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A fall in December’s CPI inflation of 0.1 percentage points to 2.5% is marginal, but by being below expectations it delivered an above-expectations boost to Rachel Reeves.

The chancellor has been under intense scrutiny for the last week as UK borrowing costs have risen (in line with US and European peers) and the value of the pound has fallen.

While this has presented a political headache rather than the economic crisis presented by the opposition, it is no less real for a government that has made growth, stability and fiscal probity a priority.

Money blog:
What inflation drop means for you and economy

Strikingly the moves against the UK came unprompted by any fresh data to trigger a lack of confidence in the bond and currency markets.

This week that changes, with December’s inflation figures today followed on Thursday by GDP numbers for November.

In that context, this morning’s surprise on the upside will have been welcomed at the Treasury, particularly when the underlying numbers are analysed.

 

Good news from underlying figures

Core inflation, which strips out fuel and other volatile elements, fell to 3.2% from 3.5% in November, and services inflation, a key metric for the Bank of England‘s calculations, dropped 0.6% in the month to 4.4%.

Both of those falls were larger than consensus expectations and may be a sign that the ‘sticky’ inflation the Bank has consistently warned is staying its hand may be falling back.

The markets appear to think so, with expectations of a rate cut at the next Monetary Policy Committee meeting on 6 February increasing from 62% before publication, to 83% 90 minutes later.

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Sky’s Kay Burley speaks with chief secretary to the Treasury Darren Jones about the inflation figures

Warning uplift could be temporary

Borrowing costs also eased in light of the figures, with the 10 and 30-year gilt yields, which have seen 16 and 28-year highs respectively in the last week, falling back as markets opened.

If that suggests a measure of perspective returning to the UK, the chancellor still faces genuine challenges.

With the cost of servicing debt elevated, her fiscal rules remain in peril, and difficult decisions on spending will follow if they bust the OBR spreadsheet in March. And she cannot evade responsibility for loading £25bn of employment taxes on business without demonstrating that it will not, as many claim, depress growth.

In a note this morning, Pantheon Economics said it expects those measures to erase today’s good news on inflation.

The economic intelligence firm said: “Looking ahead, we expect headline inflation to rise to 2.8% in January, and then 3.2% in April as energy deflation eases, as a range of government administered and inflation-indexed prices rise and underlying services inflation persists.”

What next?

Ms Reeves will spend the next three weeks making the case for her economic plan, with a trip to the World Economic Forum in Davos next week followed by a speech on growth at the end of the month, and further staging posts in the industrial strategy, similar to the AI announcement this week.

All of which may reassure the world about Britain’s prospects, but still may not be enough.

US inflation figures, published later on Wednesday, are expected to show an increase, which may push yields up further.

And in five days Donald Trump will be in a position to begin implementing trade and tariff policies which are expected to be inflationary.

If the last week has demonstrated anything, it is that the US exerts a gravitational pull on markets the UK cannot escape.

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Revealed: Huge shortfall in NHS funding for weight-loss jab

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Revealed: Huge shortfall in NHS funding for weight-loss jab

So little money has been set aside by the NHS for the rollout of the Mounjaro weight-loss jab in GP surgeries that as few as one in five people with life-threatening obesity is likely to get treatment, new research shows.

The NHS estimates that around 220,000 people living with obesity will be eligible for treatment through their GP over the next three years.

But Freedom of Information requests by the British Medical Journal revealed that funding from NHS England has fallen well short of what is needed for the rollout.

Just nine out of 40 Integrated Care Boards (ICBs) in England said they had enough funding to treat the 70% of eligible patients who are expected to come forward.

Four ICBs – which plan health services in local areas – said NHS funding covered just 25% or fewer of their eligible patients.

Coventry and Warwickshire ICB said funding would only stretch to treat 21% of its patients.

The findings confirm an investigation by Sky News earlier this summer that access to Mounjaro is a postcode lottery for people living with obesity.

Ellen Welch, Doctors’ Association UK (DAUK) co-chair, told the BMJ: “These figures confirm the fear that the rollout is not fit for purpose.

