The Week of June 21, 2026: Air conditioning, SpaceX, gas prices, and much more.
The Week of June 21, 2026: Air conditioning, SpaceX, gas prices, and much more.
As Keir Starmer, Britain’s latest failed prime minister, prepares to slink out of 10 Downing Street, his successor seems set to be Andy Burnham. Burnham, who has spent nearly the whole of his working life in politics, first entered parliament in 2001, initially becoming a minister under Tony Blair, an ascent that continued under Gordon Brown. He unsuccessfully bid for Labour’s leadership after the party’s defeat in the 2010 election and, after serving in Ed Miliband’s shadow cabinet, tried again after Labour’s loss in 2015, only to be beaten by Jeremy Corbyn.
Usually labeled as on the Labour’s “soft left” (whatever that might mean), Burnham’s principles were even softer. He accepted a senior position under Corbyn, an extremist on any reasonable definition of that term. In 2017 Burnham quit parliament to become mayor of Greater Manchester.
Within months of becoming Labour’s first prime minister in almost a decade and a half, Keir Starmer was, to put it mildly, extraordinarily unpopular. Labour MPs grew increasingly restless and Burnham sensed an opportunity. His mayoralty was a political success, and he is more personable (low bar) than the dull, dour Starmer. Despite an early attempt to return to Westminster being thwarted by the prime minister’s maneuvering earlier this year, Burnham won a seat in the House of Commons in June, prompting Starmer to throw in the towel.
If Burnham makes it to 10 Downing Street, he will oversee a realm beset with problems far deeper than its flailing economy, but it’s to the economy that Burnham will first have to turn his attention.
Starmer inherited an economy weakened by the Conservatives’ long leftward drift and promptly made it worse. Britain’s regulatory burden has grown even heavier, and, by pushing energy costs up still higher, the fanatical acceleration of the futile and counterproductive “race” to net zero presided over by Ed Miliband (yes, him again) is wrecking what remains of the country’s industrial base. The much-vaunted green industrial revolution has degenerated from farce to tragedy. The U.K. fiscal outlook is deteriorating. Public spending is still rising, and so are taxes, which as a percentage of GDP are matching earlier postwar peaks.
British government debt as a percentage of GDP now stands at 95 percent (up from 35 percent in 2007/08). Servicing the debt is made more difficult by the fact that an unusually large slice of it (about 24 percent) comprises inflation-linked bonds. British inflation has subsided from its post-Covid peaks but still stands at an annual rate of around 3 percent and is expected to edge up further, primarily on the back of Iran War-related supply shocks.
Government borrowing rose by 30 percent between May 2025 and May 2026, about a third more than forecast by the Office for Budget Responsibility (OBR). Borrowing for the financial year ended May 2026 was up 24 percent over the previous year, again far above OBR projections. That is bad enough, but bond investors cannot fail to have noticed that the government’s interest bill rose 54.4 percent in May than twelve months before, the highest in nominal terms for any May on record. The budget deficit is around 4 percent of GDP.
Adding to the gloom, Britain’s economy is stagnating, presaging deeper decay ahead. Its real per capita GDP has barely moved since 2007. There are plenty of reasons for this, but among the most important are high levels of immigration, both directly — a matter of basic math — and indirectly. A longstanding yet short-sighted reliance on cheap labor has eaten away at UK productivity for years.
Despite media hallelujahs not dissimilar to those that greeted Starmer’s arrival in power, hopes that Burnham can jump-start the economy look far-fetched. If anything, he may speed up the rate of decline. His plan to cut and paste “Manchesterism” across the country should be treated as a threat rather than a promise.
“Manchester liberalism” was a jewel in classical liberalism’s crown. But Burnham has described his Manchesterism as the “end of neoliberalism, and the end of trickle-down economics,” a creation, in other words, with no resemblance to laissez-faire’s long-vanished ghost. Burnham’s Manchesterism is a rebranding of heavily interventionist government, combining distorted echoes of early 20th-century municipal activism with souped-up social democracy. Much of it rests on the notion that the “answer” to the U.K.’s lopsided regional development (London accounts for nearly a quarter of Britain’s GDP) is greater “devolution” of economic and political power to its regions beyond those already given to Scotland, Wales and Northern Ireland and, to a lesser extent, parts of England.
