over the Federal Reserve at a delicate moment for the US economy.

The former Morgan Stanley banker and Fed governor has previously argued in favour of maintaining the central bank’s credibility on inflation, while also signalling support for reforms to the institution’s communication strategy and balance sheet policies.

Warsh’s confirmation comes as financial markets remain divided over how aggressively the Federal Reserve should respond to persistent inflation pressures.

Some investors believe rates may need to stay higher for an extended period, while others warn that maintaining tight monetary conditions for too long could weigh heavily on economic growth and employment.

The main driver of the rise in inflation is the current disruption to global energy markets caused by the Iran war which also leaves the central bank at the mercy of geopolitics and not able to effectively control the situation.

Analysts stated that Wednesday’s Treasury auction illustrated the immediate challenge confronting the incoming Fed chair.

Elevated bond yields can help tighten financial conditions without additional rate increases from the central bank, but they can also amplify risks for heavily indebted households, businesses and the federal government itself.

For Warsh, the market reaction served as an early reminder that restoring confidence on inflation may prove more complicated than simply holding interest rates at restrictive levels.

WASHINGTON — The Senate confirmed President Trump’s nominee to lead the Federal Reserve, Kevin Warsh, bringing new leadership to the world’s most powerful central bank at a fraught moment for the global economy.

Warsh was confirmed Wednesday in a largely party-line vote. His nomination had been thrown into doubt in recent months after Republican Sen. Thom Tillis of North Carolina said he would block the nomination while the Justice Department investigated Fed Chair Jerome H. Powell. The Powell inquiry was dropped in April, clearing the way for the Senate to confirm Warsh.

Senate Majority Leader John Thune (R-S.D.) urged colleagues to support Warsh during a floor speech Wednesday morning, saying it’s crucial that a Fed chair “understand not only the macro” but also “appreciate the microeconomy: and that’s the hardworking Americans, their jobs and their livelihoods.”

“Kevin Warsh is just such a person,” Thune said.

Warsh, 56, a former top Fed official, will become chair at an unusually difficult time for the independent agency.

Inflation has topped the Fed’s 2% target for five years and is now rising faster because of surging gas prices. The Fed’s interest rate-setting committee is divided and saw the most dissenting votes in more than three decades last month. And Powell, after years of personal attacks from the Republican president and an unprecedented legal investigation by the Justice Department, plans to stay on the Fed’s board even after his term as chair ends, potentially creating a competing power center.

Trump has demanded change at the Federal Reserve

The Fed has faced numerous threats to its independence from Trump, who has repeatedly attacked Powell for not cutting interest rates. Trump also sought to fire Fed Gov. Lisa Cook and launched an investigation into brief Senate testimony by Powell on a building renovation.

Kevin Hassett, director of the White House’s National Economic Council, said in a Fox News interview on Sunday that he believes the markets are relieved that Warsh “is going to help lower interest rates over time.”

“Obviously, data driven,” said Hassett. “I’m not putting any pressure on Kevin Warsh.”

In December, Trump said on his social media platform that he wanted a Fed chair who would cut interest rates when the stock market rose — the opposite of what traditional economics would prescribe — and added, “Anyone that disagrees with me will never be the Fed chairman!”

Trump’s comments have fueled concerns over whether Warsh will set rates based on economic conditions or seek to cut rates to appease Trump, even if doing so could worsen inflation. At Warsh’s confirmation hearing last month, Sen. Elizabeth Warren, a Democrat from Massachusetts, derided him as a “sock puppet” for Trump. Warsh declined to say that Democrat Joe Biden had won the 2020 election against Trump, who has falsely claimed that voter fraud cost him reelection.

Still, Warsh denied at the hearing that Trump had pressured him to reduce the Fed’s key rate.

“The president never once asked me to commit to any particular interest rate decision, period,” Warsh said then. “Nor would I ever agree to do so if he had. … I will be an independent actor if confirmed as chair of the Federal Reserve.”

A critic of the Fed’s leadership in the past

Warsh has been highly critical of the Fed’s recent track record, particularly the inflation spike in 2021-22, the worst in four decades, and has called for “regime change.” Yet he has provided only broad outlines of what that change would involve.

He has called for limiting the Fed’s communications, which would be a sharp shift after decades of increasing transparency. He has argued that some of its communications tools, such as quarterly forecasts of where its key rate may head, have made it harder for officials to switch gears.

Senate Democrats also have condemned Warsh for not fully divulging the details of his extensive wealth, which disclosures show amounts to at least $100 million. His investments include stakes in Polymarket and SpaceX, but he hasn’t revealed how large those holdings are. He promised to sell all such assets within 90 days of being sworn in.

“He will be the wealthiest Fed chair in history, but he refuses to provide transparency to the American people about who he is entangled with,” Warren said.

Warsh faces difficult economic conditions

The Fed is still grappling with how to respond to the 50% jump in gas prices from the Iran war. The increase has boosted inflation, which reached 3.8% in April.

The Fed is tasked by Congress with keeping prices stable, which it seeks to do by raising its short-term rate to make borrowing and spending more expensive, cooling growth and inflation.

The Fed typically looks past temporary price increases that stem from supply disruptions, such as the war’s cutoff of oil through the Strait of Hormuz, because those prices typically level off — or even fall back down — once the supply is restored.

But the Fed also followed that approach after the COVID-19 pandemic snarled global supply chains for goods, lifting prices for things such as cars, furniture and electronics. Inflation turned out to last longer than expected, and Powell and other Fed officials have acknowledged they waited too long to raise rates. Inflation surged to 9.1% by June 2022.