“There is a huge discrepancy between national messaging and what patients are actually being delivered on a local level.”

Read more from Sky News:
How fake papers helped family get to Britain
Bank lobby chief warns Reeves over budget tax raid

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How much will Mounjaro price rise by?

Five ICBs admitted they are already considering further tightening the prescribing criteria or rationing the treatment beyond the plan agreed by the NHS.

Any change would effectively move the goalposts for people who thought they qualified for NHS treatment.

Birmingham and Solihull ICB received funding to cover just 52% of its eligible patients. It admitted: “Difficult decisions are having to be made to ensure money is spent in the most effective and efficient way possible and for the greatest patient benefit.”

Dr Jonathan Hazlehurst, an obesity specialist and researcher at the University of Birmingham, said NHS England has only provided funding for just over 22,000 patients in the first year of the rollout.

“It shows that there’s a lack of political will to fund this adequately,” he told Sky News.

“NHS England says that obesity costs the NHS £11.4bn per annum as a pure NHS cost.

“Yet we can’t even afford to properly fund the rollout of a life-changing drug in year one. That just doesn’t make any sense.”

An NHS spokesperson said: “The NHS is fully supporting the phased rollout of tirzepatide for eligible patients, having issued guidance in line with the NICE guidance, and provided funding to local ICBs to support patient care in March 2025.

“These represent brand-new services in primary care that are being established and scaled up over time, starting with those who are in the most need – and in the meantime, eligible patients can get weight loss support from a range of other services, including the NHS Digital Weight Management programme.”

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D-Day for Rayner? PM’s adviser prepares pivotal verdict – as her lawyers deny giving tax advice

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D-Day for Rayner? PM's adviser prepares pivotal verdict - as her lawyers deny giving tax advice

Sir Keir Starmer could be forced into a decision over Angela Rayner’s future as early as today, as the prime minister’s ethics adviser prepares his verdict on the Labour deputy’s tax affairs.

Ms Rayner, who is also the housing secretary, has been under mounting pressure since she admitted not paying the correct amount of stamp duty on an £800,000 flat in Hove, East Sussex.

She has argued the mistake was made as a result of incorrect advice from a conveyancer and two trust law experts, who told her she did not need to pay the higher rate reserved for second home purchases.

Her case was thrust into doubt late on Thursday when the conveyancing firm – Verrico & Associates – said it did not provide advice and had been made “scapegoats” in the political row.

Its managing director, Joanna Verrico, told The Daily Telegraph while it had acted for Ms Rayner when she bought the property, no tax or trust advice was provided.

Any advice she may have received will form a key plank of an investigation by Sir Keir’s independent ethics guru, Sir Laurie Magnus, who Ms Rayner referred herself to earlier this week.

Downing Street has said the prime minister expects a “quick” verdict, and he has refused to rule out sacking his second-in-command.

“I will act on whatever the report is that’s put in front of me,” Sir Keir told the BBC on Thursday – and that report may well arrive on his desk today.

Sir Laurie has concluded investigations into ex-ministers Nadhim Zahawi and Tulip Siddiq within days – and Sky’s chief political correspondent Jon Craig reports he’s due to go on holiday on Saturday.

He is assessing whether Ms Rayner broke ministerial rules, which place an “overarching duty on ministers to comply with the law”, “behave in a way that upholds the highest standards of propriety”, and “be as open as possible” with the public.

Sir Keir Starmer and Angela Rayner have been at the top of Labour since 2020. Pic: PA
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Sir Keir Starmer and Angela Rayner have been at the top of Labour since 2020. Pic: PA

Conservative leader Kemi Badenoch has said Ms Rayner must go.

In a statement following the intervention by Verrico & Associates, she said: “This is yet more damning evidence that Angela Rayner has not been honest with the British public.

“She must resign or Keir Starmer must finally find the backbone to sack her.”

Read more:
Key questions left unanswered in Angela Rayner tax row
Victim of misogyny’ or ‘freeloading’ deputy prime minister?

