And another thing before I go:

Alan Milburn, who is leading a major review into soaring rates of inactivity among Britain’s young people, said the UK was facing a “generational problem” that was having a devastating impact on the UK economy, government finances and society at large.

He said

They [young people] almost see it as an emblem for a generational problem. There’s almost a sort of concern, a fear in society, about what the next generation faces.

A former health secretary in Tony Blair’s new Labour government, Milburn told MPs on the Commons work and pensions committee that ministers urgently needed to get a grip of a rapid increase in the number of young people who are not in education, employment or training (Neet) to almost 1m.

The rate of young people who are Neet peaked at about 16.8% in 2012 amid unemployment across Britain hitting the highest level since the mid 1990s. The percentage of 16-24 year-olds who are Neet then fell back, before a recent increase to 12.8%.

It’s lower, on the face of it we’ve got a smaller problem. But what I want to say to you is - you’ve got a bigger problem. Because the nature of the problem is more entrenched.”

If you think back 20 years ago, around four in ten people who were Neet had never worked... It’s now six in ten and it’s going in that direction: it’s getting stickier, it’s getting worse.

Milburn is expected to publish a highly-anticipated review into Neets and ill-health for the government later this month, amid a growing sense of alarm among ministers over a sharp rise in youth unemployment and rising issues with mental health and worklessness.

It’s a labour market problem, it’s a jobs crisis - but it is being fuelled by a health crisis. And so these two things are self reinforcing. You have a vortex, a spiral, and it has enormous consequences.”

Wall Street has opened higher, and European shares are also pushing higher, reversing earlier declines, ahead of first-quarter results from the US chipmaker Nvidia, the world’s most valuable company that has been at the centre of the AI booom.

It is due to report its results at 1:20 p.m. PT (9:20 p.m. BST). Expectations are “sky high” as one analyst put it.

The Dow Jones is 0.5% ahead, the S&P 500 rose 0.6% and the Nasdaq Composite gained 0.4%.

In London, the FTSE 100 index has gained 66 points, or 0.6%, to 10,395. The German Dax is 0.5% ahead, France’s CAC climbed 0.7% and Italy’s FTSE MiB jumped 1.5%.

Our main stories:

Thank you for reading. We’ll be back tomorrow. Take care – JK

A rise in interest rates in financial markets since the start of the Iran war has given the Bank of England “some time” to work out its best response to the economic impact of the conflict, its governor Andrew Bailey has said.

A rise in mortgage borrowing costs is an example of how investors have shifted their stance since the conflict began, Bailey told lawmakers on the parliamentary Treasury Committee.

That tightening, I think also gives us ... some time to assess.

Bailey was part of the majority on the Bank’s Monetary Policy Committee which voted 8-1 to leave the central bank’s benchmark interest rate on hold in April.

At that meeting, the MPC said its response to the energy shock caused by the war will depend on its scale and duration and how it spreads through the economy.

Bailey told MPs that the outlook for economic growth and labour market has become softer, with wage settlements reducing gradually.

But he also said market pricing for energy prices seems “fairly benign” compared to the damage done to gas infrastructure in the Middle East.

UK supermarkets have been asked by the government to consider freezing the prices of some essential foodstuffs to protect the public from inflation fuelled by the Middle East conflict.

They would be incentivised to make the move in exchange for the relaxation of some regulations such as easing restrictions on packaging and a possible postponing of changes to the rules around healthy food.

Retailers rejected the plan, criticising its potential cost amid rising taxes, fuel and energy costs and arguing it could push up prices for shoppers overall.

One supermarket executive called the idea “completely mad”. Another said: “This is an unnecessary, unwanted and unjustified intervention in the market.”

Speaking about potential price controls in front of the Treasury committee, Andrew Bailey, the governor of the Bank of England, said:

The question you have to think through is: are you doing this for some very well grounded, very temporary reason? I think if you start doing it as a matter of course then you are artificially moving prices relative to costs and that’s not a sustainable thing in the long run. There may be reasons for doing it in the short run, but it does need to be thought through.

