FirstFT: Hunt says UK government will cut taxes ‘if we can’ ahead of election

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Good morning. We start today with an interview with Jeremy Hunt, who has raised the possibility of further tax cuts before the UK’s general election.

The chancellor told the Financial Times that the government would like to cut taxes in an autumn fiscal event “if we can” — while insisting it was too soon to know if it will happen and stressing the need to act in a fiscally responsible way.

Hunt also highlighted how market forecasts pointed to Bank of England rate reductions in the summer or autumn as inflation subsides, saying this meant people would feel the economy had “turned a corner later this year”.

“As we move through the year towards the autumn, some of the changes in economic policy, including lower taxes, will be felt in people’s pockets — and that’s clearly something that is significant for us,” he said.

With an election expected in the second half of this year, the Conservatives are trailing Labour by about 20 percentage points in surveys, according to the FT’s poll tracker. Here’s more on how the Tories hope to improve their prospects.

UK economy: The IMF has downgraded growth estimates for Britain to just 0.5 per cent this year, the second-slowest growth rate after Germany among G7 countries.
UK politics: Dozens of Tory MPs, including several ministers, voted against Prime Minister Rishi Sunak’s flagship legislation to ban smoking by anyone in the UK born after 2009.

Stay updated with the latest insight into the upcoming UK election with our Inside Politics newsletter by Stephen Bush. Sign up here. And here’s what else I’m keeping tabs on today:

Economic data: The IMF has its fiscal monitor report, while UK annual inflation is expected to have cooled when March figures are released. But price pressures are taking “longer than expected” to ease in the US, Federal Reserve chair Jay Powell said yesterday, ahead of today’s release of the central bank’s Beige Book on economic conditions.
Europe: G7 foreign ministers meet in Italy, while EU heads of state gather at a special summit focused on improving EU competitiveness.
Croatia: Voters participate in snap elections called by Russia-leaning President Zoran Milanović, who is campaigning for the more powerful position of prime minister.
Companies: Hays has a trading update and ASML reports. See our Week Ahead newsletter for the full list.

Five more top stories

1. Exclusive: Institutional Shareholder Services has recommended that two of Germany’s biggest blue-chip companies replace their chairs over a lack of boardroom independence. The influential shareholder adviser’s complaint with BASF and Munich Re centres on the long-standing and controversial German practice of appointing top executives to join boards at the end of their operational careers. Olaf Storbeck and Arjun Neil Alim have the full story.

2. Morgan Stanley’s chief executive said dealmaking was an “existential reality” for companies that would help usher in Wall Street’s long-awaited recovery in investment banking, as first-quarter profits at the bank rose 14 per cent. Ted Pick, who took over from longtime chief James Gorman in January, presented a bullish outlook at the bank’s results yesterday.

US banks: The largest US banks lent billions of dollars less in the first quarter, in a sign that corporate borrowers are paying down debt as interest rates hover at historically high levels.

3. Ukraine’s international bondholders have formed a creditor committee ahead of a $20bn debt restructuring that Kyiv is aiming to negotiate by September, amid uncertainty over the arrival of funding to help in its war with Russia. Bondholders organised the committee, a key step before beginning talks, “in response to a request from the government of Ukraine”, the committee said yesterday. Read the full story.

4. Donald Trump has raised $75mn less for his presidential bid than Joe Biden and has 270,000 fewer unique donors now than at the same stage of his run for the White House four years ago. The findings raise new questions about how the former president’s shrunken base will sustain him through costly court cases and what is expected to be the most expensive presidential race ever. Here’s more from the FT analysis of federal campaign data.

‘Hush money’ case: The former US president’s defence team weeded through social media posts to find impartial jurors, revealing New Yorkers’ unvarnished views of Trump.

5. The US and EU are preparing new sanctions on Iran’s missile and drone programme in response to the Islamic republic’s attack on Israel, but the UK and European governments are resisting pressure to designate the elite Revolutionary Guards a terrorist organisation. A growing majority of EU capitals support the new sanctions, according to people briefed on the matter. We have the latest updates here.

UK-Israel ties: The prime ministers of both countries spoke yesterday afternoon, with Rishi Sunak calling for “calm heads to prevail”.
Middle East conflict: Whatever form Israel’s retaliation against Iran takes, analysts warn there is a high risk of miscalculation — and further escalation.

Military briefing

Top two pics: Kharkiv residents after missile attack in April; damage in Kharkiv after Jan attack; below Iranian missiles over Ashkelon in Israel and Iron Dome battery in southern Negev desert — © FT montage: Reuters; AFP/Getty Images

Israel fended off hundreds of drones and missiles fired by Iran on Saturday using an enviable combination of its own sophisticated air defences and the critical support of western powers and Arab partners. But in an all-out war, even Israeli military officials admit at least some of these projectiles would break through, especially in the face of repeated salvos fired from multiple directions by Iran-armed militants in Lebanon, Yemen, Syria and Iraq. Such an assault would resemble the desperate situation faced by another western ally: Ukraine.

We’re also reading . . .

Ursula von der Leyen: The vulnerable European Commission president will need new “frenemies” if she is to secure a second, five-year term.
Green-eyed monster: European executives jealous of their American peers’ pay should also be expected to deliver the goods, writes Brooke Masters.
Sex work: Industry workers are denouncing UK banks for waging “war” on their jobs, with campaigners saying debanking increases vulnerability to criminals and traffickers.
The Modi machine: Today’s Big Read peers inside India’s ruling Bharatiya Janata party, which has built one of the most formidable grassroots operations in modern democratic politics.

Join FT journalists and expert guests for a subscriber-only webinar at 1pm BST today on what business can expect from India’s upcoming election. Sign up for free here.

Chart of the day

European stock markets suffered their worst day in nine months as a sell-off sparked by receding hopes for rapid US interest rate cuts spread around the world.

Line chart of Indices rebased in $ terms showing Stocks tumble after strong start to the year

Take a break from the news

The London pub quiz is a very British way of unwinding. At its most basic, the Tuesday evening tradition consists of several rounds of trivia questions, with a cash prize or bar tab for whichever team scores least badly. But be warned: this hallowed institution can descend into a quagmire of unwritten rules to bog down the unwary.