The long-term deal with CityFibre, the UK’s largest alternative network provider, or “altnet”, was seen in the City as a potential blow to BT and its Openreach internet division.

At present, Sky uses Openreach’s network to supply fibre broadband to its six million internet customers. From next year, it will start using CityFibre’s network as well.

Greg Mesch, the founder and chief executive of the London-based CityFibre, said winning Sky as a customer “had been our game plan for 13 years. They were always clear that they liked what we were doing, but they needed us to have scale and we’ve proceeded to go about that.”

BT shares fell by as much as 8 per cent in afternoon trading, wiping more than £1 billion from its £14 billion market valuation.

At the moment, CityFibre reaches 3.8 million premises nationwide, but it is hoping to increase that to eight million by the end of next year. Only 10 per cent of the areas served by CityFibre are also served by Openreach, potentially allowing Sky to start offering ultra-fast broadband to hundreds of thousands of customers to whom, at the moment, it can offer only copper broadband.

“Sky’s new partnership with CityFibre will mean we are able to reach even more people with full fibre, which is essential for the modern home,” Amber Pine, the managing director of connectivity at Sky, said.

Nick Lyall, a telecoms industry analyst at Bernstein, said the tie-up “puts more pressure on Openreach. It adds potential line losses, it hands CityFibre a financial lifeline and it ensures competitive tension in the wholesale market.” On his calculations, Openreach could lose 500,000 copper broadband lines if existing Sky customers switch to a fibre package. “The question, in our view, is how quickly Openreach can roll out fibre to cover off the risk,” he said.

“We’re very confident that Openreach will continue to be the UK’s fibre partner of choice,” a BT spokesman said. “[The CityFibre-Sky deal] was expected as the UK’s fibre broadband market becomes ever more competitive. But we’re building fibre faster, more efficiently and providing better customer experience than anyone.”

CityFibre, which is backed by Goldman Sachs and Abu Dhabi’s wealth fund, is the oldest of the altnet providers, having been set up in 2011. It is the third largest broadband firm, behind Virgin Media O2 and BT Openreach, which remains by some way the industry leader, with its fibre broadband available to more than 15 million homes and businesses in the UK.

Openreach is reaching about a million new premises every quarter and is targeting 25 million by the end of 2026. CityFibre has made a point of trying to roll out its fibre broadband network in remote and rural areas that Openreach has not yet reached. As part of the government’s “Project Gigabit” programme, CityFibre is the principal broadband supplier to 1.3 million hard-to-reach homes and businesses.

Openreach’s rapid rollout in recent years has made it difficult for the altnets to eat into its market share. In its most recent set of accounts, CityFibre fell to a loss of £210 million in 2022, almost double that recorded in 2021. This was largely down to the increased cost of servicing its £1.8 billion of debts.

There are dozens of altnet providers and there is an expectation within the industry that, given the tough competition, there will soon be some consolidation. Mesch, 64, confirmed that he was open to growing the business through acquisition. “We would expect to go a little quicker on the acquisition front now this [Sky partnership] is out of the way,” he said.

Shares in BT were down by 9¼p, or 6.4 per cent, at 136¼p at the close, valuing the business at £13.5 billion.

The incumbent vice-president focused squarely on measures to alleviate the cost of living crisis for Americans, a weak spot for the present administration during a campaign in which a majority of voters have said they favour the low-inflation years of Donald Trump, blaming the Democrats for the worst rate of inflation in three decades in 2022.

Harris announced a series of policy proposals, including: a $25,000 deposit subsidy for first-time buyers with perfect rental records; tax credits for the builders of new homes; extending a President Biden policy to raise child tax credits from $2,000 to $3,600 per child; a $6,000 tax credit for families with new-borns; a cap on insulin costs at $35; and subsidies for Americans buying health insurance under the Obama-era Affordable Care Act.

The dozen or so policies were largely a continuation of Biden’s broadly progressive economic philosophy, but the proposal that garnered the most attention was Harris’s promise to pass a federal law to ban “price-gouging” by grocery companies.

“I will go after the bad actors and I will work to pass the first federal ban on price-gouging on food,” she said. “My plan will include new penalties for opportunistic companies that exploit crises and break the rules, and we will support smaller food businesses that are trying to play by the rules.”

