UK News

Hegseth right to mock Royal Navy, says ex-army chief as he backs claims over military underfunding – UK politics live | Politics

Published

2 months ago

April 14, 2026

info@oxinfo.co.uk

Hegseth right to mock Royal Navy, says ex-army chief as he backs claims over military underfunding

Good morning. When Keir Starmer gave evidence to the Commons liaison committee before the Easter recess, and when he made a statement to MPs yesterday on the first day after it was over, he was repeatedly asked when the government will publish its defence investment plan (DIP). On both occasions, he could not give a timetable and would just say it would be published as soon as it was ready.

His critics are furious because the DIP, a 10-year plan explaining how the government will fund its commitment to get defence spending up to 3% of GDP by the end of the next parliament, with total national security spending reaching 5% of GDP by 2035, was due to be published last autumn.

In particular, the DIP will explain how the government will be able to fulfil the goals set out in the strategic defence review it published last year. The review was led by the Labour peer George Robertson, a former defence secretary and former secretary general of Nato. And he seems to have finally lost patience with the government.

He is giving a speech in Salisbury tonight, but Lucy Fisher from the Financial Times has already written up some extracts and in them Robertson is withering about the Treasury. According to Fisher’s report, Robertson will accuse “non-military experts in the Treasury” of “vandalism”, adding: “We cannot defend Britain with an ever-expanding welfare budget.”

He will criticise Rachel Reeves, the chancellor, for devoting just 40 words to defence in her budget speech last year, and saying nothing about the topic at all in her spring statement last month. He will say:

There is a corrosive complacency today in Britain’s political leadership. Lip service is paid to the risks, the threats, the bright red signals of danger — but even a promised national conversation about defence can’t be started.

He will also say Britain is not safe.

We are underprepared. We are underinsured. We are under attack. We are not safe . . . Britain’s national security and safety is in peril.

Robertson is not a defence loudmouth. He is a quintessential establishment figure who for most of his career has avoided being provocative, or rocking the boat. If he feels minded to speak out like this, it must be serious.

Olivia Lee has a full write-up here.

This morning General Sir Richard Barrons, who along with Robertson was one of the three experts who wrote the defence review (the other was the former White House adviser and Russia expert Fiona Hill), gave an interview to the Today programme. Barrons, a former commander of Joint Forces Command, fully supported what Robertson will be saying in his speech. And he said that Britain’s armed forces are so diminished that he had to accept that Pete Hegseth, the US defence secretary, was right when he mocked the Royal Navy last month.

“Last time I checked, there was supposed to be a big, bad Royal Navy that could be prepared to do things like [clear the strait of Hormuz] as well,” Hegseth said.

Asked how he felt hearing that, Barrons said:

Like many others I hung my head in sorrow. But I couldn’t argue with him because although the Royal Navy and the Royal Air Force and the army are, in their bones, outstanding institutions, they are simply too small and too undernourished to deal with the world that we we now live in. And the review says this.

Here is the agenda for the day.

Morning: Keir Starmer chairs cabinet. There will be a political session, as well as the usual government meeting.

10am: South East Water executives give evidence to the environment, food and rural affairs committee, followed by Ofwat chief executive Chris Walters at 11am.

10am: Education experts give evidence to the Commons education committee about the proposed changes to Send (special educational needs and disabilities) provision.

10.30am: Executives from TikTok, Meta, Sky TV and Paramount TV executives give evidence to the culture committee about children’s TV and video content.

Morning: Kemi Badenoch is on a visit in south London.

11am: Ed Davey, the Lib Dem leader, holds a press conference focusing on health.

11.30am: Wes Streeting, the health secretary, takes questions in the Commons.

Noon: Downing Street holds a lobby briefing.

Afternoon: Starmer meets his Dutch counterpart, Rob Jetten, in Downing Street.

If you want to contact me, please post a message below the line when comments are open (between 10am and 3pm), or message me on social media. I can’t read all the messages BTL, but if you put “Andrew” in a message aimed at me, I am more likely to see it because I search for posts containing that word.

