Good morning. Here’s what matters today.

Andy Burnham, the frontrunner to succeed Keir Starmer, said this week there is “room for movement on tax” in the Labour manifesto, though he was careful to carve out the headline pledges — no rises to VAT, income tax, or national insurance. It’s a signal worth noting for anyone watching the fiscal trajectory under a potential Burnham government. The direction of travel suggests business rates and council tax are more likely targets for reform than the big three. Nothing imminent, but it tells you something about where flexibility might emerge.

On Wall Street, analysts are lifting S&P 500 earnings forecasts at the fastest pace since the post-Covid rebound, according to the FT. That’s driving concern in some quarters about an earnings bubble — expectations running ahead of what companies can actually deliver. Worth keeping in mind as Q2 reporting season gets underway in the next few weeks.

Anthropic is moving to close technical loopholes that have allowed Chinese users and entities to access Claude despite export restrictions. Engineers are apparently still finding workarounds. The practical implication is that the US-China AI decoupling is messier in practice than the policy frameworks suggest, and compliance risk for firms using frontier AI APIs in multi-jurisdictional operations is real and not fully priced.

Mark Zuckerberg told staff internally that Meta’s AI agent development is not progressing as quickly as he had hoped. That’s a notable admission given the scale of capital Meta has committed to the AI build-out, and it adds to a broader picture — alongside the data centre planning backlash covered by the Economist this week — that the AI infrastructure investment cycle may be running into execution friction on multiple fronts.

A European Parliament member who sat on the committee investigating spyware abuse was himself targeted with Pegasus, according to Citizen Lab analysis reported by both the Guardian and TechCrunch. The target was Greek former MEP Stelios Kouloglou. It’s a significant escalation in the documented use of NSO Group’s tool against EU political figures, and it will add pressure on the Commission ahead of any renewed debate on spyware regulation.

A new report, covered by the Economist, concludes it was probably Russia behind the drone incursions over European airspace that caused repeated disruption over the past eighteen months. No official attribution yet, but if the assessment hardens it will complicate NATO’s posture and feed directly into European defence spending debates that are already live.

US non-farm payrolls for June are due today at 13:30 BST. Given where the Fed’s rate path sits and the recent softening in labour market data, this print will move things.

Sources

Politico, Guardian, Al Jazeera, BBC News, TechCrunch, FT, Ars Technica, The Economist — 2026-07-03