The price-gouging proposal was seized on by Trump, the Republican nominee, as “communist”, implying state-controlled price caps. More surprising was the fury of the liberal and Democratic-adjacent media. The Washington Post ran an opinion piece titled When your opponent calls you ‘communist’, maybe don’t propose price controls? ; the Financial Times said Harris’s plan had put the party on the “defensive” after weeks of positive momentum because the policies were “poorly received”, implying some loss in the polls days after the speech.

Yet the supposed backlash against Harris was not from voters but rather those in the economics profession, who interpreted her vague, two-sentence plan as meaning the introduction of sweeping price controls. Many economists took to social media to decry a “populist and “horrible” policy that would undermine market functioning.

The reaction was entirely disproportionate to what Harris had said or, more accurately, what she didn’t say. She did not propose price controls, with a campaign statement adding that the plan was to “set clear rules of the road to make clear that big corporations can’t unfairly exploit consumers to run up excessive corporate profits on food and groceries”.

This makes the near-universal ire of the economics profession more baffling, particularly as Harris is merely continuing the anti-monopoly rhetoric of the Biden administration, which over the past two years has pinpointed concentrated sectors as being partly responsible for high inflation. The administration has attacked grocery groups for exploitative practices and in 2022 it passed a law to forcing shipping companies to reduce their prices after the pandemic. Equally, Harris’s plans to cap the price of insulin, also announced last week, was hardly decried as communist.

Her federal-level price-gouging ban is also far from revolutionary. Similar state prohibitions against companies yanking up prices during emergencies, usually defined in the range of 10 per cent or more, already exist in states such as Texas, California and New Jersey.

Rather than jumping to conclusions about her anti-capitalist instincts, economists and the media should be pushing the Harris team for details on their definitions of price-gouging and what they deem to be sufficient “penalties”.

What is clear is that both Republicans and Democrats, along with America’s voters, have grievances against the market power wielded by big corporations. Countless examples of egregious corporate pricing include findings from the powerful Federal Trade Commission in March that some food companies had “accelerated and distorted” supply chain disruptions, using them as “an opportunity to further hike prices to increase their profits”.

The FTC is also investigating Amazon, which is alleged to have used a secret algorithm to see how far it could increase prices and force its competitors to follow. Authorities also have investigated cases of price-fixing in sectors such as meat, hotels and energy. Far from being unpopular, polling consistently shows Americans support more aggressive anti-monopoly and anti-trust action.

Pinpointing the role played by corporate pricing power in driving up inflation is one of the big economic debates of the day, one not confined to the United States. The European Central Bank, which manages inflation across the 20 economies that use the single currency, has pointed to “greedflation” in the corporate profit margins of some industries as contributing to its inflation problem. In Britain, there has been less evidence of mass profiteering, with the Bank of England choosing to describe the food sector as engaging in margin “rebuilding” when grocery inflation came close to 20 per cent last year.

Economists who advocate for state monitoring and anti-trust intervention to prevent forms of price-gouging argue that the inflationary episode that spanned 2021-23 shows that markets cannot always and entirely be relied on to adjust outside of “normal” times. In particular, companies that begin to charge more in times of high demand or supply chain disruption add to socially punishing inflation in key utilities such as food and energy. The decisions to impose windfall profits on energy producers in Britain and across Europe are testament to this. Isabella Weber, a German economist who has pioneered the academic study of this “sellers’ inflation”, argues exactly this point, that relying on markets to adjust while prices soar is an abdication of policymakers’ responsibility.

As for Harris’s promise, her price-gouging plans may come to naught, but the scrutiny of corporate pricing behaviour is to be welcomed.

Mehreen Khan is Economics Editor of The Times

Ofgem is set to lift the price cap by 9 per cent, from £1,568 for the present quarter, when it updates the ceiling on Friday, according to Cornwall Insight, an industry forecaster.

An increase would be the first since January last year, when the price cap hit a record high of an annual £4,279, after the outbreak of war in Ukraine caused energy prices to soar. The price jump prompted the government to intervene and to subsidise bills through the energy price guarantee, limiting a typical household bill to £2,500 a year.

