Our main stories today:

The anticipated post-election bounceback in the UK economy failed to materialise as activity flatlined in July for a second month, according to the latest official data.

The Office for National Statistics (ONS) said the pre-election stalling of activity in June was followed by another month in which gross domestic product remained unchanged.

Although the economy grew by 0.5% in the three months to July, the weak performance of the economy during Labour’s first weeks in power came as a shock to the City, which had been expecting growth of 0.2% on the month.

The economy grew by 0.7% in the first three months of 2024, followed by a 0.6% expansion in the second quarter, but the latest ONS figures suggest the recovery from the mild recession in late 2023 has petered out.

Price growth continued to soften in the US last month, as the Federal Reserve prepares to cut interest rates for the first time since the start of the pandemic at next week’s meeting.

As inflation continues to fade, the consumer price index rose at an annual rate of 2.5% in August – down from 2.9% in July, and below the 2.6% expected by economists. However, the core rate of inflation, which strips out volatile food and energy costs, remained at 3.2%.

The British steel industry has suffered a blow after confirmation that 2,500 jobs will go at the Port Talbot steelworks despite a £500m taxpayer-backed deal for the south Wales plant.

The business secretary, Jonathan Reynolds, has agreed a deal in which the government will provide £500m towards the construction of a new greener electric arc furnace at the site, with the plant’s Indian owners, Tata Steel, paying £750m.

However, while the deal secures the long-term future of steel production at the south Wales site, the government was unable to secure guarantees that would save the 2,500 jobs at Port Talbot that Tata was likely to cut over the coming months.

Thank you for reading. We’ll be back tomorrow. Take care! – JK

Manchester United’s new chief executive has said that the football club is working towards improving performance on and off the pitch, after posting a financial loss for the fifth year running following a poor 2023-24 season.

United have embarked on a number of changes since British billionaire Jim Ratcliffe acquired a 25% stake in the club and over the summer managed to secure new players, many of whom are under 25 years of age.

Omar Berrada, who was appointed CEO in July after moving from Manchester City’s parent company, City Football Group, said:

We are working towards greater financial sustainability and making changes to our operations to make them more efficient, to ensure we are directing our resources to enhancing on-pitch performance.

Our clear objective is to return the club to the top of European football.

United’s net loss ballooned to £113.2m in the year to 30 June, from £28.7m the previous year. This is only the second time since the New York listing in 2012 that the club’s annual net loss exceeded £100m. Shares were 5% lower in US premarket trading.

United finished eighth in the Premier League last season, their lowest position since the league’s inception. This season hasn’t started any better, with two losses in the first three games.

Earlier this month, Berrada said manager Erik ten Hag had the full backing of the club.

For the coming year, the club expects an adjusted core profit between £145m and £160m, and revenues between £650m and £670m. It reported adjusted core profit of £147.7m on record revenues of £661.8m in the latest year.

It said the estimate reflects the impact of recent restructuring initiatives, including plans for 250 job cuts.

Consumer price inflation in the United States has slowed more than expected to its lowest since February 2021.

The headline annual rate of inflation fell to 2.5% in August, from 2.9% in July, according to official figures. This was below the 2.6% rate predicted by analysts.

The US Federal Reserve has already signalled that it will cut interest rates at its meeting next week.

However, the core rate of inflation, which excludes volatile food and energy costs, stayed at 3.2%, as expected, complicating the Fed’s job.

The Unite union said it was instrumental in securing the £2.5bn fund for investment in steel, and is in ongoing talks on further investment which should include new lines being installed and generating jobs at both Port Talbot and Llanwern. This should be agreed over the next 12 months.

The Unite regional secretary Peter Hughes said the deal avoided compulsory redundancies.

Unite general secretary Sharon Graham said:

The two stage government commitment to provide serious funding for steel in South Wales is vital for local communities and the long-term future of the steel industry.

The last government was quite frankly asleep at the wheel. The present crisis is a direct result of it failing to invest in the UK steel industry and allowing the companies involved to rundown their operations and let them fall into disrepair. Conservative inaction and disdain have resulted in wholly avoidable job losses.