Swati Dhingra, an external member of the monetary policy committee, said:

Thinking about where to find these sources of supply when you have a crisis is really key and that is one thing we can think about doing, a lot of our food is imported which many other countries don’t face as a problem. On the specific point about price controls, lots of countries have tried it, not necessarily successfully, and the biggest problem with these sorts of controls is you are dampening precisely the price signal you want people to react to, so as a market economy you can that for a little bit but how long do you want it to go on for?

I grew up with price controls on food all my life [in India] and that story to some degree was very successful in being able to cure famine and poverty but at the same time what it’s ended up creating is a highly distorted agricultural sector in India, so in that sense, do it with a lot of caution and a lot of thinking behind what it’s trying to target.

The UK government has ruled out mandatory supermarket price caps today, but said it is in talks with the sector on ways to ease cost of living pressures, with food prices likely to head higher in coming months because of fertiliser and energy shortages caused by the Iran war.

Marks & Spencer boss Stuart Machin described the idea as “completely prepostorous”.

It emerged on Tuesday that government officials had raised the idea with supermarkets that they should stock at least one version of basic items such as bread, milk and butter at a set low price in exchange for an easing of some regulations on issues such as packaging and healthy food.

Keir Starmer has announced an extension to the temporary 5p cut in fuel duty, as widely expected, telling the Commons it was a necessary response to cost-of-living pressures.

Before a wider package of measures due to be announced by Rachel Reeves, the chancellor, on Thursday, Starmer used prime minister’s questions to announce the extended freeze and a vehicle tax break for the haulage industry.

At the last budget, Reeves announced she would freeze fuel duty for nine months but that she would end a temporary 5p cut, first announced by Rishi Sunak in 2022 after Russia’s full-scale invasion of Ukraine, beginning in September.

However, the Resolution Foundation said the move will benefit richer households just as low-income families find themselves at the heart of a cost of living crunch.

Jonny Marshall, principal economist at the think tank, said:

The best that can be said of today’s announcement is that the chancellor has wisely ignored calls for an expensive blanket cancellation of the temporary 5p cut to fuel duty.

Nonetheless, even this modest extension will cost £210m this year. That money could be better spent elsewhere, not least as the real cost of petrol is still lower today than it was pre-Covid.

Come the autumn, low-income families – who are still £1,800 poorer than they were before the last energy price shock – will be worst affected by another round of rising food prices and energy bills. And yet the support announced today will primarily benefit those who are better off, with the richest fifth of households gaining more than twice as much as the poorest fifth.

Over the past 15 years, successive hancellors have backed off implementing already budgeted for fuel duty rises – the total cost of which has grown to £120bn. The Chancellor must ensure that this extension doesn’t make that fiscal fiction even worse.

The “sick note” system will be overhauled, with government trials aiming to reduce the number of benefit claimants who are signed off work because of poor health.

Four pilots, in different areas, in England will look at the best way to end this “tick-box exercise” which does not offer any support or guidance, and replace it with personalised ‘stay in work’ and ‘return to work’ plans for workers who fall ill, according to the Department for Work and Pensions, in news first reported by the Times and the Financial Times.

The DWP said in the pilots, some GPs will issue the first fit note in a sickness absence while in other areas, fit notes will be replaced by the new plans.

Some 11m “fit notes” (which used to be called sick notes) are issued every year, and more than nine in 10 declare the person “not fit for work”.

The £3m trials will run from July.

• Birmingham and Solihull – GPs issue the first fit note where needed, with all patients referred to a new support service led primarily by non-clinical staff, including social prescribers and work and health coaches

• Coventry and Warwickshire – GPs issue the first fit note, with patients able to be referred to a support service made up of both clinical and non-clinical staff

• Cornwall and the Isles of Scilly – GPs refer patients directly to a non-clinical support service, without issuing a fit note

• Lancashire and South Cumbria – GPs refer patients to a support service made up of both clinical and non-clinical staff, without issuing a fit note.