Fresh tensions between Ukraine and Russia could push the price cap even higher at the start of next year, the consultancy said, as the energy market was yet to recover from last year’s upheaval and remained highly sensitive to any global events that could disrupt supply. Britain’s reliance on imported energy leaves it very vulnerable to this global volatility.

European wholesale gas prices are close to their highest level since February at €39.80 per megawatt/hour, having risen from a 30-month low of €24 per MW/h. However, that is still about 77 per cent below the peak of August 2022.

“This is not the news households want to hear when moving into the colder months,” Craig Lowrey, principal consultant at Cornwall Insight, said. “Following two consecutive falls in the cap, I’m sure many hoped we were on a steady path back to pre-crisis prices. However, the lingering impact of the energy crisis has left us with a market that’s still highly volatile and quick to react to any bad news on the supply front.

“Despite this, while we don’t expect a return to the extreme prices of recent years, it’s unlikely that bills will return to what was once considered normal. Without significant intervention, this may well be the new normal.”

The energy price cap, introduced by the government in 2019, limits the price that suppliers can charge households for each unit of gas and electricity on standard tariffs. It was designed to protect consumers and is updated regularly, based on the regulator’s assessment of the costs that an efficient supplier should incur.

An increase would lead to renewed pressure on millions of households that have struggled to pay their bills as energy costs have risen sharply. Bad debts, which are unlikely to be recovered, have risen to a record £3.1 billion, according to the latest figures from the energy watchdog. About ten million pensioners already were set to feel the pinch in the colder months after the chancellor scrapped the winter fuel allowance for those not in receipt of pension credit or some other means-tested benefits.

“It’s another difficult week on the cards for households, who will learn just how bad energy bills will be this winter,” Simon Francis, of End Fuel Poverty Coalition, a campaign group, said. “The reality is that bills will go up compared with today and will be about 65 per cent higher than they were before the energy bills crisis started.”

Like the bosses of millions of organisations in the private and charitable sectors, the hospice’s chief executive, Jeremy Lune, has been watching nervously as generous public sector pay rises are doled out by ministers in the wake of Labour sweeping to power.

“Ultimately, our staff have got to put food on the table, they’ve got to pay the rent and so on,” he said. “If colleagues in the NHS are suddenly getting 5.5 per cent more than them, the reality is it becomes very tempting to go back to work in their local hospital.”

The 5.5 per cent increase for nurses followed junior doctors being awarded a 22 per cent hike. Now GPs are poised to snaffle an 11 per cent rise. But it was Labour’s decision to hand train drivers a 15 per cent uplift that has proved most controversial so far — particularly as, within 48 hours, the very same union had called a strike over a separate dispute on the East Coast Mainline.

Analysis by The Sunday Times reveals that train drivers will now earn a basic salary averaging almost £90,000 for a four-day week. This is before having the option to make tens of thousands more in overtime pay.

With union leaders seemingly having Sir Keir Starmer’s administration over a barrel, ministers have done little to play down the prospect of yielding to new overtures in the coming weeks and months. “There is an enormous cost to not settling these disputes,” Nick Thomas-Symonds, the government’s paymaster general, said on Friday.

Businesses big and small fear public sector wage rises could set a dangerous precedent for the private sector, potentially spilling over into demands for higher pay at a time when minimum wage rules have already pushed through two years of 10 per cent rises for lower earners. Could this lead to spiralling wage inflation that, in time, delays the Bank of England cutting interest rates?

Nimisha Raja, founder and chief executive of Nim’s Fruit Crisps, which makes crisps, teas and other fruit-based products from a facility in Kent, perhaps summed up the mood best. “I’m not saying they don’t deserve it,” she said. “I just think it should be performance-related — and yes, what it may do is encourage private sector employees to say, ‘Hold on a minute, if the public sector can get non-performance-related pay rises, then why can’t we?’ That puts a little pressure on small businesses, especially where we can’t always be passing on the cost of the pay rises to our customers.”

Penalised

Rupert McSheehy, co-founder of Swindon-based tech headhunter RMG Digital, is also not impressed by public sector pay rises that could cost the exchequer between £7 billion and £10 billion. “They’re not doing anything different for this extra money, and it’s taxpayers who are probably going to have to pay for this pay rise overall,” he said.