The Fed’s rate-setting committee has kept rates unchanged for three straight meetings as it evaluates the effect of the gas price spike. At its most recent meeting last month, three members of the committee objected to language that suggested its next move would be a rate cut. They preferred more neutral language that would allow for a hike. Many Fed watchers saw those dissents as a warning shot to Warsh that he won’t be able to easily engineer rate reductions.

A fourth member of the 12-member committee, Stephen Miran, dissented in favor of a rate cut, as he has at every meeting since Trump appointed him to the Fed’s board last September. Miran is serving until a replacement is named, and Warsh will take his spot.

Powell, meanwhile, said at a news conference April 29 that he would remain as a Fed governor until the Justice Department closes its investigation into the Fed’s building project, the first time a chair may stay on the board for an extended period since 1948. His term as a governor lasts until January 2028.

U.S. Atty. Jeanine Pirro has dropped the government’s investigation, but she has said it could be reopened if the Fed’s inspector general office, which has looked into the renovation project since last July, finds evidence of criminal activity.

Rugaber and Cappelletti write for the Associated Press.

May 13 (UPI) — Final demand wholesale inflation rose by 6% on an annual basis in April, marking the largest increase since 2022, the U.S. Bureau of Labor Statistics reported Wednesday.

More than three-quarters of the 2% increase in final demand goods in April was attributed to a 7.8% increase in energy prices. Final demand services moved up 1.2%, pushed along largely by a 2.7% increase in trade services.

The producer price index increased by a seasonally adjusted 1.4% in April, double the rate increase in March. The increase outpaced the Dow Jones consensus estimate of 0.5%. It is the largest monthly increase since March 2022.

The annual 6% wholesale inflation increase is the largest since December 2022.

Machinery and equipment wholesaling was another big factor in rising inflation. Final demand service prices for machinery and equipment rose by 3.5%.

Final demand excluding volatile food and energy rose 0.6%, the largest bump since October. For the year ending in April, final demand excluding food and energy was up 4.4%, the largest increase since February 2023.

By commodity type, the index for unprocessed goods went up 4.1%. Intermediate demand goods increased 2.7% for the month, the sixth consecutive monthly increase.

About 80% of the index increase for unprocessed goods for intermediate demand can be attributed to unprocessed energy materials which increased 9.2%. Crude petroleum rose by 11.3%.

Unprocessed non-food materials and excluding energy fell by 1%.

Tehran, Iran – Skyrocketing inflation is jeopardising food security among households in conflict-hit Iran, new figures show, as diplomatic efforts to end the war launched by the United States and Israel intensify.

“The people must realistically understand the conditions and restrictions of the country,” President Masoud Pezeshkian told a group of officials who gathered on Sunday to discuss rebuilding structures damaged or destroyed in US and Israeli attacks.

“It is natural that there are difficulties and problems in this path, but through people’s cooperation and reliance on national cohesion, problems can be solved,” he was quoted as saying by state media.

Pezeshkian’s comments came a day after the Statistical Center of Iran (SCI) said Farvardin, the first month of the Persian calendar year that ended on April 20, had an inflation rate of 73.5 percent compared to the same month of the previous year. The SCI also noted that inflation was five percent higher in Farvardin compared to the previous month.

The Central Bank of Iran, which reports figures based on a different method and with different data sets, reported a slightly lower inflation rate of 67 percent for Farvardin compared to a year earlier, and a seven percent monthly increase.

Although not matched, both figures indicate a considerably accelerating pace for general inflation, which has been among the highest in the world over recent years, and is continuously making Iranians poorer.

A Tehran resident told Al Jazeera she could no longer afford some of the items she could just last month.

“And it’s not just me – I think most people in society right now can’t afford many of the things they want,” she said.

Figures from the institutions also showed that food inflation is much higher than headline inflation, meaning that people are increasingly forced to pay an expanding share of their shrinking salaries on basic items.

The SCI reported a staggering 115 percent food inflation rate for the first month of the year, compared to the same period the year before, with several staple items more than tripling in price.

Solid vegetable oil had the highest increase at 375 percent, followed by liquid cooking oil at 308 percent; imported rice at 209 percent; Iranian rice at 173 percent; and chicken at 191 percent. The lowest price hikes were for butter, at 48 percent, followed by infant formula at 71 percent and pasta at 75 percent.

Majid, a young man who works at a liver kebab shop in the capital, said the eatery has increased prices three times in recent months.

“The price of liver has doubled. When we ask suppliers why, they either say there’s a shortage or that sheep are being exported. Honestly, there’s no real oversight,” he said.

The state-run Consumers and Producers Protection Organization said in a directive sent to 31 governors across Iran on Sunday that new price hikes for cooking oil are “illegal” and “must be returned to previous levels”, without saying how officials expected that to happen amid deteriorating economic conditions.

The country’s embattled currency, the rial, has also been registering new all-time lows over the past two weeks. On Sunday afternoon, it stood at about 1.77 million against the US dollar in Tehran’s open market after marginally recovering. The rate was about 830,000 per US dollar a year ago.

Subsidies and ‘enemy plots’

The response from the government has included offering subsidies and coupons, while trying to crack down on acts such as hoarding that are perceived to be contributing to price hikes.

But this has not been accompanied by a clear macroeconomic stabilisation package as the US presses on with a naval blockade of Iranian ports.

As Iranian media reported on Sunday that Tehran had sent an official response to the text for an agreement earlier proposed by the US through mediator Pakistan, Pezeshkian said, “If there is talk of negotiations, it does not mean surrender.”

The government hands out monthly cash subsidies and electronic vouchers to buy essential goods at select stores, which together amount to less than $10 each month per person. Authorities are considering raising the amount, but a hefty budget crunch has made that more difficult.

Pezeshkian and Central Bank chief Abdolnasser Hemmati have said they are aware of the price increases, but have blamed the war that began in late February while coordinating with the judiciary to act against price gauging and hoarding.