John Foster, chief policy & campaigns officer at Confederation of British Industry, said:

The fit note system is broken and fails employers, workers, and the economy. Business welcomes these pilots. They are an important step towards building a better system.

Three supertankers carrying crude oil to Asia have attempted to pass through the strait of Hormuz today, a couple of days after Iran announced a new authority to oversee shipping through the waterway.

Two ships are carrying Iraqi crude to China while a third is transporting Kuwaiti oil to South Korea, the Financial Times reported, citing shipping data.

Together the three ships are carrying 6m barrels of oil, potentially the largest amount to exit the Gulf in a single day since the US and Israel started launching missile attacks on Iran on 28 February.

The ships went through the northern side of the strait, following a route designated by Iran. “It is most likely that there was a deal done,” with Tehran, Matthew Wright, lead shipping analyst at data company Kpler, told the FT.

The news came after Iran threatened to spread war beyond the Middle East if the US attacks again, after Donald Trump said he had come within an hour of restarting the military campaign.

Iran submitted a new proposal to end the war to the US this week, but the terms appear to be the same as those previously rejected by Trump, including demands for control of the strait of Hormuz compensation for war damage, lifting of sanctions, release of frozen assets and the withdrawal of US troops from the area.

Wall Street futures have climbed, with chip stocks rebounding ahead of results from Nvidia, the world’s most valuable company at the centre of the global AI boom.

Brent crude has fallen more than 2% to below $110 a barrel on hopes for the latest negotiations between the US and Iran, while investors remain cautious.

“All eyes on Nvidia,” said Ipek Ozkardeskaya, senior analyst at Swissquote.

Expectations are, of course, sky high. The company is expected to report around $79bn in revenue – roughly 15% higher than last quarter and nearly 80% above the same quarter last year.

Margins are also expected to remain exceptionally strong, around 75%, confirming that Nvidia still enjoys enormous pricing power despite the massive Blackwell ramp and rising competition.

But Nvidia’s earnings no longer carry the same existential weight they did at the very beginning of the AI craze. Back then, markets were obsessed with training AI models. GPUs became essential because they are incredibly efficient at handling thousands of calculations simultaneously — exactly what AI training requires. Imagine trying to get from point A to B by simultaneously testing millions of possible paths through C, D, F, X, Y or Z. GPUs are built for that kind of parallel processing power. CPUs, on the other hand, are designed for sequential computations.

As such, once the models are trained with GPUs, the focus increasingly shifts toward inference — running the trained model — where TPUs and CPUs can also play a major role, while memory chips are needed to store and process information efficiently.

That’s why GPUs say more about the raw power and evolution of AI models, while CPUs and memory chips increasingly say more about real-world AI adoption and scaling. This growing importance of CPUs and memory infrastructure is also why traditional CPU and memory chip makers have taken over part of the AI narrative — and why Nvidia is developing its own CPU technologies within its next-generation Vera Rubin platform.

Investors will therefore closely watch whether the company can maintain strong margins while scaling production and preparing the transition toward the next-generation Vera Rubin platform — designed for the next phase of AI focused on massive-scale inference, reasoning and AI “factories.”

And the competition for running models efficiently at lower cost is fierce. Besides traditional chipmakers like AMD and Intel, Nvidia’s biggest clients — Big Tech companies like Amazon, Google and Meta — are all working on their own in-house chips to build the most energy- and cost-efficient alternatives to Nvidia’s ultra-powerful premium products.

UK government borrowing costs continue to ease, with yields on short-dated gilts – as UK government bonds are known- falling by 11 basis points.

The yield, or interest rate, on three-and four-year bonds dropped 11bps to 4.46% and 4.48% respectively, while the yield on five-year bonds fell 10bps to 4.55%.