“It’s a shame that train companies and train drivers are getting rewarded, whereas small businesses seem to be ultimately penalised in the other direction.”

Alex Lovén, founder of the Wrexham-based online retailer Net World Sports, is just as frustrated. “It just means the already crazy high tax burden is being wasted on sectors that refuse to modernise — the result being entrenched inefficiency and further decay of the public sector … as well as stoking inflation.

“It will come back to bite them. Appeasement of union barons has never ended well.”

Craig Beaumont, from the Federation of Small Businesses, fears that his members will be the hardest hit — and that, just as in the hospice sector, they risk losing staff as their heads are turned. “It’s a set of massive pay deals, alongside things like public sector pensions, which are incredibly high. You look at the pressure it creates. People in small businesses are not getting 5 per cent pay rises.”

He added: “Blockbuster pay rises do have a morale impact on people … Eventually, they will start to think, ‘Maybe I can go for a nicely paid role in the public sector. I will get a big pension. I will get stable employment’.”

Perhaps unsurprisingly, senior Conservatives have been quick to criticise Labour’s apparent kowtowing to the unions. “This will have a knock-on effect right across the system — in terms of business and in terms of inflation,” said the shadow business secretary Kevin Hollinrake.

But will it? Economists are not convinced. Sanjay Raja, an economist at Deutsche Bank, said: “The public sector is only about 20 per cent of the workforce and it tends to be that public sector pay follows the private sector, not the other way round. What our corporate clients are telling us is that they’re more worried about the real living wage.”

This refers to the proposal from the government to make the national minimum wage account for the actual cost of living. There is currently a voluntary “real living wage” set by the Living Wage Foundation, but it is entirely voluntary. Currently, the obligatory national living wage is £11.44 for over-21s, while the real living wage is £12, or £13.15 in London.

Raja pointed out that the living wage had already shot up by about 10 per cent in each of the past two years. “The worry for some employers is that we could be set for another 5 per cent to 10 per cent rise next year, too. But until we know what the government’s plans are, we’re really flying blind.”

Details are expected to emerge in chancellor Rachel Reeves’s budget on October 30, and the ratesetters at the Bank of England will be watching closely. In June, some members of the Bank’s monetary policy committee justified their relative optimism on inflation by pointing out that the large increases in the minimum wage would not be repeated. An obligatory real living wage might change that view.

‘Strap ourselves to the mast’

Yielding to the train drivers’ union Aslef is reportedly costing the exchequer £100 million. It is a hefty sum — but one that might well be worth it. Hotels, pubs and restaurants have lost more than £3.5 billion in sales because of strike action on the railways, according to UKHospitality.

“The end of the train strikes is good,” said Allen Simpson, the trade body’s deputy chief executive. “However, the cost to the taxpayer is more challenging.”

Simpson pointed out that the double-digit inflation of recent times was a product of price rises and an extremely tight labour market. Supply-side constraints, such as the outbreak of the Ukraine war, fuelled the price increases, particularly in energy bills, but the cost of living impact has now eased. The labour market, meanwhile, has settled to a degree following the shock caused by Brexit.

“We are at the point where we are reasonably resilient towards wage inflation and price inflation. We’ve all got to strap ourselves to the mast and sail through the storm,” said Simpson.

“The monetary lesson right now is to go for growth rather than worry about inflation. I am more worried about stagflation [high inflation, high unemployment and low growth] than I am about inflation.”

Mark Reynolds, chairman and chief executive of the construction company Mace, is unconvinced that pay rises in one sector will spark an exodus of workers from the other. “Public sector wage growth over the last few years has been behind the private sector,” he said. “Even these [latest pay] jumps would still leave many in the public sector, like healthcare workers, very much lower-paid than the people in construction, engineering and manufacturing.

“I kind of joke that construction is the second-best-paid industry in the country. And who’d want to be doing banking and professional services — which are the best paid.”

Does this justify train drivers nearing six-digit salaries for working four days a week? “We recognise it comes at a premium. That’s not for me to judge. We need to make sure that, quite frankly, trains run efficiently,” he said.

That might be scant consolation for smaller businesses and labour-intensive charities in the care sector. “Your average hospice is basically a payroll organisation, because hospices tend to own their buildings and they tend to be paid for by capital appeals or large gifts from big foundations,” said Toby Porter, chief executive of the trade body Hospice UK.