A number of lawmakers in Iran’s hardline-dominated parliament, as well as state television hosts and outlets linked to the Islamic Revolutionary Guard Corps (IRGC), have said the price surges are suspicious. They have described the runaway prices as being part of an “economic revenge” campaign by enemies who suffered failures in the military arena.

“I want the people of Iran not to be fooled by the enemy-made price hikes,” a guest on state television’s Ofogh network said on Saturday. “Great things have happened, and great things are ahead. The economic achievements of the war are unrivalled by any other period.”

But some of the economic pain continues to be inflicted as a direct result of a near-total internet shutdown now being imposed by Iranian authorities for a 72nd day.

Numerous officials in the government, internet infrastructure firms, telecommunication companies and other state-linked organisations have emphasised that they are against a tiered internet system that is now being implemented. But they have said they bear no responsibility, since the blackout, which is expected to remain in place until the war ends, is ordered by the Supreme National Security Council.

In the meantime, the combined impact of local mismanagement, Western sanctions, blockade, war and the internet shutdown is squeezing people and businesses hard.

“The startup ecosystem of the country is dead, we are searching for a tombstone for it,” the Guild Association of Internet-based Businesses said in a statement on Saturday.

San Francisco, United States – Greer Dove’s days are packed with studying business and finance, as well as doing administrative work at college, along with caring for her eight-year-old daughter with special needs. But once a week, Dove, a single mother, makes sure to drop in at the food bank in California’s Marin County to pick up vegetables, fruit and other food. Along with the federal government’s food benefits, they keep her housing running.

“We need this so we can keep functioning at a high level,” she says. “She loves fruit, so I make sure to get it,” she says of her daughter.

Dove, who is also looking for a full-time job, has worked in restaurants, event management, retail, television shows, office administration and payroll over the years. But she has been on the federal government’s Supplemental Nutritional Assistance Program (SNAP) for six years, and with the food bank, for more than three years. Before she got food benefits, Dove fed her daughter all she had and skipped meals or looked around for snacks in the offices she worked at to get her through the day.

United States President Donald Trump’s One Big Beautiful Bill Act (OBBBA), passed in June, cut SNAP benefits by more than $186bn over the next 10 years to make up for extending cuts to income tax. This could lead to more than 3 million people nationwide, and 665,000 recipients in California, losing such food benefits, according to estimates.

“This will bring a series of cuts that collectively present an existential threat to food benefits,” says Andrew Cheyne, managing director of government relations and public affairs at the County Welfare Directors Association of California.

California’s proposed billionaire tax, which seeks to impose a one-time 5 percent tax on the assets of the state’s more than 200 billionaires to make up for the funding gap created by the OBBBA, got more than 1.5 million signatures in April. It is likely to be on the ballot for the November midterm election.

While most of the nearly $100bn expected to be raised through the tax will go towards filling the gap in health insurance created by the OBBBA, 10 percent will be used to make up for the retrenchment in food benefits.

In California, where more than 5.3 million people, more than any other state, receive food benefits, the impacts of the cuts began to be felt in April when 72,000 immigrants started losing benefits. June onwards, nearly 600,000 recipients will be screened for work eligibility. Recipients, including those who are homeless, seniors, foster youth and veterans, will have to work, study or volunteer to receive food benefits. Failing the screening to meet work requirements for three months will lead to their food benefits being cut.

Brian Galle, professor of law at the University of California at Berkeley and one of the tax measure’s authors, says that in California, the state that introduced gig work, “jobs are increasingly precarious. You may find enough work or not. You may get tips or not. But nutrition needs are steady.”

Making impossible choices

On a recent Friday morning, new members lined up to enrol at a whitewashed, bunting-festooned La Ofrenda food bank in San Francisco’s Mission district. The food bank doles out fresh vegetables, fruit and bread that have been donated by large grocery stores once those products neared expiration date.

Gladys Lee had taken a 45-minute train ride after a friend told her about it. Lee worked at downtown San Francisco’s Hyatt hotel as a room cleaner for three decades until a back injury meant she could not push the heavy cleaning carts any more and had to leave. After seven years of struggling to find work, food was getting scarce, and Lee found her way to La Ofrenda. She packed what she could into a carton and held it in her arms for the train ride back.

Food benefit rolls have shrunk by more than 3.3 million nationally in the six months from July 2025, when the OBBBA was enacted, to January 2026.

In California, the rolls of Calfresh, as food benefits are known in the state, shrank by 288,000 or 6 percent from July 2025 to February 2026, according to analysis by the Center for Budget and Policy Priorities, a Washington, DC-based think tank. This reduction in rolls happened even before the OBBBA cuts began.

Brooke Rollins, the agriculture secretary, wrote in a recent essay that the shrinking of SNAP rolls reflected an ebullient economy and buoyant job growth.

“The drop in SNAP recipients affirms that many Americans are moving from welfare to work,” she wrote. “It is no secret that Trump’s massive tax cuts and deregulation efforts are unleashing robust, private sector-led economic growth, which are fueling trillions in investments, booming wage growth”.

But unemployment remained stable at about 4.4 percent since July 2025, according to the Bureau of Labor Statistics data, while SNAP rolls shrank.

“This last time we saw such a steep, quick decline, other than during natural disasters, is three decades ago when welfare reform was enacted,” says Dottie Rosenbaum, senior fellow and director of  Federal SNAP Policy at the Center for Budget and Policy Priorities.

Nationally, SNAP rolls shrank by 8 percent, while in California, they shrank by 5.5 percent, in part because the work eligibility requirements were delayed until June, while some other states have already implemented them.