The 10-year yield, the UK benchmark, dropped 9bps to 5% and the 30-year yield hit 5.7%, down 8bps.

Money markets are now pricing in just over 50 basis points of interest rate increases from the Bank of England (effectively two quarter-point hikes) by December, compared with 60bps on Tuesday.

In the last two weeks, bond yields rose sharply as traders priced in Bank of England rate hikes and braced for a the potential departure of prime minister Keir Starmer, with the leftwing mayor of Greater Manchester Andy Burnham seen as the main challenger – which could lead to higher spending. Burnham has said, though, that he would stick to the fiscal rules.

UK house prices were flat in March while private rents rose at a slightly faster rate in April, according to official figures.

The average price of a home was unchanged at £268,000 in March, compared with an annual increase of 1.7% in February, according to the Office for National Statistics.

This was because prices fell by 0.4% between February and March, compared with a large monthly increase of 1.2% a year earlier, ahead of the expiry of a stamp duty tax break that meant people were rushing to complete their house purchases.

House prices fell 0.6% year on year to £290,000 in England, and increased 2.9% to £213,000 in Wales and were up 1.6% £187,000 in Scotland.

Private rents rose by 3.5%, to an average of £1,381 in April, up from 3.4%.

• Average rents increased to £1,438 (3.5%) in England, £834 (4.9%) in Wales, and £1,019 (2.0%) in Scotland, in the 12 months to April.

• In Northern Ireland, average rents increased to £877 (4.0%), in the 12 months to February.

• In England, private rents annual inflation was highest in the North East (6.5%), and lowest in London (2.0%), in the 12 months to April.

Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said:

Rents are holding firm, and we don’t see that changing any time soon. The reason is simple: stock levels remain extremely low while the number of applicants for each available property stays high. Until that supply and demand imbalance shifts meaningfully, landlords have little pressure to move on price.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said:

Inflation softening to 2.8% as a result of lower utility bills is welcome but the ongoing conflict in the Middle East means the inflationary threat has not rescinded.

While further interest rate cuts seem unlikely for now, perhaps the need to increase them has reduced, particularly in light of the weaker economy and rising unemployment. This will come as a relief for borrowers already grappling with higher living costs.

As lenders continue to tweak their mortgage rates downwards on the back of lower swap rates, this will assist those buyers who are pressing on with their plans regardless of wider geopolitical concerns.

The cost of the government’s £38bn nuclear plant in Suffolk is subject to “significant uncertainty” and may outweigh the benefits for UK households until at least 2064, according to the government’s spending watchdog.

The National Audit Office (NAO) has warned that although the potential benefits of the Sizewell C nuclear plant are considerable, they remain uncertain. The risks, however, are “immediate, substantial and borne by the public”.

The government claims the nuclear reactor, expected to generate the equivalent of enough low-carbon electricity to power 6m homes when it begins operations in the late 2030s, could save £2bn a year from the electricity system compared with using other low-carbon technologies.

However, for households the overall savings could be outstripped by the cost of supporting its construction until almost halfway through its 60-year operational life. The project could take even longer to “break even” if there are cost overruns or delays, the NAO warned.

English wines won the highest percentage of gold medals per entry in a global competition, with experts describing the improvement as remarkable.

At the International Wine Challenge, English wines are winning more gold medals than ever. In 2025, the country won 10, but this year it was awarded 25.

Sam Caporn, a master of wine, said:

I think there are a number of reasons why England did so well this year. One of them is that for many of the top producers, the vines are getting older which leads to greater quality; Nyetimber’s first vintage for example was in 1992 so actually over 30 years ago now.

She added that the wines were being matured for longer:

There is also the possibility of increased bottle age – Wiston for example, won a trophy for their Cuvee 2009 Magnum and reserve wines are also taking on more complexity with every year that goes by.

As the climate changes, vineyards, particularly in the south of England, can expect more sunny days and warmer weather. However, extreme weather including drought can often have the adverse effect in threatening food crops.