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Good morning

The Labour Party has refused to rule out an increase in capital gains tax, sparking warnings that such an increase could deter investors from Britain and force entrepreneurs to sell their companies.

The focus on capital gains tax intensified yesterday after Labour repeatedly refused to rule out such a move and the Liberal Democrats made a £5.2 billion capital gains tax increase the centrepiece of their election manifesto.

Brent Hoberman, chairman of the Founders Forum and former chief executive of Lastminute.com, told the Financial Times that raising capital gains tax was a “populist trap”.

“If we pursue policies that are not globally competitive, it will cost us more and the country will have to find other ways to fund the NHS etc,” he said.

Read more about the reaction to a possible increase in capital gains tax.

Here’s what I’m keeping an eye on today:

  • Economic data: OPEC publishes its oil market report for June and labor market figures are available from the UK.

  • Ukraine Aid: German Chancellor Olaf Scholz, President of the European Commission Ursula von der Leyen and Ukrainian President Volodymyr Zelenskyy attend the Ukraine Recovery Conference in Berlin.

  • Results: FirstGroup, Oracle and Oxford Instruments report.

Five more top stories

1. The Federal Reserve will only cut interest rates once this year, according to the latest FT-Chicago Booth survey of academic economists, as persistent inflation forces the Federal Reserve to adjust its timetable for cutting borrowing costs. The results of the survey, conducted in the last week of May, appear ahead of tomorrow’s Fed meeting. Read more about economists’ reactions.

  • ECB: The European Central Bank could leave interest rates unchanged if necessary, even though it has begun cutting borrowing costs for the first time in nearly five years, its president Christine Lagarde said.

2. Apple has partnered with OpenAI to integrate ChatGPT into its devices. the iPhone maker said yesterday as it unveiled improvements to its software ecosystem. The changes aim to use artificial intelligence to deliver a smarter Siri voice assistant and more personalized features to boost productivity. Read more about what the company calls “Apple Intelligence.”

3. The UN Security Council has passed a US resolution supporting President Joe Biden’s ceasefire plan for Gaza. Part of a US-led effort to increase pressure on Israel and Hamas to end the war. The UN resolution was not binding, but its adoption will increase pressure on both sides to respond positively to the three-phase proposal.

4. Private equity groups could soon own 10 of the 30 largest U.S. accounting firms, At least four groups are in talks for a deal, following the sales of Grant Thornton and Baker Tilly this year as regulators raise concerns about the quality of audits. Here are the 30 biggest firms planning deals.

5. Investors flock to local currency bonds of former emerging market pariahs such as Egypt, Kenya, Nigeria and Pakistan, attracted by the economic recovery and higher interest rates in these countries. The US dollar debt of many of these countries has already recovered as they were able to avoid outright default. Here’s why frontier market bonds are making a comeback.

The great reading

A picture of the construction of a house with diagrams showing the ups and downs of construction over time
© FT Montage/Bloomberg

The stranglehold that green belts impose on housing in the UK is one aspect of a strict planning regime that shadow chancellor Rachel Reeves has condemned as “the biggest obstacle to our economic success”. Labour hopes to shake up the labyrinthine system to improve housing affordability and boost growth. Could the party’s reform plans finally break Britain’s planning deadlock?

We also read and listen …

  • Political gambling: French President Emmanuel Macron’s surprise call for new elections is a risky bet to stave off the rise of the extreme right, writes Leila Abboud.

  • US debt: With $1 trillion in interest payments each year and interest rates high, the federal budget looks more like a leveraged buyout, writes Patrick Jenkins.

  • South Africa: Despite losing his parliamentary majority in recent elections, President Cyril Ramaphosa is determined to keep calm and carry on, writes Gideon Rachman.

  • Tech Tonic 🎧: China wants to be a world leader in AI, but needs more chips to do so. Can the country overcome US restrictions?

Chart of the day

The future of Scotland’s oil and gas industry has taken centre stage in the UK election campaign as parties seek to convince workers that they can avoid mass layoffs by implementing a “just transition” to renewable energy. Industry groups fear that up to 100,000 jobs are at risk because a special 75 per cent tax on oil and gas producers introduced by the Conservatives could be increased by a future Labour government.

Line chart of North Sea investment and job losses

Take a break from the news

Golf is having a big moment right now. Global participation is at an all-time high, thanks in part to an influx of younger and more versatile players. The sport’s upward trajectory has also been helped by a handful of brands that have attempted to change the game.

Two players on a golf course
© Olivia Jank

More articles by Benjamin Wilhelm and Gordon Smith

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