If you want to flag something up urgently, it is best to use social media. You can reach me on Bluesky at @andrewsparrowgdn.bsky.social. The Guardian has given up posting from its official accounts on X, but individual Guardian journalists are there, I still have my account, and if you message me there at @AndrewSparrow, I will see it and respond if necessary.

I find it very helpful when readers point out mistakes, even minor typos. No error is too small to correct. And I find your questions very interesting too. I can’t promise to reply to them all, but I will try to reply to as many as I can, either BTL or sometimes in the blog.

Key events

Reeves condemns Trump’s decision to launch war against Iran as ‘folly’

Rachel Reeves, the chancellor, has described Donald Trump’s decision to go to war against Iran as “folly”.

She used the comment in an interview with the Daily Mirror, ahead of her trip to Washington for IMF meetings where she will discuss the global impact of the war with her counterparts.

Reeves has already said publicly that she is “angry” about the war, but she was blunter speaking to the Mirror. She said:

This is a war that we did not start. It was a war that we did not want. I feel very frustrated and angry that the US went into this war without a clear exit plan, without a clear idea of what they were trying to achieve. And as a result the strait of Hormuz is now blocked.

Asked why she was so angry, she explained:

Because of the impact it’s having on families and businesses in our country. When I presented the spring statement at the beginning of March, it showed that inflation was coming down, interest rates were projected to fall further after having been cut six times since I became chancellor of the exchequer.

Borrowing and debt were falling and the economy was set to grow. It was already the fastest growing G7 economy in Europe last year, and that was projected to continue

Obviously no sensible person is a supporter of the Iranian regime, but to start a conflict without being clear what the objectives are and not being clear about how you are going to get out of it, I do think that is a folly and it is one that is affecting families here in the UK but also families in the US and around the world.

Sometimes politicians make the news when they say things that are unusual or controversial. This is an example of the opposite sort of news; a politician making a statement of the bleeding obvious, but one that is still unexpected because, for reasons of tact or diplomacy, most of her colleagues would never say it in public.

In private, “folly” may be one of the milder things being said by government ministers about Trump’s war. But Reeves’s comment is still stronger than anything anyone else in the government has said openly.

Keir Starmer and his team have spent much of their time in office trying to avoid saying anything at all critical of Trump, for fear of offending him. But increasingly Trump’s conduct, and domestic political considerations too, are making that policy impossible to sustain.

Core compensation paid to victims of infected blood scandal to be increased, MPs told

Nick Thomas-Symonds, the Cabinet Office minister, has told MPs that the government will increase the amount of “core compensation” available to victims of the infected blood scandal.

In a statement to the Commons giving the government’s response to a consultation on the compensation scheme, he said:

The community were clear that the scheme must do more to recognise people’s individual experiences and compensate them fairly in a way that minimises the administrative burden placed upon those who have been harmed, minimises the demand for evidence and maintains the delivery of tariff based compensation, and those requirements underpin the changes.

For infected people, the changes will increase the amount of core compensation available and increase the options available for supplementary compensation awards.

For affected people, additional core compensation will be available to those eligible.

Thomas-Symonds said the government would be making “substantive changes” in seven areas. He also said that as of April 7, 3,273 people have received an offer and more than £2 billion has been paid out.

The Cabinet Office has published full details of the changes here.

Sarwar accuses Swinney of encouraging ‘conspiracy theory’ about decision to block Chinese wind investment in Scotland

Anas Sarwar, the Scottish Labour leader, has accused John Swinney, Scotland’s SNP first minister, of encouraging a “conspiracy theory” about the UK government’s decision to ban a Chinese firm from building a wind turbine factory.

Last month the government announced that it would not allow MingYang, China’s biggest offshore wind company, to supply wind turbines for use in the North Sea. MingYang had been planning to build a factory to make them in the Highlands, creating up to 1,500 jobs.