At La Ofrenda, Roberto Alfaro, executive director of the nonprofit Homey, says he started the food bank when food costs went up during the pandemic. They have stayed high, he says. Now he sees people doing day jobs and night jobs and coming for food when they have paid rent.

“People are making impossible choices,” says Keely O’Brien, a policy advocate at the Western Center for Law and Poverty.

While California is the world’s fourth-largest economy, growth has come with a soaring cost-of-living crisis.

“With rising housing and utility costs, few households can dedicate that much of their income towards food,” O’Brien says.

The OBBA has also shifted the administrative cost of meeting work eligibility requirements to states, and beginning next year, part of the cost of SNAP will also fall on states.

“To make requirements more stringent, you are creating more government, more bureaucratic logjam,” says Jaren Sorkow, state director for the Children’s Defence Fund.

This has already led to a 51 percent drop in SNAP rolls in Arizona, which has begun implementing the OBBBA cuts, according to data by the Center for Budget and Policy Priorities.

Making something from nothing

Several measures to counter the $100bn gap in funding for health insurance and food benefits created by the OBBBA have been floated in California. The biggest of these is the one-time 5 percent tax on those with assets of more than a billion dollars. The tax will raise $100bn, its authors estimate.

As it seems set to be voted on in the November election, it faces mounting opposition from the state’s tech entrepreneurs who have funded measures to undercut the tax.

Tech entrepreneurs have called it an economic 9/11, saying taxing their assets, including shareholding in startups, will lead to a flight of capital and innovation from the state. Sergey Brin, a cofounder of Google Inc, now spends a week in Nevada and a week in his Bay Area offices and has spent more than $57m on opposing the billionaire tax. He has backed two measures that undercut the billion tax, which have also received 1.4 million and 1.5 million signatures and are also set to be on the ballot for the November election.

One of these measures prohibits future taxes on personal property, including financial assets, savings and retirement accounts, as well as intellectual property. The other would increase audits of taxpayer-funded programmes, and includes language that would essentially invalidate the billionaire tax.

In a recent statement to The New York Times, Brin said, “I fled socialism with my family in 1979 and know the devastating, oppressive society it created in the Soviet Union. I don’t want California to end up in the same place.”

The coalition of unions backing the billionaire tax is bracing for the fight ahead. “We expect to be outspent,” says Kris Cuaresma-Primm, director of partnerships for the coalition that is backing the billionaire tax. “We will keep communicating to people that there is a tidal wave of pain coming from the cuts, and we want to reclaim the losses from the OBBBA.”

Giulia Varaschin, senior tax policy adviser at the International Tax Observatory, who recently coauthored a study on wealth taxes, says there is little academic evidence that such taxes cause the wealthy to leave at a notable scale. “There is only a marginal flight with very little, if any, economic impact,” she says.

The study, coauthored with the economist Gabriel Zucman, who supports the California billionaire tax, did find that wealth taxes had not raised as much revenue as estimated in several European countries and became less popular as a result.

Varaschin says this was because these taxes were levied on a larger set of the wealthy, which included homeowners or small businesses, rather than the ultra-rich or billionaires. The taxpayers could hardly afford to pay it, and the government made exemptions instead. These taxes also did not touch assets, where much of the wealth of the ultra-rich lies, Varaschin says.

The California tax remedies this by taxing only billionaires and taxing assets, including shares in companies.

Daniel Shaviro, Wayne Perry professor of taxation at New York University, says, “Traditionally, these taxes can be hard to enforce because tax administration don’t want to go after these people.”

Even if it passes, “The governor could just say this is not a high priority for him and not enforce it,” Shaviro says, referring to Governor Gavin Newsom, who has opposed the tax.

But Primm says, “The governor is out of touch with Californians on this”.

Newsom is in the last year of his last term as governor. However, nearly all the candidates running for the June 2 primary for governor, except billionaire Tom Steyer, who is running as a progressive Democrat, also oppose this measure. While some have said this will lead to a flight of capital, others say the spending plan does not include expenses for education, which was not cut in the OBBBA.

Greer Dove, who gets food through Calfresh and the San Francisco Marin Food Bank for herself and her daughter, says the looming food benefit cuts are worrying. “The anxiety of it all is adding up. I could be next.”

Caught between rising inflation and slowing growth, the United States Federal Reserve, the European Central Bank and the Bank of England are keeping interest rates and borrowing costs steady.

That’s despite rising energy bills, fuel and food costs squeezing businesses and households worldwide.

The International Monetary Fund is warning of a global slowdown, and no one knows how long the energy shock set off by the US-Israel war on Iran will last.

The impact will be felt hardest in emerging markets and developing nations. Central banks face a tough choice: fight rising prices or support a weakening economy.

BRITISH Airways passengers face higher fares after its parent company warned rising oil prices will add about £1.72billion to its fuel bill this year.

International Airlines Group (IAG), which also owns Iberia and Aer Lingus, said it expects to pass on part of the extra cost through ticket prices, with business class and other premium long-haul passengers among those most likely to be affected.

Chief executive Luis Gallego said airlines need to increase fares to help offset fuel costs, which make up about a quarter of their spending.

The rise follows disruption linked to the Middle East conflict and the closure of the Strait of Hormuz, which normally carries about a fifth of the world’s oil and gas shipments.

IAG warned the crisis could deepen if the strait remains blocked, with global jet fuel supplies potentially restricted.

However, the group said it does not expect any disruption to summer fuel supplies.

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Mr Gallego said there is less jet fuel coming from the Middle East, but there are “other places with record supply” such as the US.

He said IAG has been “planning for situations like this for many years”, and has invested in its own jet fuel supply at its “main hubs”.

The company recorded a pre-tax profit of £365million during the three months to the end of March.

