Labour had said it would lower the voting age if elected

International News via Reuters:

The British government said on Thursday it planned to give 16 and 17-year-olds the right to vote in all UK elections in a major overhaul of the country’s democratic system.

The government said the proposed changes, which are subject to parliament approvals, would align voting rights across the UK with Scotland and Wales, where younger voters already participate in devolved elections.

“We are taking action to break down barriers to participation that will ensure more people have the opportunity to engage in UK democracy,” Deputy Prime Minister Angela Rayner said in a statement.

Turnout at the 2024 general election was 59.7%, the lowest at a general election since 2001, according to a parliamentary report.

According to the House of Commons library, research from countries that have lowered the voting age to 16 shows it has had no impact on election outcomes, and that 16-year-olds were more likely to vote than those first eligible at 18.

Labour, whose popularity has fallen sharply in government after being elected by a landslide a year ago, had said it would lower the voting age if elected.

The reforms would also expand acceptable voter ID to include UK-issued bank cards and digital formats of existing IDs, such as driving licences and Veteran Cards.

To tackle foreign interference, the government said it also planned to tighten rules on political donations, including checks on contributions over 500 pounds ($670) from unincorporated associations and closing loopholes used by shell companies.

($1 = 0.7462 pounds)

Reporting by Sam Tabahriti and Muvija M; Editing by Kate Holton

The number of employees on company payrolls dropped by a provisional 41,000 in June after a 25,000 decline in May

International News via Reuters:

British pay growth slowed in May and employee numbers dropped further last month, but the cooling in the labour market which had alarmed some policymakers appeared less acute than previous data had suggested, official figures showed on Thursday.

Annual wage growth, excluding bonuses, slowed to its lowest since the second quarter of 2022 in the three months to May at 5.0%. But the figure was still slightly higher than the 4.9% median forecast from economists in a Reuters poll and April’s pay growth was revised up to 5.3% from 5.2%.

The number of employees on company payrolls dropped by a provisional 41,000 in June after a 25,000 decline in May.

However, the May decline was far less sharp than the originally reported reading of 109,000, which represented the biggest decline since early in the COVID-19 pandemic and had triggered concern that businesses were retrenching rapidly in the face of higher labour costs and a weak growth outlook.

“The latest figures ease immediate pressure on the Bank of England to accelerate interest rate cuts. Though the labour market continues to soften, the hefty revision to May’s payrolled employees figure paints a less alarming picture than previously,” said Jack Kennedy, senior economist at recruitment site Indeed.

Five-year British government bond yields rose to a one-month high after the data and financial market expectations for an August rate cut softened marginally.

The ONS said May’s initial estimate of the fall in payroll numbers had been more provisional than usual due to an earlier-than-usual publication date for the labour market data last month.

INFLATION PRESSURE

The Bank of England is closely watching wage growth and employee numbers for signs of how persistent domestic price pressures are likely to prove, especially after data on Wednesday showed inflation in June rose to its highest since January 2024 at 3.6%.

Most BoE policymakers view annual wage growth of around 3% as desirable for consumer price inflation to stay near its 2% target over the medium term.

In May, the BoE forecast that annual private-sector wage growth, excluding bonuses, would be 5.2% in the three months to June and slow to 3.8% in the final quarter of this year.

Thursday’s data showed that this measure of pay growth slowed to 4.9% in the three months to May.

Despite the above-target inflation – which the BoE does not forecast to be back on track until early 2027 – most economists expect the BoE to cut rates by a quarter point next month and again later this year.

A combination of fewer job vacancies and more people looking for work is one of the key reasons why the BoE thinks it needs to keep cutting interest rates at a gradual pace to stop inflation falling too far below target in the longer term.

Some employers have been saying that they expect to scale back hiring due to an increase in the minimum wage and employers’ social security contributions that took effect in April, as well as a planned tightening of employment laws.

Thursday’s data showed that the number of job vacancies fell by 56,000 in the second quarter to 727,000, the lowest number since the three months to April 2021.