At the time ministers said the investment was being blocked for reasons of national security. There are fears that the Chinese could somehow retain the capacity to switch off vital infrastracture in a crisis, but the government has not made this argument, or elaborated on what the national security concerns involved in this case were.

In a BBC election debate on Sunday night, Swinney suggested the move was motivated by anti-Scottish bias. He said:

My concern is that Scotland’s renewable industry is being undermined by the actions of a Labour government that’s just turned its back on £1.5 billion worth of investment.

It is welcoming Chinese investment into Hinkley power station south of the border. If that’s not an anti-Scottish move by a Labour government, I don’t know what is.

This morning, speaking to BBC Radio Scotland, Sarwar accused the first minister of peddling a “pretty strange conspiracy theory”. He said:

I can give you a cast-iron guarantee, I will not do crankery or conspiracy theory as first minister.

I will always accept national security advice, because our first duty as a government would be to protect the great citizens of this country.

Asked if it was strange that Chinese investment was allowed in other UK projects, Sarwar said:

All these projects will have national security briefings. A national security briefing was received that said there was a national security risk for investment.

Are we honestly saying that a first minister would reject national security advice? I can tell you quite categorically, if a national security briefing comes to me, I will not ignore it, because I will put the national interest before political interest.

He said the suggestion that the intelligence services would have taken a “deliberate do Scotland down approach” was the “height of conspiracy theory”.

But Swinney has defended his comment, saying he has not had an explanation from the UK government as to why the MingYang bid was blocked. He told the Press Assocation.

I have no more detailed understanding [of the decision] than that simple statement from the UK government.

And I think that is unacceptable because there is Chinese investment, Chinese development being embraced and welcomed in other parts of the United Kingdom – there’s a Chinese super embassy going to be built in the heart of the city of London.

Nandy clears takeover of Telegraph by German media group

Lisa Nandy, the culture secretary, has cleared Axel Springer’s £575m takeover of the Telegraph, paving the way for the end of almost three years of uncertainty over the ownership of the titles. Mark Sweney has the story.

Nandy made the announcement in a Commons written statement.

The Labour MP Samantha Niblett has said she wants to make 2026 the “summer of sex”. While this sounds like the most enticing of the election offers we’ve heard during the campaign so far, she used the phrase in an interview with PoliticsHome talking about her campaign for better, lifelong sex education. You can read the full interview, which includes Niblett saying she is negotiating with the parliamentary authorities about bringing sex toys into the Commons for an event she is planning to publicise her campaign, here.

Reform activist suspended over racist and antisemitic comments remains election agent

A Reform UK activist in the Gorton and Denton byelection who was suspended over racist and antisemitic comments has been named as the election agent for three of the party’s candidates in Manchester ahead of polls on 7 May, Ben Quinn and Rob Davies report.

Q: Do you understand why some people in your party are frustrated because they think you as a party should be doing much better?

Nationally, the Lib Dems are now polling well behind not just Reform UK, Labour, the Tories and the Greens.

Davey said oppostion was difficult. But he said “the fact that we keep winning is somethiing that should reassure people”. He said he thought the party would win “many more seats” at the next general election.

And the party was on course to become the second biggest party in local government because it “keeps winning”, he said. That would happen again in May, he said.

Lib Dems call for housing developers to be required to fund extra GP provision for people buying their homes

Ed Davey, the Lib Dem leader, was holding his press conference this morning to announce a proposal for housing developers to be required to fund new or expanded GP surgeries for the people who buy their new homes.

Explaining the plan in a news release, the Lib Dems say:

The party would require developers to fund or build new, or expand existing, GP surgeries in time for the arrival of new residents, with developer levies used to pay for them to be staffed while new residents are still moving in. This is part of the Liberal Democrats’ infrastructure-first approach to development, and supports their campaign to rescue General Practice and ensure everyone can get an appointment within 7 days, or 24 hours if urgent.

Developers would be required not only to fund new facilities but also to guarantee the GP surgery contract (or the cost of salaried GPs) while new residents are still moving in. This would ensure new residents don’t have to turn to over-stretched existing GPs, and new practices can be viable from the outset.