Unite which secured the additional funding will ensure that the substantial second stage investment in South Wales means new jobs will be available and secure the future of Port Talbot and Llanwern.

It is now imperative on Tata to bring forward the second stage proposals to develop increased steel capacity at its South Wales sites, a jobless transition will not occur on our watch.

Jonathan Reynolds, the business secretary, has apologised, and said he recognised the deal “falls short of what would be my ideal”.

He told the Commons:

The last government had been promising a plan for the steel industry for years. With what I’m able to announce today, with the signing of a legally-binding deal that enables Tata to order their electric arc furnace as part of a significantly improved package, this government has made more progress in two months than they made over the last parliament.

But even if we had started these negotiations a year ago, never mind many years ago as they had the opportunity to do, I have no doubt we would have secured an even better deal for the community, so I would like to start with an apology to the people of Port Talbot because they were let down by the previous government.

Whilst this deal is much improved, I acknowledge very much it falls short of what would be my ideal.

Reynolds had previously said he believed there was a “better deal available” and that Labour would ensure that job guarantees in return for investment were part of the negotiations, my colleague Jack Simpson reports.

The Guardian understands that Reynolds had initially hoped to persuade Tata to keep the second blast furnace switched on at the site and secure more jobs but this was rejected by Tata because of the costs.

The last blast furnace will now close on 28 September, with most employees leaving before Christmas after working their notice periods. Tata predicts that nearly all of the Port Talbot staff will be gone by March next year.

Despite the job losses, Reynolds said the deal did what the previous government’s deal could not do, and gave “hope for the future of steelmaking in south Wales”.

Here is our full story:

The government has announced a £500m taxpayer-backed deal for the Port Talbot steelworks, securing the long-term future of steel production at the south Wales site, but was unable to secure guarantees that would save the 2,500 jobs that Tata Steel is likely to cut over the coming months.

The business secretary, Jonathan Reynolds, has agreed a deal under which the government will provide £500m towards the construction of a new greener electric arc furnace at the site, with the plant’s Indian owners Tata Steel paying £750m.

Reynolds claimed the deal went much further than the previous government’s agreement – delivering a minimum voluntary redundancy payout of £15,000 for full-time employees plus a £5,000 ‘retention’ payment and offering paid-for training.

The government said 2,000 workers had expressed interest in voluntary redundancy under this deal. Employees who choose redundancy will be paid 2.8 weeks’ earnings for each year of service, up to a maximum of 25 years.

About 500 new jobs are expected to be created to construct the Electric Arc Furnace, but this won’t happen until early 2028 at the earliest.

The government is putting £500m into the steelworks, but said it can claw back investment should Tata Steel not fulfil its commitments. This includes “increased penalty payments should the company not retain 5,000 jobs across its UK business post transformation”.

The government has also pledged £2.5bn of investment to rebuild the industry and help it decarbonise, and said it would lay out a steel strategy next spring.

As part of the deal, Tata Steel will release 385 acres of the site for redevelopment, which is expected to bring in more companies and employers not just from the steel sector but other industries.

It comes after Tata’s decision in January to close both blast furnaces at its Port Talbot site, putting 2,800 jobs at risk.

The business secretary said:

Port Talbot has always been and will always be a steelmaking town. This deal does what previous deals failed to do – give hope for the future of steelmaking in South Wales.

Steel is fundamental to the UK’s economy, sovereignty, and communities, but previous government inaction has blighted the steelmaking industry. That’s why this Government is taking strong action through a new deal and strategy which will reverse the industry’s stagnation and set out a long-term vision for a bright and sustainable future.

We know that a cleaner, greener future for UK steelmaking is vital to the industry’s long-term economic stability. The road ahead is not without its challenges but our steel strategy will set forth a positive vision for the future of the industry, backed by our manifesto commitment to £3 billion of government investment.

Boohoo is closing is US distribution centre just over a year after it opened in the latest sign of cost cutting at the struggling online fashion seller which owns brands including Debenhams, Warehouse and Karen Millen.

