12.05.26
The Map Has Changed
Reform took Essex, Havering and Sunderland. Labour lost over a thousand seats. UK borrowing costs hit their highest since 1998. A week that will be studied for years.
REFORM RESHAPES BRITISH POLITICS, UK BORROWING COSTS HIT A 28-YEAR HIGH, 163,000 JOBS AT RISK FROM ENERGY COSTS, AND HENRY MOORE ARRIVES AT KEW. YOUR WEEK, DIGESTED BY DURA.
MONEY MATTERS
UK borrowing costs hit their highest since 1998
UK government borrowing costs surged to their highest levels since 1998 this week, driven by the Iran conflict, rising oil prices and the growing political uncertainty following the election results. The 30-year gilt yield hit levels not seen since the late 1990s, as investors demanded higher returns to hold UK debt. For households, the knock-on effect is already visible in mortgage pricing, where lenders have been adjusting fixed-rate products upwards. For investors holding bond-heavy portfolios or pension funds with significant gilt exposure, the direction of travel warrants a fresh conversation with your adviser. The combination of political turbulence and an energy price shock is proving particularly damaging to the UK's standing in sovereign debt markets.
163,000 jobs at risk from energy costs, report warns
A report published this week warned that the UK stands to lose 163,000 jobs as the Iran war sparks an energy-driven economic crisis. The analysis, cited by the Evening Standard and the Independent, points to the hospitality, construction and manufacturing sectors as particularly exposed, with hospitality singled out by the Bank of England's own April Monetary Policy Report as one of the sectors most at risk if consumers tighten their belts in response to rising energy bills. The Bank of England's average forecast for unemployment in the fourth quarter of 2026, compiled from HM Treasury submissions, now stands at 5.5%, up from the 4.9% recorded in February. Consumer confidence has fallen to its weakest level since 2023, and three quarters of UK small businesses say they are unsure they can pay their bills next month.
The election results and your finances
Reform UK gained over 1,400 council seats on Thursday, taking control of Essex county council, Havering in London and Sunderland, while Labour lost more than 1,100 seats. The Greens took Lambeth and Lewisham from Labour in London, and the SNP held Scotland. By the weekend, around 30 Labour MPs had publicly called for a change in leadership or a timetable for Starmer to resign, with former deputy leader Angela Rayner warning that what the party is doing is not working and describing the moment as potentially Labour's last chance. The financial implications are not abstract. Political instability feeds directly into gilt yields, which in turn move mortgage rates and the government's fiscal headroom. The June Bank of England meeting and the Autumn Budget are both now considerably harder to call than they were a week ago.
Hiring freezes, temp contracts and a cooling labour market
The Recruitment and Employment Confederation and KPMG reported this week that demand for permanent staff fell again in April, with businesses becoming increasingly cautious about committing to full-time hires in the current environment. Temporary hiring showed some improvement as firms sought flexibility, but BDO's employment index reportedly fell to its lowest level in 15 years, suggesting businesses are becoming genuinely defensive. For women in senior roles negotiating contracts, considering a role change, or managing teams through this period, understanding that the labour market is softening faster than headline figures suggest is material context for any decision made in the next six months.
Political instability, rising borrowing costs and 163,000 jobs at risk. This is not a week to look away from the economic picture.
CULTURE AND LIFE
Henry Moore at Kew Gardens
Henry Moore: Monumental Nature opened on 9 May at Kew Gardens and runs until 27 September, included with garden entry. The exhibition brings Moore's large-scale bronze sculptures into dialogue with Kew's trees, glasshouses and historic landscapes, including the Great Pagoda and the Temperate House. It is one of the more quietly spectacular ways to spend an afternoon in London right now, particularly as the gardens come into full spring bloom. Worth visiting on a weekday to avoid weekend crowds, and worth combining with the new Treetop Walkway if you have not been recently.
London Craft Week: 11 to 17 May
London Craft Week runs until Saturday, bringing together over 1,000 makers, designers, brands and galleries across the city for exhibitions, talks and studio visits. The programme includes studio open days, talks from leading makers and a strong showing of textile artists, jewellers and ceramicists working at the intersection of craft and fine art. Events range from free to ticketed, and the full programme is available at londoncraftweek.com. If you collect or have ever considered collecting craft-based work, this is one of the best weeks of the year to see what is being made and to meet the people making it.
Last chance: Seurat and the Courtauld's women painters close this week
Two exhibitions at the Courtauld close this week and are not to be missed. Seurat and the Sea, the first UK exhibition dedicated to the pointillist master in nearly three decades, closes on Saturday 17 May. A View of One's Own, the companion show spotlighting landscapes by British women artists from 1760 to 1860, closes on 20 May. Both are included with Courtauld admission and together make one of the strongest double bills London has offered this spring. If you have been meaning to go, this is the week.
ON THE HORIZON
16 May: Rising Voices opens at the V&A
One of the most anticipated exhibitions of the London summer opens at the V&A on Friday, bringing together 40 artists from Asia, Australia and the Pacific in a landmark show running until January 2027. Foregrounding First Nations perspectives and artistic heritage, the show is a major collaboration with QAGOMA in Brisbane. Tickets from £17, and worth booking in advance for weekend visits.
27 May: Ofgem price cap announcement
Ofgem must confirm the July to September price cap by 27 May. Cornwall Insight is forecasting a rise of around 12%, pushing typical annual bills to approximately £1,843. If you are on a standard variable tariff, the two weeks between now and the announcement are your window to review fixed deals before the market adjusts. Three quarters of affected households are reportedly unaware the increase is coming.
18 June: Bank of England rate decision
The next MPC meeting is six weeks away, and the political and economic landscape between now and then is genuinely difficult to forecast. Two more months of inflation and labour market data, a price cap announcement, and considerable political uncertainty all sit between here and that decision. Markets are still pricing in close to three quarter-point hikes before the year end. What the Bank says in June will be one of the most consequential statements it has made in years.
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