Delivery of health services has been found to be integral for public trust, with recent LSE research finding that where GP provision has declined and more surgeries have closed, support for the extreme right has risen.

At the press conference Davey was asked about claims by rival parties that, although the Lib Dems nationally back new housing, at a local level their councillors are adept at blocking developments.

Davey said “the reverse” was true. He claimed Lib Dem councils have a very good record building homes.

We’re the ones who actually build homes. I could take you to Eastleigh, who’ve been building homes over a number of years and have got a very good record. I could take you Cambridgeshire. I can take you to my own area, Kingston, where I have to declare a vested interest; my wife is the housing portfolio holder. She’s overseeing the largest council house building programme for 40 years. I could take you the Vale of White Horse in Oxfordshire. I could take you to South Lakeland. Across the country, actually the Liberal Democrats have a very, very proud record of building homes.

Davey renews call for South East Water CEO to resign after company tells MPs it failed in its duty to customers

Q: Do you think the chief executive of South East Water should resign? This morning he and colleagues told a committee that some of the problems that let to a water shortage in Tunbridge Wells last year were foreseeable?

Davey said that he has already called for the resignation of David Hinton, the South East Water CEO. He did so at the time of the Tunbridge Wells shortage, he said. He went on:

If he’s now admitting it was foreseeable and predictable, I’m surprised he is not offering his resignation already.

Here is the Press Association report of the evidence given by Hinton and others to the Commons environment committeee this morning.

The chairman of South East Water has admitted the company failed in its primary duty to supply customers with water after recent outages left thousands without drinking water.

Bosses of the company were grilled by the Commons environment, food and rural affairs committee this morning about their response to the multiple supply interruptions in Kent and Sussex.

Tunbridge Wells suffered a sustained outage in November and December, with around 24,000 properties in and around the Kent town left without drinkable water for almost two weeks.

Then thousands of properties in Kent and Sussex saw their supply disrupted for days in January, with South East Water (SEW) blaming the outage on Storm Goretti causing burst pipes and power cuts.

Customers were left with no tap water, unable to shower or bathe and could not flush their toilets, while a number of schools were forced to close.

Chairman Chris Train told MPs that the company “failed on the basic objective of delivering water to customers and therefore that is a failure and we recognise that failure”.

“We failed our customers,” he continued. “We worked very hard to rectify that situation, and since the events and independent review, we have undertaken a lot of actions to improve the resilience of the operations.”

Committee chairman Alistair Carmichael asked Train to score his team’s performance out of 10, arguing that customers deserve that degree of accountability from a non-executive director.

The chairman refused to do so, saying the situation is “complex” but added: “That degree of accountability is that we accept that we failed in our primary duty and we could have done better with all of the factors.”

Chief executive David Hinton was also asked to give a score out of 10 for the company’s response to the January outages after he previously marked it as eight out of 10 for the November incident.

Hinton also refused to do so but admitted that the performance was “disappointing” after many vulnerable customers were left without an alternative supply of water.

“My expectation is that we deliver to all priority service customers and that the bottled water stations are completely resourced the whole time, and customers can get access to alternative water at all times.

“So whenever we do not meet that particular yardstick, then I’m disappointed.”

Q: Do you think the Treasury should be looking for savings in other departments to fund higher defence spending?

Davey said of course the Treasury should be trying to find savings. But he claimed that his plan for defence bonds (see 11.36am) was the best idea put forward by any party to find the money for defence.

Davey claims Lib Dems will be ‘one of two biggest parties in local government’ by time of next general election

Q: Are you concerned that the Liberal Democrats are losing support given the rising popularity of the Green party?

Davey did not accept that. He replied:

We got, the best result for over a hundred years at the general election. But we’ve kept on winning since.

At the last May elections a year ago we beat the Conservatives and Labour for the first time ever. And it was our seventh year in a row of wins.

If you look at council by elections across the country, which party won the most in 2025? It was the Liberal Democrats.