There was also potentially concerning news on unemployment, though long-standing problems with the response rate to the ONS’ labour force survey means the BoE places less weight on it and related employment and inactivity numbers than in the past.

Britain’s unemployment rate in the three months to May rose from 4.6% to 4.7%, its highest since the second quarter of 2021, in contrast to economists’ expectations in a Reuters poll for it to stay unchanged.

The increase appears to reflect more people entering the labour market to look for work.

The number of people in work rose by 134,000 on the quarter – far above economists’ forecasts for a 46,000 rise – while there was a 139,000 drop in “economic inactivity”, a category that includes the long-term sick, students and unpaid carers but not unemployed people looking for work.

Higher inactivity since the COVID-19 pandemic has been a major concern of British governments and this fall reduced the inactivity rate to its lowest since April 2020 at 21.0%, down from 21.4% in the three months to February.

“The LFS data suggest the labour market is easing in a positive way, with the inactivity rate falling as employment continues to growth. That could be disinflationary if it continues,” said Rob Wood, chief UK economist at Pantheon Macroeconomics.

Reporting by David Milliken and Suban Abdulla; Editing by Catarina Demony and Toby Chopra

Merz’s day trip follows a three-day state visit to Britain by French President Emmanuel Macron

International News via Reuters:

Friedrich Merz embarks on his first trip to London as German chancellor on Thursday to sign a wide-ranging friendship treaty with British Prime Minister Keir Starmer, part of a broader push to reset the EU’s relationship with Britain.

Merz’s day trip follows a three-day state visit to Britain by French President Emmanuel Macron, signalling greater cooperation between Europe’s top three powers at a time of threats to the continent and uncertainty about their U.S. ally.

Europe has been confronted with new U.S. tariffs since President Donald Trump returned to the White House as well as questions about the U.S. commitment to defend its European allies, including Ukraine in the face of Russia’s invasion.

“The agreement comes at a time when, as Europeans, we are particularly challenged in terms of security policy,” a German government official said in a briefing ahead of the trip.

“Not stated in the preamble is that transatlantic matters are also — let’s put it this way — in flux. This too is part of the context.”

Germany has such friendship treaties with just a handful of countries like France, symbolizing the closeness of their ties.

Coming nearly a decade after Britain voted to leave the European Union, the treaty includes a clause on mutual assistance which, “in light of the Russian war of aggression against Ukraine, is highly significant”, the official said.

It builds on a defence deal agreed last year that included the joint development of long-range strike weapons, and comes after France and Britain agreed last week to reinforce cooperation over their respective nuclear arsenals.

As part of the announcement on Thursday, Britain and Germany will pledge to “pursue joint export campaigns” to drum up orders from other countries for equipment they make jointly, such as the Typhoon Eurofighter jet and the Boxer armoured vehicle.

That could help boost sales, and represents a significant reversal from the previous ten years, when Germany blocked Saudi Arabia and Turkey from buying Typhoons.

Typhoons are made by a consortium of European companies, including BAE Systems in Britain and Airbus in Germany, with the different partner governments responsible for orders to different countries; the Boxer is made by a German-British joint venture, Rheinmetall BAE Systems Land.

Further deepening ties, a German defence tech company, Stark, has also agreed to build a new factory in Britain, the first production facility outside of Germany, to create AI-powered unmanned systems.

Beyond defence, the treaty will also include an agreement to jointly combat smuggling and human trafficking, the German official said – addressing a key demand of Starmer’s government which is under pressure to show it can control migration.

The British government said Germany would make a landmark commitment to outlaw the facilitation of illegal migration to Britain, with a law change to be adopted by the end of the year.

That would give law enforcement the tools to investigate warehouses and storage facilities used by migrant smugglers to conceal dangerous small boats intended for illegal crossings to Britain, it said in a statement.

Reporting by Sarah Marsh in Berlin and Elizabeth Piper and Sarah Young in London;Editing by Ros Russell