“Over the last two years, almost every hospice now precisely matches the NHS pay award by headline … or your staff will leave.”

Meanwhile, since the end of the Cold War, the threat of global conflict has been never higher. It has prompted the biggest increases in defence spending around the world in a generation. And what nations are or will be fighting against is rapidly evolving.

On the outskirts of the sleepy North Devon town of Barnstaple, an industrial unit is expanding as it finds its proprietary technology suddenly in high demand. This is the home of SEA, or Systems Engineering & Assessment, a naval technology business in a locality that includes the Appledore shipyard and a Royal Marines base on a site used for preparations for the D-Day landings.

SEA is building surface ship torpedo launchers for naval as well as merchant vessels, as well as state-of-the-art, 150m-long, lightweight sonar arrays called Krait (as in the sea snake) designed to be towed by submarine-spotting underwater drones or by other small spy vessels. Its most eye-catching work, though, is on Ancilia, a freshly minted anti-ballistic, anti-hypersonic missile system, on order with the Ministry of Defence, to be deployed on Royal Navy frigates, and destined for export to navies in southeast Asia uncomfortable with the regional aggressiveness of China.

Ancilia is the name of the 12 sacred shields, a gift from the gods, to protect the sovereignty of ancient Rome. Ancilia, the SEA machine, is a fast-swivelling, turret-like countermeasures launcher, firing off radio frequency or electromagnetic effectors and heat and light pyrotechnics that act as decoys to deflect, divert and maybe detonate incoming superfast missiles. It is designed to take out the sort of missile or multiple missile attacks that now arrive in seconds rather than the several minutes’ warning that warships may have had in the past. Each machine has a dozen launchers for various-sized ordnance, hence the name.

Chess Dynamics, a sister company to SEA based in Horsham, West Sussex, has developed technology to identify and take down aerial drones. Deploying heat-seeking cameras and sensors to locate and track signals used to control unmanned aerial threats, it can disable drones using radio frequencies or it can be fixed to the turrets of armoured vehicles, which can shoot them down.

The financial results of Cohort, the Aim-listed parent company of SEA and Chess, indicate that demand is rising for the group’s technologies. Last year and for the first time, Cohort’s revenues and profits rose above £200 million and £20 million, respectively. Its £135 million MoD contract for Ancilia (for which it beat off competition from Elbit, of Israel, Safran, of France, and Rheinmetall, of Germany) takes the order book to a record near-£600 million, split evenly between Britain and overseas security forces. Its shares, rising steadily towards 900p and valuing the company at more than £350 million, have never been higher.

Andy Thomis, Cohort’s chief executive, sees all that as a validation of a business model for a collection of independent defence technology businesses . The company has six in all, including in Germany and Portugal. It has aped what was achieved on a larger scale by Cobham and Ultra Electronics, British companies latterly taken over and dismantled by American private equity.

According to Richard Flitton, the managing director of SEA, Cohort’s products are the antidote to a new world of unconventional, asymmetric warfare in which opposing military forces have wildly differing capabilities. “The Ukraine situation has shown that a country like Ukraine with neither navy nor air force can take out Russian battleships,” he said. “We are in a world in which the threats are innovative, ad hoc and unsophisticated.”

Cohort, with a highly skilled workforce of 1,300, is less than two decades old. Through a buy-and-build strategy, it has acquired old British and European military industrial capabilities and through research and product development is delivering hardware and software for the second quarter of the 21st century.

It was created by Thomis, 60, and his old boss from their days at the Alvis armoured vehicle company, Nick Prest, 71, Cohort’s chairman. When Alvis was taken over by BAE Systems, they quit and identified the opportunity to create, list and grow a technology company similar to QinetiQ, which had just been privatised. Stanley Carter, the founder of SCS, the defence consultancy, had the same idea. They transacted, raised money and floated Cohort as an acquisition vehicle. Carter, now 82, remains Cohort’s largest shareholder, with a 21 per cent stake.