That was a 76.6% increase from £207million a year earlier.

The group now expects its annual fuel bill to reach £7.78billion.

Mr Gallego attributed the firm’s “strong first quarter” to “continued strong demand for our networks and airline brands”.

He added: “IAG is uniquely positioned to navigate the current headwinds created by the Middle East conflict thanks to our leading positions across diverse markets, strong brands, structurally high margins and strong balance sheet, as well as a strong track record of execution.”

IAG said about 3% of its capacity was “exposed to the Gulf region” at the start of the war on February 28, mostly with British Airways flights.

A large part of this has been redeployed, including boosting capacity at destinations where there are now fewer flights by Middle East carriers such as Bangkok, Singapore and the Maldives.

British Airways has also announced additional flights this summer on routes with higher demand for direct flights, such as India and Nairobi.

The UK bond market is currently experiencing a period of intense volatility, with the yield on 30-year government bonds, known as gilts, climbing to its highest point since 1998.

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On Tuesday, 30-year gilt yields rose as much as 0.14% to 5.79%, their highest level this century, before dipping slightly to around 5.6% at the time of writing.

The yield on the 10-year gilt also climbed as much as 0.15% to 5.11%, very close to the 18-year high of 5.12% hit earlier in the Iran war. It has since lowered somewhat to roughly 4.93% on Thursday.

Bond prices and yields have an inverse relationship. Bond yields rise when prices fall in order to increase investment attractiveness as demand for the debt weakens.

The surge in gilt yields indicates that investors currently perceive UK debt as a riskier prospect than other lending options, requiring a larger premium to commit their capital over the long term.

Presently, there are several reasons for this evident but abnormal lack of confidence.

The primary catalyst is the fear that the Bank of England may be forced to keep interest rates higher for longer to mitigate the chance that inflation will remain “sticky” and not return to the 2% target as quickly as previously hoped.

This estimation has been fuelled by surging energy prices due to the disruption caused by the Iran war. Gilts have continuously sold off during the conflict.

Speaking to Euronews, Richard Carter, head of fixed interest research at Quilter Cheviot, added that “the UK is expected to be the worst hit developed economy by events in the Middle East due to its reliance on energy imports, so the longer energy prices remain elevated, the deeper the pain the country is likely to experience.”

Beyond geopolitics and global energy markets, there are many domestic factors currently contributing to the exceptional distrust in UK debt.

Keir Starmer, fiscal policy and local elections

Political uncertainty and fiscal policy are also playing a central role in the recent and severe gilts sell-off.

In 2024, after Keir Starmer’s election, the Labour party pledged “fiscal discipline” and established a long-term framework in the Autumn Budget to distinguish the new government’s approach from the former.

The plan introduced the “Stability Rule” mandating that the current budget, which covers day-to-day costs such as public sector salaries and welfare, must be in surplus by the end of 2029/30. This effectively prohibits borrowing to fund the ongoing operations of the British state.

Additionally, the “Investment Rule” was also put forward to target the national balance sheet. This norm requires Public Sector Net Financial Liabilities (PSNFL) to be falling as a percentage of GDP within the same timeframe as the “Stability Rule”.

By using PSNFL rather than the traditional measure of net debt, the UK Treasury has more room to borrow for long-term capital projects like infrastructure and green energy, which are technically classified as “investments” rather than “spending”.

Finally, the Budget Responsibility Act 2024established a “fiscal lock”, legally preventing any significant tax or spending changes from being introduced without an independent assessment from the Office for Budget Responsibility (OBR).

Despite all these rigid guardrails, bond markets are now sceptical because investors fear political necessity will eventually override fiscal prudence.

Recent scrutiny of Starmer has intensified as he faces a mounting challenge from the left of his party, where dissenting voices are calling for a shift away from “fiscal conservatism” to address funding crises in the NHS and local government.

On top of that, the disastrous appointment of Peter Mandelson as Britain’s ambassador to Washington, and the revelations of his past friendship with Jeffrey Epstein, have severely damaged Starmer’s administration over the last few months.

The problems have culminated in the local elections taking place in 136 authorities for more than 5,000 council seats on Thursday. More than half of the seats up for grabs this week are being defended by Starmer’s party.

Analysts project that Labour will suffer a massive loss and potentially end up over 1,000 councillors down. Any major setback will certainly increase internal pressure to oust Keir Starmer as the leader in which case snap elections could be triggered.

The head of markets at AJ Bell, Dan Coatsworth, explained to Euronews that “investors will be watching bond markets like a hawk over the coming days as the results of the UK local elections are released. Any major setback to Labour will fuel calls for Keir Starmer to be replaced as prime minister and if that happens, bond markets will want to know who is taking over.”

“The obvious challengers, Angela Rayner and Andy Burnham, are seen as candidates who might push for greater government borrowing and spending, which could take gilt yields even higher. Fundamentally, there is a real risk of gilt yields soaring if Labour experiences a wipeout in the local elections,” Coatsworth added.

Speaking to Euronews, the head of fixed interest research at Quilter Cheviot, Richard Carter, conveyed the same sentiment.

“The uncertain UK political backdrop has played a role ahead of the local elections with gilt investors concerned about a Labour Party lurch to the left should Keir Starmer either be replaced or have little choice but to appease his backbenchers in the wake of challenging results.”

Effectively, these local results are no longer just a measure of regional popularity, but a high-stakes verdict of political viability that could determine the long-term stability of British borrowing costs.

The cost to the UK Treasury, businesses and households

For the British government, the consequences of the ongoing bond market shift are measured in billions of pounds as the UK’s debt-interest bill is highly sensitive to fluctuations in gilt yields.