And I make this prediction as we look at the council elections between now and the next election … By the time the next election will be one of the two biggest parties in local government. And with politics changing, that will be a massive change across our country.

According to Open Council Data UK, the Lib Dems are currently in third place, in total councillor numbers, in the UK.

Davey seems to be saying the Lib Dems will overtake the Tories, who are on course to lose around 1,000 seat in the local elections, according to at least one forecast. Labour are expected to lose even more, but they are starting from a higher base.

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Man who suffered 'racially-motivated' attack says he regrets moving to NI

Published

3 minutes ago

June 15, 2026

info@oxinfo.co.uk

The man said his home has been targeted three times in the last five months.

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UK News

European stock markets hit record high and oil price falls to three-month low after US-Iran peace deal – business live | Business

Published

1 hour ago

June 15, 2026

info@oxinfo.co.uk

European stock markets hit record high

European stock markets have hit a record high at the start of trading, as relief over the US-Iran peace deal ripples across global markets.

The pan-European Stoxx 600 index has jumped by 0.9% to 639 points, over the previous record high set just before the Iran war started, with shares rising in London, Frankfurt, Paris, Madrid and Milan.

Mining and travel companies are driving the rally, while oil company shares are sliding.

That follows sharp gains in Asia-Pacific markets overnight, where Japan’s Nikkei surged by 5% on hopes that the strait of Hormuz will reopen within days.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, says global equity markets are starting the week firmly on the front foot after President Trump announced that a deal with Iran had been reached, adding:

The move has given investors a clear reason to dial back some of the geopolitical risk premium that has hung over markets, especially as the Strait of Hormuz is expected to reopen and oil prices move sharply lower.

Energy prices have been one of the clearest transmission channels from Middle East tensions into inflation, bond yields and equity sentiment, and there is likely to be a concerted effort to get prices down even further once this deal is finalised.

There are still details to be ironed out before markets can fully trust the agreement, but for now the direction of travel is clear: lower oil, calmer nerves and a renewed appetite for risk.

Key events

Peace deal should keep mortgage rates down

Mortgage borrowers can breathe a sigh of relief at the news of a peace deal in Iran, says Adam French, head of consumer finance at Moneyfactscompare.co.uk.

While we are far from being out of the woods yet, a lasting peace deal should dramatically reduce the risk of the Bank of England’s worst-case scenario for inflation and interest rates becoming a reality.

“Under that scenario, Base Rate could have risen to 5.25%, potentially pushing typical rates on new mortgages towards 6.75%. Instead, today’s news means mortgages rates, which have already been slowly falling for several weeks, have likely already passed their peak – at least until the next unwelcome crisis.

“Borrowers can be optimistic but with a word of caution, as inflation and economic data will continue to influence the outlook. However, a lasting peace should remove one of the biggest risks to mortgage costs and may help restore a more stable environment for hard-pressed remortgage borrowers and prospective buyers.”

Even before this morning’s drop in UK bond yields (see earlier post), average mortgage rates have dipped slightly.

Moneyfacts reports:

The average 2-year fixed residential mortgage rate today is 5.61%. This is down from 5.62% the previous working day.
The average 5-year fixed residential mortgage rate today is 5.58%. This is down from 5.59% the previous working day.

Why it may take months for oil flows to return to normal

Donald Trump excitedly declared: “Ships of the World, start your engines. Let the oil flow!” last night, but the reality is that it will take some time for oil flows through the strait of Hormuz to return to pre-war levels.

One reason is that many oil tankers are simply in the wrong place, after the long closure of the strait.

Another is that some production and refining facilities have been damaged by the conflict, while others were mothballed after storate facilities filled up to the brim.

A third factor is that insurers could still be wary of the conflict reigniting, and price their cover accordingly.

Neil Shearing, group chief economist at Capital Economics, explains:

Even if ships now have safe passage, tankers are in the wrong place, oil production/refining facilities need to get up to full capacity, and questions over the cost and availability of insurance for ships traversing the Strait will remain.