“All our businesses have the technology needed for the threats that have become apparent,” Thomis said, citing UK border protection and the underwater threat of marauding vessels off the country’s shores. “We know the threat of Putin does not end with Ukraine. We know that when Britain was focused on Iraq and Afghanistan, China was amassing a massive fleet, which has galvanised southeast Asia [the Philippines and Indonesia] and Australia and latterly Japan. We know that the Middle East has always been a volcano, eruptions from which we are currently going through.”

Paraphrasing the old generals’ adage, Thomis says tactics and strategy don’t win conflicts, but logistics, getting the right hardware and technology in the right place, does. “This has accelerated demand from our customers and our growth to record results,” he said. “None of us wants to be in a dangerous conflict, but Cohort can contribute to nations’ safety and security.”

Interim results from Plus500 show that it made $39.7 million from trades by clients that lost money in the six months to the end of June. This helped to boost its revenues by 8 per cent year-on-year to $398.2 million, with pre-tax profits rising by 5 per cent to $183.7 million.

The Israel-based Plus500 is a leading seller of contracts-for-difference, which are complex derivatives used by amateur and professional traders to place wagers on movements in financial markets. These instruments are high-risk, with 80 per cent of Plus500’s retail investors losing money using the derivatives.

Plus500 acts as principal on its customers’ trades, meaning that it suffers losses when clients’ bets pay off but enjoys gains when markets move against its punters. The company says that it expects the impact of its customers’ trading performance on its financial results to be “broadly neutral over time”, although it enjoyed a $74.2 million boost from unlucky clients over the course of last year and a $193 million gain in 2022.

Almost 176,000 people used Plus500’s platform at least once during the first half of 2024, trading everything from equities and currencies to commodities and indices. Contracts-for-difference allow customers to use leverage to multiply the size of their bets. While this increases the potential profits they stand to make from successful trades, it also magnifies possible losses if things go awry. Regulators worldwide have clamped down on sales of derivatives in recent years amid worries that punters using the instruments do not understand the risks they are taking.

Plus500 made an average of $2,264 in revenue per user of its platform during the first half of 2024, up from $2,097 a year earlier. The group makes most of its money from the spread that customers pay between bid and ask prices.

Its business is highly cash-generative and the group is now sitting on $1 billion of cash. It has a track record of returning surplus cash to investors and it said that it would hand back a further $185.5 million after its half-year results, of which $110 million will be delivered through a share buyback and the remainder via a dividend.

This, it said, took the amount returned by Plus500 to its shareholders since its stock market flotation in 2013 to $2.3 billion, compared with cumulative net profits of $2.7 billion and the more than $3.4 billion in cash it had generated from its operations. “No company listed in London has provided higher distributions over the last decade,” Jefferies, the broker, said.

In a further fillip to shareholders, the trading business also said that it was on course to beat revenue and profit expectations for the year.

Platforms that sell derivatives tend to thrive when financial markets are febrile. This is because punters are often tempted to trade during time of volatility, when they hope to make quick profits from sudden movements in asset prices. The presidential election in the United States this year is likely to be a boon for companies such as Plus500 as traders seek to profit from the run-up to the vote and its aftermath.

Shares in Plus500, a FTSE 250 company, were up by 100p, or 4.1 per cent, at £25.32 at the close.

In an unusual intervention, Keith Williams, the chairman of Royal Mail parent IDS, said Sir Keir Starmer must realise that the UK has a “regulatory model that is not fit for purpose”.

Williams, the former chief executive of British Airways, has battled successive governments to allow reform of postal services. But his issue with the quality of regulators in the UK is wider-reaching.

“The UK has been a leader in economic regulation over the last 40 years and has been copied widely internationally. But that has changed. We now lag countries such as Singapore or Australia and, nearer to home, Denmark and Ireland,” he said. “While price control across sectors from energy to water has been arguably successful in keeping down bills, it has left fundamental flaws.

“We are all starting to pay the price, whether in service quality or charges, and potentially the need for government subsidy.

“These flaws are becoming well known, but less visible is the way in which economic regulation has stifled growth.”

Royal Mail is losing between £325 million and £675 million a year by sticking to regulations that stipulate letters must be delivered to UK addresses six days a week. “This outdated regulatory burden is holding back growth in other services both domestically and internationally,” he said.

