Makerfield has been one of the safest, most unbroken Labour seats in the country, held continuously by the party and its predecessor seat, Ince since 1906. That safety can no longer be taken for granted. The constituency has been transformed into a highly volatile battleground between Labour and an insurgent Reform UK.
Two forces are putting the seat under severe pressure. Demographically, Makerfield is a predominantly white, working-class, high-homeownership constituency south of Wigan, precisely the kind of territory Reform UK targets. In the 2024 General Election, Labour’s Josh Simons held the seat with a majority of 5,399 over Reform UK, taking 45.2% of the vote to Reform’s 31.8%. Reform needs a swing of just 6.7% to overturn that margin. In last month’s local elections, Reform swept the board entirely, winning all eight council wards within the constituency and capturing roughly 50% of the local vote share against Labour’s 23–27%.
The by-election was deliberately triggered by Josh Simons’s resignation to facilitate a Westminster return for Greater Manchester Mayor Andy Burnham, positioning him for a potential leadership challenge amid a wider Labour Party crisis. Labour’s defence of the seat rests almost entirely on Burnham’s personal brand. He grew up in the area and retains enormous popularity across Greater Manchester as the “King of the North.”
Survation’s constituency polling captures the “Burnham effect” clearly. When voters are asked to choose between named candidates, Burnham leads Reform’s Robert Kenyon by a narrow 43% to 40%.
Makerfield is now anything but safe Labour territory — it is a hyper-marginal toss-up. National electoral history and Burnham’s personal popularity give Labour a fragile edge, but Reform UK’s momentum in the local wards makes this one of the most unpredictable and high-stakes by-elections in recent political memory.
Voting takes place on Thursday 18 June, with results expected in the early hours of Friday morning.
If Burnham returns to Westminster, he is expected to move swiftly to trigger a leadership election and win it comfortably. He is so far ahead of any other challenger that we may see a coronation rather than a contest. A pathway to the premiership that looked extremely difficult just a few months ago now looks like a cakewalk.
Just how the bond markets will react to a Burnham victory is the billion-pound question. Burnham was quoted in September 2025 in the New Statesman stating, “We’ve got to get beyond this thing of being in hock to the bond market.” During the by-election campaign, his team cancelled a high-profile call with hedge fund managers at short notice. UK borrowing costs are already the highest in the G7, with the benchmark 10-year gilt yield 7.8% higher than the corresponding US yield and 61% higher than the German 10-year bund.
The backdrop could hardly be less forgiving. Friday’s GDP data showed a 0.1% contraction in April; inflation is expected to bounce back toward 3.5% by end-2026; unemployment stands at 5.0% for the January–March 2026 period, up 0.5% year-on-year; economic inactivity remains stubbornly high at 20.9%, with over nine million people aged 16–64 entirely outside the workforce; and the number of payrolled employees on a downward trend. Burnham’s spending and renationalisation plans will quickly come into sharp conflict with economic reality.
Currency Exchange Rates Update
The Pound traded within a narrow range against the Euro throughout the week, finishing little changed.
Against the US Dollar, there was more movement (0.85%) with the Pound ending the week up 0.48%.
The Pound hit a nine-week high against the Australian Dollar on Wednesday, closing the week up 0.45%, and reached its highest level against the Canadian Dollar since January, finishing up 0.83%.
Rabobank, a leading European bank, predicts the Pound will eventually come under pressure from the Euro, warning that political risks could create further downside.
This Wednesday brings the UK CPI inflation data, and Thursday brings the Makerfield by-election, the UK unemployment data and the Bank of England interest rate decision. Analysts expect the MPC to talk hawkish but act cautiously, holding Bank Rate at 3.75% with the decision unlikely to be unanimous. It is the nine-way vote split within the Monetary Policy Committee that markets will be watching most closely.
In the coming week, the key economic data releases and significant events include:
Monday US Industrial Output
Tuesday China Industrial Output & Retail Sales
Australia RBA Interest Rate Decision
Germany ZEW Business Confidence
Wednesday UK CPI Inflation
EU CPI Inflation
US Fed Interest Rate Decision
Thursday UK Makerfield By-election; BoE Interest Rate Decision & Unemployment Rate
Friday UK Retail Sales
Canada Retail Sales
What’s in the news?