According to estimates from fiscal watchdogs, every 0.25% rise in government borrowing costs adds approximately £2.5 billion (€2.9bn) to the annual debt-servicing cost. A 0.5% increase, which has already been observed this spring, therefore requires the UK Treasury to find an extra £5 billion (€5.8bn) every year just to pay interest.

The rise in gilt yields also has a direct and immediate impact on the real economy as they serve as the benchmark for pricing a vast array of financial products, most notably fixed-rate mortgages.

As yields climb, lenders adjust their swap rates, which inevitably leads to higher monthly repayments for millions of homeowners looking to refinance.

Businesses also feel the squeeze. The cost of corporate loans and commercial credit is often tied to the yield curve. When the state has to pay more to borrow, the private sector follows suit, potentially stifling investment and slowing economic growth.

“A gilt yield shock might be called a stealth tax, but it is not an intentional one. It would be the knock-on effects of bond prices falling and yields going up, which can negatively affect asset prices and tighten financial conditions,” Coatsworth told Euronews.

“Consumers would experience higher mortgage costs and potentially spend less money, particularly if companies scale back hiring if their borrowing costs rise from higher gilt yields, as the two are intertwined. It could also lead to lower public spending and pave the way for tax rises,” Coatsworth added.

Every increase in the cost of debt limits the amount of capital available for private innovation and reduces the disposable income of households already struggling with the cost of living.

A fragile ceasefire may have paused the US-Israeli war on Iran, but the economic cost is crippling the daily lives of Iranians. The US is blockading Iranian ports, while the price of goods skyrockets and businesses struggle to keep employees.

Workers are gathering in cities around the world to mark International Labour Day, with some demonstrations, such as those in Istanbul, Turkiye, turning to scuffles with police.

Trade Unions are calling for solidarity and the protection of workers’ rights as the United States-Israeli war on Iran and rising energy costs raise concerns about the global economy.

“Working people refuse to pay the price for Donald Trump’s war in the Middle East,” the European Trade Union Confederation, which represents 93 trade union organisations in 41 European countries, told the media. “Today’s rallies show working people will not stand by and see their jobs and living standards destroyed.”

Josua Mata, leader of the SENTRO umbrella group of workers’ groups in the Philippines, said: “Every Filipino worker now is aware that the situation here is deeply connected to the global crisis.”

Renato Reyes, a leader of the left-wing political group Bayan in the Philippines, told The Associated Press: “There will be a louder call for higher wages and economic relief because of the unprecedented spikes in fuel prices.”

In Indonesia, Said Iqbal, president of the Indonesian Trade Union Confederation, told reporters: “Workers are already living pay cheque to pay cheque.”

Some of the largest demonstrations are being held in South America, including in Chile, Bolivia and Venezuela. In Argentina, angry workers protested on Thursday in the capital of Buenos Aires over President Javier Milei’s recent overhaul of long-held labour protections.

In Cuba, the foreign ministry held a gathering on Thursday in defiance of what it called the US’s “aggressions, threats, intensified blockade, and energy siege”.

On Friday, Cubans are expected to mark International Labour Day with a mass rally and a march in Havana.

In many countries, Labour Day rallies attract large crowds because May 1 is a public holiday. In the Turkish city of Istanbul, roads around Taksim Square were closed to make way for marches during the day. Later on Friday, demonstrators clashed with police, international media reported.

In France, where most people have the day off for May Day, workers’ unions using the slogan “bread, peace and freedom” called for protests in Paris and other cities.

Global recession fears

Fears of a global recession are looming over Labour Day rallies at a time when income inequality is growing.

In Gaza, Palestinian workers have cancelled May Day events because of the economic crisis caused by Israel’s genocidal war on Gaza and poor conditions on the ground.

The Palestinian General Federation of Trade Unions said that about 550,000 workers across Gaza and the West Bank have no income and that the situation is unprecedented.

The International Trade Union Confederation has reported that at least four CEOs of major corporations each pocketed more than $100m in pay and bonuses last year, while many workers are facing potential job cuts.

Workers’ rights coalitions are calling for urgent action to curb extreme wealth. They want governments to impose higher, fairer taxes on the wealthiest and limit excessive executive pay.

While Labour Day began in the US, when workers protested for an eight-hour workday in the 1880s, the US does not count May Day as a public holiday.

However, an umbrella group of activist and workers’ groups known as May Day Strong has called for protests under the slogan, “workers over billionaires”. Hundreds of demonstrations and marches have been planned across the US.

Only 22 percent of US voters back the president’s performance on the cost of living, Reuters/Ipsos survey suggests.

United States President Donald Trump’s approval rating has dropped to its lowest point since he returned to the White House, sinking to 34 percent amid economic uncertainty and the US-Israel war on Iran, a Reuters/Ipsos poll suggests.

The poll, released on Tuesday, also showed that only 22 percent of respondents back Trump’s performance on the cost of living. Affordability has been a top issue for US voters.

The Iran war, which saw Tehran block most shipping through the Strait of Hormuz, has sent energy prices soaring across the world and fuelled inflation in the US.

The Reuters poll was conducted April 24-27, and it surveyed 1,014 US adults.

It comes months before the midterm elections in November when Trump’s Republican Party will have to contend with the US president’s abysmal job approval ratings as it tries to retain control of the Senate and House of Representatives.

Trump continues to enjoy near-unanimous support from Republicans in Congress despite growing criticism of the war on Iran by some right-wing commentators and podcasters.

The conflict has also been unpopular with US voters, including a sizeable Republican constituency.

A Marquette Law School survey released last week suggested that only 32 percent of voters approve of Trump’s handling of the war.

The number rose to 65 percent among Republican respondents, but it still showed significant dissent within the party on the issue.

