In Germany, unemployment rose more than expected in April, above the 3 million mark.

The jobless figure, which is adjusted for seasonal effects, increased by 20,000, according to offical figures. Economists had expected a rise of 4,000.

Andrea Nahles, head of the labour office, said:

There is still no sign of a turnaround in the labour market. The spring upturn remains weak in April as well.

Air France-KLM has reported a smaller first-quarter loss than expected, but is scaling back capacity because of the US-Israeli war with Iran and soaring jet fuel costs.

The Franco-Dutch carrier expects its fuel bill to rise by $2.4bn this year. Capacity (i.e. more seats) will now increase by 2% to 4% this year, rather than 3% to 5% as previously planned.

Other European airlines, including easyJet and Tui, have also revised their outlooks, and expect to feel the impact of the closure of the strait of Hormuz, which has sent energy prices soaring, more acutely in the coming months.

Air France-KLM chief executive Ben Smith said:

While fuel price increases are not yet reflected in the results we present today, they are expected to weigh on the coming quarters.

The company said it is limiting discretionary spending, including travel expenses, and has frozen hiring for non-operational staff, while continuing to recruit for operational jobs such as mechanics.

The group said its fuel hedging strategy remains in place and it is already 33% hedged for 2027.

However, it also said summer travel demand remains strong, with European destinations such as Italy and Spain popular, as travel to parts of the Middle East remains constrained.

It said it had seen an initial boost after the Iran war broke out as more people booked flights to Asia, but plans to expand its long-haul capacity gradually as people are postponing travel plans or booking closer to the date of travel.

Air France-KLM reported a first-quarter operating loss of €27m, a €301m improvement over last year.

France’s economy did not grow at all during the first quarter, with households spending less and a slump in exports.

GDP was unchanged between January and March, after 0.2% growth in the fourth quarter, according to figures from the French statistics office Insee.

Household consumption declined slightly (-0.1% after +0.4%), and investment fell back (-0.4% after +0.3%). Overall, the contribution of domestic demand (excluding inventories) to GDP growth was zero this quarter, after it added 0.4 points to fourth-quarter GDP.

The contribution of foreign trade to growth was strongly negative this quarter (-0.7 points after +0.6 points): exports fell sharply (-3.8% after +0.8%), while imports declined again (-1.7% after -0.8%).

Total production, of goods and services, was once again sluggish, rising by 0.1%, after a 0.2% gain in the previous quarter.

Meanwhile, Spain’s economic growth slowed to 0.6% in the first quarter from 0.8% expansion in the previous quarter, preliminary data from the National Statistics Institute showed. However, this was slightly better than expected.

Spain’s economy has been one of the top performers in Europe, in part thanks to record tourist numbers, and grew 2.8% last year.

The Spanish government still expects the economy to grow 2.2% this year, although it said earlier this week that uncertainty triggered by the US-Israeli war on Iran could affect the forecast.

Premier Inn owner Whitbread is to cut about 3,800 jobs in the UK and Ireland as it resets its five-year business strategy, after tax rises and pressure from a US activist investor.

The cuts will affected about 12% of Whitbread’s 30,000-strong workforce in the UK and Ireland working in its Beefeater and Brewers Fayre restaurants, which are usually located next to or inside Premier Inn hotels. The company said consultations with affected employees would begin immediately.

Whitbread said it expected to retain a “significant proportion” of those affected and would try to find alternative roles for them, given it hires about 15,000 people each year.

Whitbread was one of the biggest fallers on the FTSE 100, down 4.4%.

The cuts come after Whitbread began a fresh review of its business in November, a year after it first announced its five-year plan, after it was hit by higher costs in the chancellor’s budget.

Britain’s largest hotel operator had already been in the process of converting some of its underperforming Beefeater and Brewers Fayre restaurants, usually located next to or inside its Premier Inn hotels, into hotel rooms.

Whitbread warned after Rachel Reeves’s 2025 budget that tax changes would cost it an additional £50m this year, amid changes to the way business rates are calculated. This came hot on the heels of an earlier cost squeeze due to higher wage bills and rising food prices.

Whitbread’s new strategy means it will become a pure hotel business, about seven years after it sold the Costa Coffee chain to soft drinks giant Coca-Cola in a near-£4bn deal.

This means that as it stands the Beefeater restaurant brand - established in 1974 in known for serving steaks and classic pub dishes – will disappear from UK high streets.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The European Central Bank is also set to keep rates unchanged on Thursday, but is also likely to signal that a rate hike, perhaps as soon as June, could be on the cards to tackle an energy-driven surge in consumer prices.

In the United States, the Federal Reserve on Wednesday left interest rates unchanged for the third time this year, despite Donald Trump’s insistent demands for rate cuts.

Oil prices jumped a further 7% on Thursday to the highest since March 2022, after a report that the US is considering military options against Iran to break the deadlock in stalled negotiations to end the war.

Donald Trump is set to receive a briefing today (from Centcom commander Adm. Brad Cooper) on plans for a series of military strikes on Iran to force it back to negotiations over its nuclear programme, according to a report from the US news outlet Axios.

Brent crude futures for June are now 5.3% higher at $124.58 a barrel, after hitting $126.41 a barrel earlier. On Wednesday, oil gained 6.1%. The June contract, up for a ninth day, expires on Thursday and the July contract rose 3% to $113.78 a barrel, after gaining 5.8% yesterday.

US West Texas Intermediate futures for June rose 2.3% to $109.35 a barrel, after hitting $110.93 a barrel earlier, and climbing 7% on Wednesday.

Both oil benchmarks are on track for their fourth month of gains. Brent has more than doubled since the start of the year while WTI is more than 90% higher.

Asian stock markets declined, with Japan’s Nikkei losing 1.06% and Hong Kong’s Hang Seng down 1.2%.

The Agenda

• 9am BST: Germany GDP for Q1

• 10am BST: Eurozone GDP for Q1, inflation for April

• Noon BST: Bank of England interest rate decision

• 1.15pm BST: European Central Bank interest rate decision

• 1.30pm BST: US GDP for Q1