Analysts said the closure of the site in Pennsylvania was likely to mean a £34m profit writedown on the capital investment in the site, which had been distributing the group’s Pretty Little Thing brand and had been intended to handle more brands later this year.

Katie Cousins, an equity analyst at Shore Capital said:

To us, the short life of the US warehouse (previously stated as a key pillar of growth for BOO) is concerning, highlighting a naivety of the American market, along with a waste of time and resources.

Boohoo said it would continue to serve US customers via its UK warehouse and was testing new routes into the market including the recent launch of its Nasty Gal brand in Nordstrom department stores.

These changes will result in a significant reduction in ongoing costs over the medium term. The group remains excited about the opportunity in the US.

The closure of the US site comes as analysts said Boohoo’s sales there were well below 2022 levels and forecasts from that time.

The group racked up net debts of £95m in the year to the end of February – down from almost £6m of net cash a year before – after losses widened 76% to £160m and sales fell to £1.8bn.

Boohoo and fellow online fashion seller Asos have both been struggling amid new competition from cut-price online sellers Shein and Temu as well as the rise in popularity of secondhand clothing among young people spurred on by the likes of Vinted and Depop.

Yesterday, Pretty Little Thing founder Umar Kamani, the son of Boohoo’s founder and chairman Mahmud Kamani, said he was returning to run the brand, which he stepped down from in April last year.

He said one of his first steps would be to reintroduce free returns for premium customers adding “I sincerely apologise for any negative experiences you may have encountered during my absence.”

Drivers working for Bolt, the ride-hailing app operator, are seeking to be classed as workers rather than self-employed contractors at an employment tribunal.

More than 12,500 drivers, who are represented by the law firm Leigh Day, are bringing the action against Bolt, an Estonia-based ride-hailing app which has been operating in the UK since 2019.

The drivers claim they should be treated as workers because of the significant control Bolt has over how they work, and say they should be given the same rights and protections as typical workers.

The high-profile employment rights case, which begins in central London on Wednesday, comes as the new Labour government prepares to draw up its plans to strengthen workers’ rights in legislation.

The TV production sector in the UK suffered a £400m fall in revenues last year as cash-strapped British broadcasters reduced spending to the lowest level since the height of the pandemic.

The latest annual industry survey found that total revenues made by UK production companies fell by £392m to £3.61bn in 2023. However, just as traditional broadcasters struggle, global streaming companies such as Netflix and Amazon continue to become an increasingly important income stream, the study showed.

The latest bellwether census from industry body Pact said UK broadcasters such as ITV, the BBC, Channel 4 and Sky cut programming commissioning budgets due to factors such as a falling advertising market, viewers moving away from traditional TV and rising inflation. The freeze on the BBC’s licence fee also led to severe spending cuts.

The total amount spent on commissioning programmes by all UK-based broadcasters fell by more than 10% last year, from £1.99bn to £1.78bn, to the lowest level since the industry shut down during the pandemic in 2020.

While spending by public service broadcasters – the BBC, ITV, Channel 4 and Channel 5 – remained relatively resilient, budgets across multichannel broadcasters such as Sky plummeted by more than 35%.

The report blamed this on part of the UK market being “particularly exposed to a difficult advertising market placing downward pressures on broadcaster margins”.

Bosses at Campbell Soup Company, whose cans feature in one of Andy Warhol’s best-known 1960s pop artworks, have announced plans to drop “soup” from its name after more than 100 years.

Its chief executive, Mark Clouse, said the decision to rename the group the Campbell’s Company was part of a shift in focus to the other snack foods and jarred sauces it sold.

The 155-year-old company started producing canned condensed soup in 1897 – believed to be the first in the US to do so – and has held the Campbell Soup Company name since 1922.

Its place in US popular culture was further cemented when Warhol produced his screen prints depicting 32 cans of Campbell’s soup with different flavours in the early 1960s.