UK
Ten years on from the Brexit referendum of June 2016, there is still no sign of the economic renewal its supporters promised. Does the fault lie in Brexit itself, or in policymakers’ reluctance to seize the opportunities it presents? A decade on, Britain has more red tape than ever or so its supporters argue, rebutting the charge that the divorce from the EU failed to deliver.
Brexit has not proved the abject catastrophe many feared. More economically damaging have been a series of unrelated shocks: the pandemic, the energy price crisis unleashed by Russia’s war in Ukraine, and now the looming threat of a supply crunch as the Strait of Hormuz closure bites.
Brexit at Ten: Why Labour’s EU Dilemma Could Define the Next Election – Cosmos Currency Exchange
Yet Brexit has not delivered the economic boost its cheerleaders promised either. After ten years, the verdict remains one of disappointment. Surely the time has come to complete the project. Britain now has the freedom to set its own rules, and a more agile approach to regulation could unlock significant advantages. The tech sector’s visible relief at sitting outside the EU’s emerging AI regulatory framework is an early sign of what that freedom could mea
Not so good news
The ONS (Office for National Statistics) reported that the UK economy shrank by 0.1% in April, with a 0.2% contraction in services activity cited as the main driver. Construction output rose 0.1%, partly offsetting the decline, while production was flat. Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said the figures made a Bank of England rate cut next week unlikely, with the GDP decline pointing to a damaging drift toward stagflation.
The GMB union general secretary Gary Smith has warned that Labour’s net zero agenda is killing British industry, accusing Sir Keir Starmer of pursuing policies that are destroying jobs. Speaking to the Radio Times, Smith drew a stark comparison with the deindustrialisation of the 1980s, arguing that forcing North Sea workers out of well-paid, unionised employment and closing off those careers to future generations was economic madness.
The BRC (British Retail Consortium) has accused ministers of pressing ahead with employment reforms that could inadvertently regulate flexible working out of existence. The warning is the latest from employers alarmed by Labour’s reform agenda, which has already raised concerns over rising wage bills and higher National Insurance contributions. Under the proposals, employers would be required to offer workers on zero-hours, or low-hours contracts a guaranteed weekly hour based on their typical patterns. Ministers argue the changes will reduce insecurity and improve living standards, but retailers say the reforms misread why many workers choose flexible arrangements in the first place, seeing them as a fit around personal commitments rather than a trap.
From April 2028, UK small companies must file full profit and loss (P&L) accounts digitally using commercial software, as abridged accounts are abolished. Following business pushback, a significant concession allows small companies to opt out of making their P&L publicly visible on the Companies House register, though the data will still be shared with HMRC and law enforcement. The 2028 deadline gives businesses a 21-month runway to transition. Affected companies should act now by adopting compliant accounting software and preparing for full disclosure to the authorities.
Small firms must report accounts to Companies House from 2028 – FTAdviser
A classified Cabinet Office dossier has revealed that more than £28 billion in taxpayer money found its way to terrorists, hostile foreign states and organised criminal networks over the six years from 2015 to 2021. The internal assessment identifies systemic weaknesses across government departments, grant programmes and emergency funding schemes as the route through which public money was diverted. Most strikingly, the losses are not attributed solely to opportunistic fraud, and substantial sums are believed to have flowed, directly or indirectly, to individuals and organisations regarded as threats to national security.
USA
US inflation jumped to a three-year high of 4.2% in May, driven largely by the ongoing conflict in the Middle East. Core CPI rose 0.2% for the month and 2.9% year-on-year. The annual rate in line with forecasts, though the monthly gain came in slightly below the 0.3% estimate.
The data arrives at a sensitive moment, with Federal Reserve officials due to meet this Wednesday to consider their next move on rates. Markets largely expect the FOMC to hold, but investors will be watching closely for any signal of how concerned policymakers are about the inflation surge.