Our current working assumption is that ~80% of energy flows will resume by the end of Q3. Natural gas flows will be slower to return, following the damage to Qatari facilities earlier in the conflict, which according to local officials has put 17% of production offline for two to three years.

US crude drops below $80

US crude oil has dropped to its lowest level since the second week of the Iran war.

The cost of a barrel of West Texas Intermediate (WTI) light sweet crude has dropped by 6% today to $79.72 per barrel, the first time since 10 March that it has been under $80/barrel.

That could help to pull down US gasoline prices, which climbed after the conflict began, hitting consumer confidence.

UK bond yields fall

Today’s relief rally is also driving up government bond prices, pushing down the cost of borrowing.

The yield (or interest rate) on 10-year UK government debt has dropped by 6.5 basis points (0.065 of a percentage point) to 4.775%.

Two-year bond yields are down 8bps to 4.16%.

Lower bond yields indicate that that the cost of issuing new government debt has fallen, which will be a relief for the UK Treasury after the Iran war drove up borrowing costs.

Copper mining company Antofagasta is now the top riser on the FTSE 100, up almost 8%.

Trader will be concluding that an end to the Iran war will boost the world economy, leading to more demand for raw materials such as copper.

European stock markets hit record high

European stock markets have hit a record high at the start of trading, as relief over the US-Iran peace deal ripples across global markets.

Mining and travel companies are driving the rally, while oil company shares are sliding.

That follows sharp gains in Asia-Pacific markets overnight, where Japan’s Nikkei surged by 5% on hopes that the strait of Hormuz will reopen within days.

The move has given investors a clear reason to dial back some of the geopolitical risk premium that has hung over markets, especially as the Strait of Hormuz is expected to reopen and oil prices move sharply lower.

Energy prices have been one of the clearest transmission channels from Middle East tensions into inflation, bond yields and equity sentiment, and there is likely to be a concerted effort to get prices down even further once this deal is finalised.

There are still details to be ironed out before markets can fully trust the agreement, but for now the direction of travel is clear: lower oil, calmer nerves and a renewed appetite for risk.

BP and Shell’s shares slide

Shares in oil companies are falling, though – BP and Shell are both down 3.7%, as investors anticipate an end to their earnngs boost from the Iran war.

FTSE 100 index hits eight-week high

Boom! Britain’s stock market has hit a near-two month high at the start of trading, as investors welcome the breakthrough between the US and Iran to end the Middle East conflict.

The FTSE 100 blue-chip share index has jumped by 99 points, or almost 1%, at the start of trading to 10,570 points, its highest level since 21 April.

Engineering firm Rolls-Royce, which makes and services jet engines, is the top riser on the FTSE 100, up 5.5%, followed by British Airways parent company IAG, up 4.8%.

UK house prices dip in June

Gwyn Topham

Two bits of good news for Britons who don’t own their homes have been revealed, with data showing a drop in house prices in June as well as fewer tenants facing rent hikes last month.

Figures from Rightmove showed the average price of property coming on the to market fell by 0.6% or £2,113 to £376,191, the biggest June fall in fourteen years, with prices 0.5% below this time in 2025. The biggest drops were seen in southern England and Wales, and in asking prices for flats rather than houses.

A chart showing monthly house price changes Photograph: Rightmove

The property site said the number of homes for sale was still at historically high levels for summer, making it more of a buyer’s market. Mortgage affordability has also improved slightly this month, with the average two-year fixed rate deal dropping about 0.1 percentage points to 5.07%, it said.

Meanwhile, figures suggest that the introduction of the Renters Right Act may already be seeing results in terms of keeping rents down for tenants.

The new law came into force at the start of May and means landlords can only increase rents for sitting tenants once a year. According to Hamptons monthly lettings index, the number of tenants who saw their rent rise was down 23% from the same month last year. Hamptons said if the rest of the year saw similar change, it would expect only 31% of sitting tenants to face increases, compared to 40%-50% in previous years.