A separate Associated Press-NORC poll last week reported similar findings – Trump’s overall approval rating at 33 percent, support for the war at 32 percent and his handling of the economy at 30 percent.

The US and Iran reached a two-week ceasefire on April 8 that Trump extended indefinitely, but tensions remain high in the region.

Duelling blockades in the Gulf – Iran shutting down the Strait of Hormuz and the US laying a naval siege on Iranian ports – have caused global energy supply issues to persist despite the truce.

In the US, the average price of 1 gallon (3.8 litres) of petrol is currently at $4.17, up from less than $3 before the war.

Still, Trump has suggested that he is comfortable with the status quo, claiming repeatedly that the Iranian economy is crumbling and that time is on his side.

“Iran has just informed us that they are in a ‘State of Collapse,’” the US president wrote in a social media post on Tuesday.

“They want us to ‘Open the Hormuz Strait,’ as soon as possible, as they try to figure out their leadership situation (Which I believe they will be able to do!)”

It’s not clear how or why Iran, which is currently refusing to hold direct negotiations with the US without it lifting the naval blockade, would inform Trump that its own economy is collapsing.

Published on
22/04/2026 – 10:40 GMT+2

The cost of living in the UK accelerated throughout March, propelled by a significant increase in petrol and diesel prices following the outbreak of the Iran war.

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According to the Office for National Statistics, the annual consumer price inflation rate moved to 3.3% from 3% the previous month, a shift that matched the forecasts.

This inflationary pressure is largely attributed to an 8.7% monthly jump in motor fuel costs, which represents the sharpest rise seen since the summer of 2022, following Russia’s full-scale invasion of Ukraine.

Beyond the petrol stations, the fallout from higher energy prices has trickled down into airfares and food supplies, complicating the economic landscape for the government and the Bank of England.

UK Treasury chief Rachel Reeves noted that while the conflict is not a domestic one, it is directly pushing up bills for families and businesses across Britain.

Lindsay James, an investment strategist at Quilter, observed that “this morning’s inflation data showed CPI creeping back up to 3.3%, confirming that price pressures are re-accelerating rather than fading away since the outbreak of the war in Iran.”

While international markets have shown some signs of recovery in equity prices, the physical market for oil delivery into Europe remains under immense strain.

Experts suggest that a swift reopening of the Strait of Hormuz is the only viable path to unwinding the current inflationary trend, yet the situation remains volatile and unpredictable.

The Bank of England’s policy dilemma

The timing of this inflation surge is particularly problematic because it coincides with a period of cooling in the domestic economy.

Recent data from the labour market indicates that payrolled employment is falling and economic inactivity is on the rise, while wage growth has started to ease.

For the average British worker, the combination of rising essential costs and stagnating earnings growth creates a challenging environment for real purchasing power.

As for the Bank of England, this sudden spike in prices has disrupted the projected path of beginning to lower borrowing costs this spring.

Prior to the escalation of the Iran war, there was a growing consensus that the central bank would reduce its main interest rate from 3.75% as inflation appeared to be heading back toward the official 2% target.

However, with inflation now expected to potentially hit 4% in the coming months, the Monetary Policy Committee faces a much more difficult decision during its meeting next week.

There is a growing debate among economists regarding whether traditional interest rate hikes are the correct tool to address this specific crisis.

According to James “a rise in rates risks misdiagnosing the problem. This inflationary pulse is being driven by supply disruption, not excess demand. Higher interest rates will do nothing to increase the flow of oil or other goods from the Middle East.”

This sentiment suggests that the Bank of England may choose to maintain its current stance, keeping rates on hold while monitoring whether these price increases begin to manifest in higher wage demands across the broader economy.

WASHINGTON — President Trump’s nominee to chair the Federal Reserve said Tuesday that he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so.

“The president never once asked me to commit to any particular interest rate decision, period,” Kevin Warsh, a former top Fed official, said under questioning by the Senate Banking Committee. “Nor would I ever agree to do so if he had. … I will be an independent actor if confirmed as chair of the Federal Reserve.”

Warsh’s comments came just hours after Trump, in an interview on CNBC, was asked if he would be disappointed if Warsh didn’t immediately cut rates and responded, “I would.”

The comments underscore the challenge faced by Warsh, 56, a financier and former member of the Fed’s board of governors whom Trump named in January to replace the current Fed chair, Jerome H. Powell. Democrats on the committee accused Warsh of flip-flopping on interest rates over the years, supporting higher interest rates under Democratic presidents and advocating rate cuts during Trump’s time in office. Investors are watching the hearing closely to see how Warsh balances Trump’s demands with worsening inflation, as the war in Iran pushes up the price of gasoline.

Higher inflation typically leads the Fed to raise rates, or at least keep them unchanged, rather than cut them. When the Fed changes its key rate, it can affect mortgages, auto loans and business borrowing.

Yet Warsh’s account was challenged by Sen. Ruben Gallego, an Arizona Democrat, who said that Wall Street Journal reporting last year found that Trump had urged Warsh to reduce borrowing costs.

“Who’s lying here? Is it you or the president?” Gallego asked.

“I think those reporters need better sources,” Warsh responded.

For all the back and forth, the hearing didn’t appear to advance Warsh’s nomination, which has been delayed by a Justice Department investigation into the Fed and Powell, over brief testimony Powell gave last June before the same panel about a building renovation.

Sen. Thom Tillis, a North Carolina Republican on the committee, reiterated Tuesday he wouldn’t vote for Warsh until the investigation is dropped. With the committee closely divided and all Democrats opposed to his nomination, Tillis’ opposition is enough to bottle it up in committee.

“We have got to get rid of this investigation,” Tillis said, “so I can support your nomination.”