Sir Laurie Magnus has a record of quick verdicts. Pic: Gov.uk
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Sir Laurie Magnus has a record of quick verdicts. Pic: Gov.uk

The row began when The Daily Telegraph first claimed Ms Rayner avoided £40,000 in stamp duty on the flat in Hove by removing her name from the deeds of another property in Greater Manchester.

Ms Rayner said she sold her stake in her family home in Ashton-under-Lyne to a trust that was set up to provide for her teenage son, who has lifelong disabilities – meaning she did not technically own that home when she purchased the flat, and so was not subject to the higher rate of stamp duty that applies to second homes.

She has described it as an “honest mistake”, and tearfully revealed on Sky News’ Electoral Dysfunction podcast she had already considered resigning.

She said she realised what had happened after seeking fresh legal advice, having spent weeks dismissing questions about the tax claims.

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What does Rayner’s tax issue mean for the Starmer project?

Were Ms Rayner to depart, it would make for a difficult end to a week which began with Sir Keir confidently declaring “phase two” of his government was now under way.

She is overseeing some of his key targets – notably building 1.5 million new homes this parliament, and a large expansion of workers’ rights.

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Man whose arrest sparked Epping hotel protest found guilty of sexual assault of 14-year-old girl

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Man whose arrest sparked Epping hotel protest found guilty of sexual assault of 14-year-old girl

A man whose arrest sparked a series of protests outside an Essex hotel housing asylum seekers, has been found guilty of sexual assault.

The Bell Hotel in Epping became the focal point of demonstrations after Hadush Gerberslasie Kebatu was arrested, and later charged, on 13 July with the sexual assault of a 14-year-old girl.

Ethiopian national Kebatu, 41, was alleged to have attempted to kiss the teenager, put his hand on her thigh and brushed her hair in July after she offered him pizza.

An adult member of the public also accused Kebatu of trying to kiss her, putting his hand on her leg and telling her she was pretty, days after he arrived in the UK on a small boat.

Police and protesters outside the Bell Hotel. Pic: PA
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Police and protesters outside the Bell Hotel. Pic: PA

Kebatu, who was a “teacher of sports” in his home country, had denied two counts of sexual assault, one count of attempted sexual assault, one count of inciting a girl to engage in sexual activity, and one count of harassment without violence near the Bell Hotel.

But at Chelmsford Magistrates’ Court on Thursday, he was found guilty of all charges. District judge Christopher Williams took just 30 minutes to return the verdicts and his reasoning.

The three-day trial heard Kebatu had also told two teenagers he wanted to “have a baby with each of them” – but Kebatu had previously told the trial he was “not a wild animal”.

Mr Williams said he was not persuaded there was “any evidence to suggest the children fabricated any of the evidence they gave”.

The defendant, wearing a grey tracksuit and sitting with a translator, gave no visible reaction as Mr Williams told him he was guilty.

Kebatu is due to be sentenced at the same court on 23 September.

The judge told the defendant that he should expect an “immediate custodial sentence”.

Essex Police Assistant Chief Constable Stuart Hooper paid tribute to the victims for ensuring the evidence put before the court was strong and true.

“It is because of their accounts of what happened, and the close co-operation with our Crown Prosecution Service colleagues, that we have been able to secure this conviction.

“We’re acutely aware that this incident has attracted widespread public interest.

“We have always said that we treat and investigate every report made to us without fear or favour.”

‘It must never happen again’

Conservative shadow Home Office minister Katie Lam said the guilty verdict showed the risks of allowing asylum seekers “to roam around communities freely”.

“The crimes of this illegal migrant are shocking and heart-breaking and the victims have shown incredible bravery.

“This must never be allowed to happen again. Every illegal migrant should be detained immediately and swiftly deported.”

The incidents sparked protests and counter-protests outside the former Bell Hotel – as well as at hotels housing asylum seekers across the country.

Rebecca Mundy, deputy chief crown prosecutor with CPS East of England, said: “This was an incident which became a cause of deep concern for the local community.

“Our prosecutors worked carefully and impartially to bring this case to justice according to the law.”

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