However, the agency warned that rent rises in Scotland, where landlords have been operating under a similar system for longer, exceeded the national average. Sitting tenants who faced rent rises had an average increase of 5.4% in May, but the figure reached 7.7% in Scotland, albeit for a lower absolute rent – £952 – than the Great Britain average of £1375.

Speaking of the ECB, their president Christine Lagarde has been warning that inflation pressures are spreading in the euro area.

In an intervew with broadcaster France Culture, Lagarde warned that high energy prices are starting to feed through to other parts of the economy, saying:

“Indirect effects of inflation, we have absolutely started to see that more or less everywhere in recent weeks.”

The US-Iran agreement is well-timed for the Bank of England, which is due to set UK interest rates on Thursday.

If the strait of Hormuz does reopen, and oil flows return towards pre-war levels, there will be less inflationary pressure – and thus less need for interest rate rises.

The European Central Bank raised its interest rates last week, but this week is the turn of the BoE, the US Federal Reserve and the Bank of Japan.

Kathleen Brooks, research director at XTB, says:

Over the past month, the price of oil is down by more than a fifth, and the Brent crude price is now back at levels from early March. This is good news for inflation, which should start tumbling monthly from June, and it could ease concerns about price pressures as we lead up to some major central bank action this week. The decline in the oil price also raises questions about whether the ECB was too hasty in raising rates last week.

European stock markets are on track to jump when trading begins, in just over 20 minutes.

Germany’s DAX share index is up 1.65% in the futures market, Reuters reports, with the UK’s FTSE 100 0.75% higher.

The US dollar is weakening, as investors shift into riskier currencies.

The pound is its highest in over a week, at $1.3438.

Markets rally across Asia

There are strong gains across Asia-Pacific markets today, as investors welcome the deal between the US and Iran.

Japan’s Nikkei share index has leapt by 5%, as has South Korea’s KOSPI, while China’s CSI300 index is 1.9% higher.

Jim Reid, market strategist at Deutsche Bank, says:

Whilst the deal is very good news for markets it looks like tough conversations will have occur in the 60-day window to ensure the peace is sustainable. As an example, the Senate needs to approve any extensive sanction relief for Iran.

For now the can kicking exercise has been very well received by markets even after a strong US close on Friday where hopes were raised of a weekend signing

Introduction: Oil falls to three-month low

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

The peace deal agreed between Iran and the US is sending a wave of relief through the markets today.

Oil has tumbled 4%, and markets across the Asia-Pacific region have jumped, as investors anticipate the reopening of the strait of Hormuz.

Although it is unclear exactly what has been agreed – with the final text of their memorandum of understanding unpublished – Donald Trump’s claim that “oil will flow on both ends again for the region, and the world” is pushing down energy prices – a relief for busineses, consumers, politicians and central bankers alike.

Brent crude has fallen as low as $83.04, its lowest since 10 March, after the prime minister of Pakistan announced the US and Iran will sign a memorandum of understanding in Switzerland on Friday.

That still leaves Brent above its pre-war price of $72.48 a barrel, though.

A chart showing the Brent crude oil price Photograph: LSEG

Trump has indicated that the opening of the strait is contingent upon the signing of the peace deal, scheduled for Friday.

Iran’s Mehr state news, though, reported that the agreed memorandum of understanding calls for the reopening of the strait within 30 days under “Iranian arrangements” – an indication that Tehran hasn’t surrendered its control of the waterway.

Chris Weston of IG points out that there are still obstacles to overcome:

The probable reopening of the Strait of Hormuz later this week would represent a significant positive development. Markets had increasingly questioned how long inventory draws could offset supply disruptions and whether physical dislocations would begin weighing more heavily on risk assets. The focus now shifts towards understanding what normalisation of logistics could realistically look like, and how quickly shipping volumes can return to pre-conflict levels of 120 to 140 commercial vessels transiting eastbound and westbound each day.

There are still obstacles to overcome. Mines may need to be cleared, and there may be structural damage to refineries and export facilities around the region that will take time to repair and come back to pre-conflict capacity.