Williams cited France and Germany, where working alongside the government to adapt domestic markets had allowed former state monopolies to grow overseas.

He said: “Today in the UK many of our parcels are delivered by DHL, a subsidiary of Deutsche Post in Germany, and DPD, a subsidiary of Geopost La Poste in France.

“DHL has annual revenues of €82 billion [£70 billion], La Poste has annual revenues of €34 billion. IDS — a combination of Royal Mail and GLS internationally — is a tiddler, with revenues of around €15 billion.” Williams further pointed out that Spain had announced €4 billion of state subsidies this month to prop up its struggling postal operator.

He said: “We do not want a subsidy, but we urgently need regulatory reform to compete against international competition. The incoming government offers a belated chance both to reform regulation in the UK and to bring in new thinking and new investment.”

While other industries have regained pre-Covid levels of activity, the tourism sector is lagging, research by the Centre for Economics and Business Research think tank suggests.

Inbound visitor numbers rose in 2022 and 2023, but were still down on 2019. Numbers reached 38 million last year, well down on the 40.9 million recorded in 2019. Even for this year, the numbers will be down, with VisitBritain projecting inbound tourist numbers of 38.7 million for 2024.

Spending is also sharply down in real terms. After adjusting for inflation, spending by overseas tourists is said to have fallen by 8 per cent, or £2.8 billion, compared with 2019.

Comparing visitor numbers last year with pre-lockdown 2019, the cities with the biggest shortfalls were Brighton, down by 32 per cent Newcastle, down 26 per cent, and Oxford, off 23 per cent, while Bath is 22 per cent lower. By contrast, tourist numbers are up in Liverpool, Edinburgh, Inverness and Manchester, albeit all at rates of less than 10 per cent.

The CEBR blamed the relatively poor showing on a “general cautiousness surrounding international travel”, resulting from unfavourable economic conditions, weak consumer confidence and the lingering effects of the pandemic.

Across the Continent, visitor numbers to Britain’s main competitors are forecast to return to growth this year relative to before the pandemic. “This suggests that the UK is falling behind its closest competitors as a tourist destination,” the CEBR said.

Competitiveness is the key factor cited by the think tank, with overall prices in Britain in 2024 running 23.5 per cent higher than in 2019. Inflation in spending categories favoured by tourists was higher still: the cost of accommodation was 35.8 per cent higher than in 2019, restaurants were 28.7 per cent costlier, while air fares had rocketed by 47.6 per cent, it said.

To add fuel to the fire, the tourism industry is also being hit by the termination of the UK’s tax-free shopping scheme, another disincentive to visitors to come to Britain.

When the deal was announced in February, one of the conditions was that it would go through only once the Competition and Markets Authority had given the all-clear.

The regulator reported its initial findings two weeks ago. Officials found that the combination of Barratt and Redrow “does not raise UK-wide competition concerns”, but they added that it could lead to “higher prices and lower-quality homes” in one area in northwest England, on the Shropshire-Cheshire border.

The developers are in talks with the authority to address its concerns, although, given that they centre on only a handful of unsold houses in and around Nantwich, most industry observers expect the issues to be resolved.

As such, Barratt has decided to push ahead with its takeover. It said that doing so “removes uncertainty for the employees, supply chain and wider stakeholder groups of both businesses”.

Aynsley Lammin, a housebuilding industry analyst at Investec, the broker, said the decision to “accelerate the deal completion looks very sensible”. He added that any issue with the watchdog appears “easily resolvable”.

The tie-up will create Barratt Redrow, a combination that last year built almost 23,000 homes nationwide and reported revenue of £7.5 billion. Barratt built 17,000 of those, more than any of its rivals.

The two companies expect to save £90 million a year and believe that they can benefit from having three brands at different price points — Barratt Homes, David Wilson Homes and Redrow — under one roof. For Barratt, the deal will give it access to Redrow’s land bank in southeast England.

Although Barratt will own Redrow this week, it will not be allowed to integrate the two businesses until the watchdog formally clears the deal. Once bosses get the thumbs-up, they will “begin full integration as soon as practicable and permissible”.

Shares in Barratt Developments rose by 18¼p, or 3.4 per cent, to close at 554p, while Redrow’s stock added 34 ½p, or 4.5 per cent, to 795p.