The US personal savings rate fell to 2.6% in April, a four-year low, having halved in just twelve months and sitting near its lowest level since the 1950s. A sharp divide is opening between corporate America thriving on AI-driven profits and ordinary consumers under mounting financial pressure, a K-shaped, two-speed economy that carries growing political risk for the Trump administration.
That risk is already visible. A new Financial Times poll finds nearly seven in ten registered voters disapprove of President Trump’s handling of inflation. Consumer data reinforces the picture. Most Americans are cutting back not just on entertainment and discretionary spending, but on groceries too, with around 40% reporting they have reduced driving.
SpaceX made history on Friday with the largest IPO in US history, raising $75 billion ahead of a record $1.8 trillion stock market debut. Shares were priced at $135, with 555.6 million sold, and opened up 11%, hitting $158.51 and in doing so making Elon Musk the world’s first trillionaire. SpaceX is the first of the major private AI foundation model companies to go public, with Anthropic and OpenAI debuts expected to follow.
For the first time, the US generated more electricity from solar than from coal in a single month, with May marking the milestone. Much of the surge is being driven by data centres, which are increasingly turning to solar as the fastest energy source they can deploy, even as the Trump administration pushes to keep ageing coal plants operational. Natural gas remains the country’s dominant power source, accounting for 37% of the May mix.
The EU
The European Central Bank raised its base rate by 0.25% to 2.25% on Thursday, its first increase since 2023, becoming the first major central bank to respond to the energy shock triggered by the Iran war and the closure of the Strait of Hormuz. Alongside the decision, the ECB revised its forecasts. Headline eurozone inflation is now expected to average 3% in 2026, easing to 2.3% in 2027 and 2% in 2028, while growth projections were trimmed to 0.8% this year, 1.2% in 2027 and 1.5% in 2028.
Germany and France have abandoned their joint next-generation fighter jet programme, a flagship project launched in 2017 and central to Europe’s rearmament ambitions. Persistent disagreements between the two countries’ defence contractors ultimately proved fatal. The collapse underscores how difficult it remains for Europe’s largest nations to align on complex industrial ventures, even when the strategic imperative, reducing dependence on the US and countering Russian aggression, is broadly shared.
A German regional court has ruled that Google bears responsibility for its AI-generated search overviews, a decision that could expose Big Tech to defamation liability. Search engines have traditionally enjoyed partial protection from liability on the basis that they direct users to third-party content. But after Google’s AI summaries falsely linked two publishing companies to scams, the court found that the overviews constituted the company’s own content and therefore its own responsibility.
Australia
Australia’s economy grew by a sluggish 0.3% in the March quarter, according to the ABS (Australian Bureau of Statistics), with the annual rate at 2.5%. Slowing household spending, falling productivity and a contraction in the mining sector, partly due to severe cyclone activity all weighed on output, with high interest rates and an ongoing energy squeeze forcing consumers to pull back further on discretionary spending.
Consumer sentiment slid deeper into gloom in June. Westpac’s index fell 2.9% to 80.6, one of the weakest readings in the survey’s 50-year history, as households flagged growing financial strain following the government’s latest budget. A separate business survey told a similar story, with confidence edging up only marginally to -14 in May from a revised -23.
Economists remain divided on the Reserve Bank’s next move, particularly in the wake of the Fair Work Commission’s minimum wage increases, which risk feeding back into sticky inflation. Sentiment has nonetheless shifted: three of Australia’s major banks now forecast rate cuts beginning in early 2027, offering heavily leveraged households some distant relief.
Domestically, the political conversation has been dominated by a sudden surge in support for Pauline Hanson’s One Nation party, triggering anxiety within both the ruling Labor government and the Coalition opposition.
Canada
Canada is wrestling with a classic stagflationary dilemma. A stalling domestic growth on one side, sticky geopolitically driven inflation on the other, and intensifying political battles over national unity and trade in the background.
On Wednesday, the BoC (Bank of Canada) held its overnight lending rate at 2.25% for the fifth consecutive meeting, with Governor Tiff Macklem explicitly acknowledging the difficulty of the policy position. First-quarter GDP edged down 0.1% on an annualised basis, missing expectations. Business investment remains weak and a pullback in government spending has further slowed momentum.