Tillis has previously said that all seven Republicans on the committee have signed a letter stating that Powell did not commit a crime when he testified before the panel last June. Federal prosecutors, led by U.S. Atty. Jeanine Pirro, are investigating his testimony for potential perjury, though a judge said last month they offered no evidence to support the charge when he threw out subpoenas Pirro had issued.

Prosecutors from her office as recently as last week sought access to the Fed’s building project but were turned away, revealing that the Trump administration has not reversed course despite opposition from members of his own party that are essential to Warsh’s confirmation.

In his opening remarks, Warsh told the Senate Banking Committee that one of his top goals would be to fight inflation, which remains elevated at 3.3% annually.

“Congress tasked the Fed with the mission to ensure price stability, without excuse or equivocation, argument or anguish,” Warsh said. “Inflation is a choice, and the Fed must take responsibility for it.”

Warsh would be in a tough spot if confirmed. Inflation is worsening, making it much harder for the Fed to implement the interest rate cuts Trump so desperately seeks. The conflict could also slow the economy, as well as hiring. And if Warsh ultimately becomes chair, he may very well find his predecessor, Powell, still sitting on the Fed’s governing board, an uncomfortable arrangement that hasn’t occurred since the late 1940s.

Warsh said the Fed’s political independence is “essential,” and that the central bank wasn’t threatened when “elected officials — presidents, senators, or members of the House — state their views on interest rates.” Trump has repeatedly urged Powell to cut the Fed’s key rate from its current level of about 3.6% to as low as 1%, a view almost no economist shares.

Sen. Elizabeth Warren, a Massachusetts Democrat, said that Trump has not just stated his opinions on rates, but has sought to fire a Fed governor and is investigating Powell.

“The Senate should not be aiding and abetting Donald Trump’s illegal takeover of the Fed by installing his chosen sock puppet as chair,” she said Tuesday.

Warren also noted that Warsh has not disclosed all of his financial holdings, which include investments in startups and private companies, or the size of those financial stakes. For example, Warsh has said he has holdings in SpaceX and Polymarket, but has not said how large those investments are.

Warren charged that Warsh is not in compliance with ethics requirements. Warsh argued that the Office of Government Ethics has signed off on his plan to sell all his assets within 90 days of his confirmation.

The turmoil could make a potential transition from Powell to Warsh an unusually turbulent one for the world’s most pivotal central bank, which has historically experienced smooth transfers of power. Should the change in leadership prove particularly bumpy, it could unnerve markets and lift longer-term interest rates.

Powell’s term as chair ends May 15. He said last month that he would remain as chair until a successor is named. Powell also is serving a separate term as a member of the Fed’s governing board that lasts until January 2028. Fed chairs typically leave the board when their terms as chair end, but Powell said last month he would remain on the board, even if a new chair is approved, until the investigation is dropped.

Trump said he would fire Powell if he attempted to remain at the Fed. Yet Trump’s previous attempt to remove a Fed governor, Lisa Cook, has been tied up in court. During oral arguments in January, a majority of justices on the Supreme Court appeared to lean toward leaving Cook at the Fed.

Rugaber writes for the Associated Press.

Shipping companies said several things had to be clarified, including the presence of mines, Iranian conditions, practical implementations.

Shipping companies have cautiously welcomed Iran’s announcement that the Strait of Hormuz is open but said they would require clarifications, including about the risk of mines, before vessels move through the entry point to the Gulf.

Iran’s Foreign Minister Abbas Araghchi said on Friday that the Strait of Hormuz was open to all commercial vessels during a 10-day Lebanon ceasefire accord, prompting a fall in oil and other commodity prices while stock markets rose.

All commercial ships, including United States vessels, can sail through the strait, although their plans need to be coordinated with Iran’s Islamic Revolutionary Guard Corps, a senior Iranian official told the Reuters news agency.

Transit would be restricted to lanes which Iran deemed safe, adding that military vessels were still prohibited, the official said.

“We are currently verifying the recent announcement related to the reopening of the Strait of Hormuz, in terms of its compliance with freedom of navigation for all merchant vessels and secure passage,” said Arsenio Dominguez, secretary-general of the United Nations shipping agency, the International Maritime Organization.

The Norwegian Shipowners’ Association said several things had to be clarified before any ships could transit the strait, including the presence of mines, Iranian conditions and practical implementation.

“If this represents a step towards an opening, it is a welcome development,” said Knut Arild Hareide, CEO of the association which represents 130 companies with some 1,500 vessels.

Shipping association BIMCO cautioned members on returning to the strait.

“The status of mine threats… is unclear and BIMCO believes shipping companies should consider avoiding the area,” said Jakob Larsen, BIMCO’s chief safety and security officer.

The threat posed by mines in parts of the strait is not fully understood, and avoidance of the area by ships should be considered, a US Navy advisory on Friday, seen by Reuters, also said.

German shipping group Hapag-Lloyd on Friday said it was working for its ships to sail through the strait “as soon as possible”, but added that several questions remained.

“Our crisis committee is in session and will try to resolve all open items with the relevant parties within the next 24-36 hours,” it added.

Its Danish peer Maersk said it was closely monitoring the security situation and would act based on its risk assessment.

France’s CMA CGM and Norwegian oil tanker group Frontline declined to comment.

A recent route imposed by Tehran through its territorial waters near Larak Island would present navigational challenges even if vessels were not required to pay a toll, and would raise questions regarding compliance and insurance, said Matt Wright, lead freight analyst at data intelligence firm Kpler.

US President Donald Trump on Friday said Iran had agreed to never close the strait again, and that it was removing sea mines from it.

One of the world’s most important maritime chokepoints, disruption in the strait has forced shipping companies to suspend sailings, reroute cargo and rely on costly workarounds to keep goods moving in and out of the Gulf.