The PrettyLittleThing founder Umar Kamani said he was returning to the fast fashion brand, and one of his first changes will be to reintroduce free returns for its royalty customers.

Retail Week described it as a “shock return” after he left the business last year.

Britain’s second-biggest drugmaker GSK has ditched its experimental vaccine for herpes after it failed in an early to intermediate stage trial – ending efforts to bring the first shot for the condition to market.

The company said the trial for a therapeutic vaccine to treat the herpes simplex virus (HSV) did not meet its efficacy objective, and it won’t be taken into late-stage trials. There were no safety issues.

There are no approved vaccines for the virus, which causes genital herpes, although there is a shot for the herpes virus that causes chickenpox, made by the US drugs giant Merck. The Japanese virologist Michiaki Takahashi invented the first chickenpox vaccine.

GSK said:

Given the unmet medical need and burden associated with genital herpes, innovation in this area is still needed. GSK intends to evaluate the totality of all these data and other studies to progress future research and development of its HSV programme.

GSK shares are down 0.8% on the news, but are still up by about 12% so far this year.

Shares in WH Smith jumped by nearly 12% after it said the latest quarter had been strong, in particular its UK stores, and announced a £50m share buyback.

The 230-year-old chain, which sells books and magazines as well as food and drinks, has been closing highstreet stores and is pushing into travel hubs such as railway stations and airports. It said revenues rose by 7% in the year to 31 August, fuelled by 10% growth at its travel division.

Carl Cowling, the chief executive, said:

We have ended the financial year in a strong position, delivering a performance in line with our expectations with good growth across our travel businesses. Our UK division performed particularly well over the peak summer trading period.

We are also today announcing the launch of a £50m share buyback, which reflects strong ongoing cash flow, the receipt of the pension fund buyout cash return, as well as the strength of our balance sheet, with leverage now within our target range.

UK and European stocks have made some modest gains. The FTSE 100 index in London has edged 0.1% higher to 8,212 while the German, French and Italian markets are between 0.3% and 0.4% ahead.

In London, mining and commodities stocks are among the main risers, led by Antofagasta, Fresnillo and Glencore.

Oil prices have risen by 1.3% amid concerns about Hurricane Francine disrupting output in the US. Brent crude is trading 91 cents higher at $70.10 a barrel, while US light crude has climbed to $66.66 a barrel.

REA, the Australian property company majority-owned by Rupert Murdoch’s News Corp, has made a £5.6bn offer for Rightmove, the UK’s biggest online real-estate portal.

The Rightmove board rejected the 705p a share offer, worth 18.6% of the enlarged company post-deal, which comes a week after REA confirmed it was considering a cash and share offer for Rightmove.

Shares in Rightmove closed at 555.6p on 30 August, the last trading day before news of REA’s initial interest was revealed in the press, and closed at 670.8p at the end of trading on the London Stock Exchange yesterday. They rose by 1.2%, or 7.8p, to 678.6p in early trading today.

REA said in a statement released on the Australian Stock Exchange today:

REA confirms that on 5 September 2024 it made a non-binding indicative proposal to the board of directors of Rightmove regarding a possible cash and share offer for the entire issued and to be issued share capital of Rightmove. REA was informed on 10 September 2024 that the Rightmove board rejected the proposal.

Rightmove said:

The board carefully considered the proposal, together with its financial advisers, and concluded that it was wholly opportunistic and fundamentally undervalued Rightmove and its future prospects. Accordingly, the board unanimously rejected the proposal … shareholders should take no action.

Markets see a near-25% chance of an interest rate cut next week.

Some economists (e.g. Capital Economics) say today’s disappointing GDP data make a rate cut then a bit more likely, but overall economists still think November is more likely.

Thomas Pugh, UK economist at RSM UK, said:

The second consecutive month of no growth in July undershot expectations of 0.2% m/m and is clearly disappointing. But it won’t be enough to convince the Monetary Policy Committee (MPC) to cut interest rates next month, especially as output in the services sector, where the MPC is watching price pressures like a hawk, rebounded. The next opportunity will come in November, when services inflation should have cooled enough to allow another cut.

