Hays has warned its annual profit looks set to come in below market expectations after 'global uncertainties' continued to weigh on the job market in June.

The recruitment group expects its annual pre-exceptional operating profit to hit £105million, below previous forecasts of between £106million to £113million.

Hays, which focuses hiring for white-collar roles, said its like-for-like net fees fell 15 per cent in the three months ending 30 June.

US investment giant BlackRock's proprietary research business has backed UK stocks to outperform, with foreign investors pulled in by 'relative political stability'.

The BlackRock Investment Institute this week moved to an 'overweight' position on London-listed stocks on the basis that a new government with a sizeable majority will encourage investors to recognise 'attractive valuations'.

But BII says a busy year for elections globally will not be a tide to raise all boats, with choppier waters predicted for stocks in the US and France.

Michael Field, European market strategist at Morningstar:

'UK GDP rose by 0.4% in May, more than twice the level forecasted by economists. This follows April’s flat reading, meaning that GDP in the UK has been above zero every month in 2024, a positive development after the disappointing growth seen in 2023.

'Economic growth in May was relatively broad-based, with both manufacturing and industrial production in positive territory, on the back of negative readings last month. Construction output also rose year-over-year,  against a negative reading last time around, and expectations of a further decline.

'The words “goldilocks territory” have become something of a cliché, but in this instance the phrase is apt.

'The UK is slowly working its way out of the technical recession that occurred last year, with many metrics showing the economy is continually improving in 2024. Inflation has cooled, however, meaning this growth will not overly concern the Bank of England, with economists believing the first cut is nailed on for next month.'

Bank of England chief economist Huw Pill said interest rate cuts were a matter of ‘when, rather than if’ but said it remained an ‘open question’ whether it should act now.

In London yesterday, Pill said underlying signs of inflation pressure showed ‘uncomfortable strength’ despite inflation falling to its 2 per cent target.

And in a separate speech, fellow Bank rate-setter Catherine Mann also emphasised the strength of price pressures in the economy.

Aarin Chiekrie, equity analyst, Hargreaves Lansdown:

'Like a sports team drafting a new player, the water regulator (Ofwat) has selected how much water companies can hike consumers’ water bills between 2025 and 2030. Ofwat has proposed an average annual increase of £19 a year over the next five years, which is a third less than the roughly £29 per year increases requested by water companies. These bill hikes are needed to pay for infrastructure upgrades, fixes to burst pipes, and deliver cash returns to investors as a reward for funding the company. The knockback on bill increases is a big blow to water companies and means they’re going to have to invest their cash very efficiently if they’re to have any chance of meeting the regulator’s demands.

'Cash returns to investors are key to attracting new money to the sector. But this is a contentious issue. Companies like Thames Water and South East Water have been guilty of paying out dividends, failing to invest enough in their leaky infrastructure, and building up a huge pile of debt at the same time.

'For now, Thames Water is still afloat but it only has enough funds to sustain operations until the end of May 2025. The group asked Ofwat for permission to hike bills by £191, but the regulator poured water on these lofty requests, suggesting a much more measured price rise of just £99 out to 2030.

'Thames’ investors have been holding off injecting new funds into the group until today’s draft determination. It’s unclear as yet whether today’s figures will be enough to convince investors to supply new funding to the company or allow it to sink and be rescued by the government. But Thames CEO, Chris Weston, said that the group had taken “informal soundings which have shown there is interest in the market”.

'The new Labour administration will want to avoid nationalisation but will have to step in given that it’s such a crucial part of the country’s infrastructure. It’s likely that emergency plans are being worked on to establish a special government arm to run the company if the financial pug does end up being pulled out.'

James Smith, developed markets economist, UK, at ING:

'Overall second-quarter GDP is on track to rise by 0.5-0.6 after 0.7% growth in the first quarter.

'We’re sceptical that these sort of growth figures can be sustained into the second half of the year, but we expect growth to remain reasonable nevertheless.

'One important factor is that the impact of past rate hikes has largely taken its course now; we estimate that 80% of the mortgage squeeze is behind us.

'Does this change the story for the Bank of England? Probably not.

'Policymakers are still almost exclusively focused on services inflation, and it’s the one remaining release of this data that will determine whether the Bank can cut rates in August.

'BoE Chief Economist Huw Pill, perhaps unsurprisingly, refused to be drawn on what he thought in comments made yesterday. But barring any big surprises in those inflation numbers, we think the Bank's preference will be to start cutting rates and we expect three cuts in total this year.'

Labour ministers will hold urgent talks with water bosses today as they gear up for a regulatory ruling on their finances.

Executives from Thames Water, South East Water and Severn Trent are among those who have been summoned to meet Environment Secretary Steve Reed.

It comes as regulator Ofwat prepares to outline how much debt-laden firms can raise bills by over the next five years.

Luke Bartholomew, deputy chief economist at Abrdn:

'While it is important to stress that the monthly GDP series is very volatile, the strength of today’s report is consistent with the broader evidence of the UK continuing its solid recovery from a long period of stagnation.

'With the Bank of England’s chief economist Huw Pill sounding somewhat cautious about the outlook for inflation, the fact that the economy now looks set to grow faster than the Bank’s forecasts may also make investors slightly more nervous about the prospect for an August rate cut. However, as long as the inflation data cooperate, we continue to expect the first cut next month.'

The UK Civil Aviation Authority has reduced the cap on passenger fees charged by Heathrow airport after push back fromt the Competition and Markets Authority.

The regulator had originally decided on an estimated cap at £25.24 per passenger in 2025 and £25.28 per passenger in 2026.

These figures will now fall by around 6 per cent or £1.52 in 2025 and £1.57 in 2026, with the price per passenger being capped at an estimated £23.73 in 2025 and £23.71 in 2026.

The CAA said the change reflects 'a smaller reduction in charges for the over recovery of revenue by Heathrow in 2020 and 2021'.

It also reflects the '​elimination of the premium that had been allowed on indexed linked debt in calculating Heathrow's cost of capital', and ensures that 'Heathrow's charges reflect the costs of pension deficit repair payments and business rates'.

Household water bills in England and Wales are set to rise by an average £19 a year over the next five years - a third less than the increase requested by companies, under draft proposals announced by Ofwat.

The regulator said water firms proposed increases averaging £144 over five years.

For example, Thames Water’s proposed increase of £191 by 2030 has been reduced to £99, while Severn Trent’s proposed rise of £144 has been cut to £93.

Ofwat chief executive David Black said: 'Customers want to see radical change in the way water companies care for the environment. Our draft decisions on company plans approve a tripling of investment to make sustained improvement to customer service and the environment at a fair price for customers.

'These proposals aim to deliver a 44% reduction in spills from storm overflows compared to levels in 2021. We expect all companies to embrace innovation and go further and faster to reduce spills wherever possible.'

The UK economy expanded by 0.4 per cent in May, beating forecasts of 0.2 per cent thanks to a jump in housing construction activity, fresh data from the Office for National Statistics shows.