Yet headline inflation has ticked back up to 2.8%, driven by a $10-per-barrel spike in global oil prices stemming from the prolonged Middle East conflict. With the domestic consumer already stretched, smaller businesses are finding it impossible to pass on rising transport and energy costs, absorbing the margin compression instead and pivoting from expansion to defensive efficiency.
The Bank’s policy statement took the unusual step of explicitly naming US trade policy uncertainty and the threat of new tariffs as a primary headwind for the second half of 2026. The memory of earlier retaliatory counter-tariffs, and the supply chain disruption they caused is keeping Canadian manufacturers firmly risk-averse. The central bank also noted that the economy is undergoing a structural transition as firms adapt to more fragmented regional trade relationships.
Canada’s labour market is showing unexpected resilience, with the unemployment rate edging down to 6.6%. The Bank cautioned, however, that monthly employment figures remain volatile, and the broader picture is of an economy operating with excess supply, enough slack to prevent wage-push inflation from taking hold, but not enough growth to restore business confidence.
Despite the domestic softness, Canada’s trade surplus widened, buoyed by higher global prices for its energy exports.
Others
China’s May trade figures came in stronger than expected, a welcome turn after a softer April. Exports jumped 19.4% year-on-year, well ahead of the 15% forecast and April’s 14.1%, suggesting overseas demand held up despite ongoing Middle East tensions. AI hardware drove much of the outperformance. Computer and parts shipments surged 66% on the year, the fastest pace since 2010 while integrated circuit exports leapt 111%, the strongest since 2013. Shipments to the US climbed nearly 36%, their best run since 2021. Imports also surprised to the upside, rising 27.4% against the 26% expected, pointing to firmer domestic activity and a push to rebuild stockpiles. South Korean semiconductor shipments into China more than tripled year-on-year in May alone. The trade surplus widened from $84.8bn to $105.4bn.
Wage growth for blue-collar workers in China has outpaced their white-collar peers for six consecutive years, reflecting the country’s booming gig economy. More than 300 million Chinese workers are now in flexible employment, according to a new think tank report. Food delivery drivers ranked among the highest earners, with annual income growth exceeding 10% between 2023 and 2025, even as many work punishing schedules. Stagnating white-collar wages, meanwhile, are feeding anxiety about AI’s impact on graduate employment, underscored by the sight of hundreds of applicants, a tenth of them recent university graduates, competing for shepherd positions in Inner Mongolia.
China plans to invest nearly $300 billion over the next five years in a national network of data centre hubs, as Beijing works to close the gap with the US in the AI race.
South Africa recorded modest growth of 0.5% in the first quarter of 2026, highlighting how exposed Africa’s largest economy remains to the Middle East energy shock. The stagnation is fuelling a volatile social environment with nearly one in three people unemployed, and public anger over rising living costs and weak job creation has spilled into xenophobic violence in several communities in recent months.
Last Sunday marked 100 days since the start of the Iran war, with no lasting peace deal in sight and the conflict continuing to drive substantial volatility across asset classes worldwide.
The Russia-Ukraine war has now outlasted the First World War, a conflict Vladimir Putin expected to conclude in Russian victory within weeks. More than four years on, there is no clear end in sight, and the fighting has at times been so attritional that advances have lagged behind even the most static phases of the Western Front. During Russia’s offensive on the eastern city of Pokrovsk, troops advanced at an average of just 75 yards per day.
Stranger than fiction
A vast whale graveyard spanning nearly 500 skeletons, five million years and 750 miles of seafloor has been discovered in the Indian Ocean. When whales die, the event ripples through the deep-sea ecosystem. Mobile scavengers such as sleeper sharks strip the soft tissue within months, but the bones sustain smaller creatures for decades, so-called whalefalls that create localised blooms of biodiversity. Beyond death, living whales are crucial to ocean health. They feed at depth and defecate at the surface, reversing the ocean’s usual downward flow of nutrients. The iron they bring up supports vast plankton blooms and the entire food chain that depends on them including, ironically, the krill that baleen whales themselves rely on.
Quote
Winston Churchill, “Democracy is the worst form of government, except for all the others”.