Turning to the budget on 30 October, he said:

Disappointing growth will also add to the chancellor’s misery ahead of a “painful” budget next month. To really make a difference to the fiscal outlook though, she will have to convince the Office for Budget Responsibility (OBR) that their supply side reforms to the planning system and boosting investment are going to kickstart growth. That looks unlikely without more radical reforms.

The weakness in GDP was concentrated in the manufacturing sector, which fell by 1% m/m. Manufacturing is struggling globally, as surging exports from China, combined with weak global demand, especially for goods, weighs on production. Construction also dropped by 0.4% m/m as a wet July hampered construction efforts.

Chancellor Rachel Reeves said:

I am under no illusion about the scale of the challenge we face and I will be honest with the British people that change will not happen overnight.

Two quarters of positive economic growth does not make up for fourteen years of stagnation. That is why we are taking the long-term decisions now to fix the foundations of our economy.

The UK economy continued to flatline in July, but grew by 0.5% in the three months to July, according to the latest official figures.

Economists had expected GDP to rise by 0.2% in July. In June, there was also zero growth.

The dollar fell by more than 1% against the yen to its weakest level of the year, after Kamala Harris put Donald Trump on the defensive in the first and only television debate in the presidential race last night.

The yen also got a boost from Bank of Japan board member Junko Nakagawa, who reiterated in a speech that the central bank would continue to raise interest rates if inflation and the wider economy moved in line with its forecasts.

The dollar dropped as much as 1.2% to 140.71 yen, a level not seen since 28 December before recovering slightly.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The UK economy is expected to have returned to growth in July, after flatlining in June.

The latest GDP figures from the Office for National Statistics, out at 7am, are expected to show that the economy expanded by 0.2% in July, after zero growth in June.

Deutsche Bank economist Sanjay Raja, who is predicting a 0.3% rise in GDP in July, said:

What’s driving the increase in output? Mainly, a stronger rebound in services activity, led by a pick up in retail and leisure services. Industrial production output also likely expanded to start the third quarter, lifted in large part by an increase in oil production, and to a slightly lesser extent, manufacturing output. Last but not least, we expect the construction sector to see its third monthly consecutive rise (0.2% month on month).

Where are risks to our nowcast skewed? To the downside, with our modelled estimates having a downward skew relative to our point estimate.

Looking ahead, we continue to see GDP expanding at a steady clip, averaging roughly 0.4% quarter on quarter in the second half. It’s early days, but risks to our quarterly nowcasts are skewed to the upside, raising upside risks to our annual growth projection too.

We are also getting figures for trade and industrial production at the same time.

It’s also US inflation day. The annual headline rate is expected to have fallen to 2.6% from 2.9%, while the core rate, which strips out volatile food and energy costs, is set to have stayed at 3.2%.

Investec economist Ryan Djajasaputra said:

July’s outturn provided further reassurance that inflation remains on a disinflationary path, with the 2.9% print being the first below 3% since March 2021. Early consensus estimates are for a further moderation to 2.6%.

Also today:

The British steel industry is braced for 2,500 job cuts at the Port Talbot steelworks, with thousands more jobs at risk in the UK, as the government prepares a taxpayer-backed deal for the south Wales plant.

The business secretary, Jonathan Reynolds, is expected to outline this morning the details of a rescue deal which will see the government hand the historic Welsh plant’s owners, Tata Steel, £500m to build a new electric furnace – but at the cost of huge redundancies from the closure of its last remaining blast furnace.

Natarajan Chandrasekaran, the chair of Tata Group, told the Financial Times on Tuesday that talks were “going well” and it was “very close” to agreeing a deal.

It is understood the government, which previously promised to “push for job guarantees”, has been unable to protect these jobs, with 2,500 still expected to go in the coming months.

The Agenda

• 7am BST: UK GDP for July (forecast: 0.2%, previous: 0%)

• 7am BST: UK trade, industrial production for July

• 1.30pm BST: US inflation for August (forecast: 2.6%, previous: 2.9%)