While that might sound benevolent, it will be anything but. It will enable fiefdoms, cronyism, and the manufacture of jobs for the typically Labour-voting bureaucratic class, while paving the way for more micromanagement of ordinary people’s lives and, if some of the darker predictions of Britain’s future come to be realized, the establishment of de facto sectarian enclaves.
There is no convincing evidence that devolution would improve Britain’s economic performance. There is, however, a danger that, particularly in combination with heavier taxation, it risks chipping away at the U.K.’s most valuable economic asset, its capital city. Output per hour worked in London was 28.5 percent above that of the UK average. London attracted more foreign investment than any other region in Europe in 2024 (despite Brexit!). London and the South-East are the only two regions of Britain to generate a fiscal surplus. Too much talk of devolution and they might want to keep more of it for themselves.
If the underperformance of Britain’s regions can be remedied, it would, aside from higher spending on social and physical infrastructure, involve less government intervention, not more. To start with, net zero, currently scything through the remnants of Britain’s traditional industrial base (which incidentally is disproportionately located in the country’s regions), should be scrapped. And deregulation should not stop there.
Manchester itself was something of a success under Burnham, but that owed little to Manchesterism. It is true that Burnham brought the bus system under tighter municipal control, using powers granted under legislation passed by (ahem) the center-left Conservatives of the last decade. The result was the “Bee Network’ of bright yellow buses, operated by private companies (and coordinated with similarly branded trams). As Andrew Gilligan, who had been Boris Johnson’s transport adviser, pointed out in an article for The Spectator, contrary to Burnham’s grumbling about London’s neglect, his scheme was made possible by large amounts of central government money.
Moreover, while bus use in Greater Manchester has increased twice as much as the national average over the last couple of years, it has trailed increases elsewhere. Gilligan lists several bus services still operating “on the old, largely commercial model” that have done better with far less taxpayer support. Meanwhile, the auditors of Transport for Greater Manchester’s accounts have also voiced reservations, including concerns about a funding gap arising from lower-than-forecast ridership. And the improvements in The Bee Network’s service are fewer than sometimes suggested. Gilligan dismisses them “as a few new routes, but not that many; some major frequency improvements, but not that many; and quite a lot of routes getting a few extra journeys, often early in the morning or late at night.” In short, on a closer look, the Bee Network is no great advertisement for state intervention. But, in the absence of many such closer looks, its bright yellow buses are helping take Burnham to 10 Downing Street.
François Valentin, writing about Burnham in Persuasion, describes how Manchester’s “success predates Burnham’s election, and was boosted by a surge in foreign direct investment encouraged by consistently pro-business political elites over the years. One example of this comes from a construction boom. Manchester — nicknamed “Manc-hattan” — is now home to a surprising number of glitzy skyscrapers, partly financed by loans from Greater Manchester Housing Investment Loans Fund (GMHILF), a result involving less “affordable” housing than once mooted, and which has — let’s leave it at this for now — raised some eyebrows.
Burnham is also, as Valentin relates, a “vocal advocate of reindustrializing the UK’s economy,” even though:
Manchester’s success has been decisively post-industrial, with an emphasis on the service economy. It’s unclear which vision of Manchesterism — the one in Burnham’s rhetoric, or the one that actually exists—he would seek to implement nationwide as prime minister.
Burnham has stressed safeguarding “sovereign manufacturing and production capability . . . in critical sectors like steel, defense, energy, food and farming.” In an age in which security of supply is rightly becoming an ever-greater source of concern, that can, depending on how far it is taken, make some sense, although like so much in today’s Britain it will be made harder to achieve by net zero. It would be welcomed in the regions too. However, reindustrialization of this type is essentially a defensive project. It may be necessary if supply lines fail, but it will not end the U.K.’s economic stagnation, and nor will nationalization, another Burnham enthusiasm. State ownership (or even heavy state involvement) is a recipe for subpar performance, an inconvenient truth that the Trump administration would also do well to remember.
Burnham should not be in the business of picking winners, but he can help create a business climate in which enterprise can flourish. And in doing so, he needs to look ahead rather than over his shoulder, to the future, not the past. Productivity growth in the Information and Communication Technology sector — albeit a mere 7 percent of U.K. output — has outpaced every other part of the British economy. According to Sam Fleming, writing in the Financial Times, “information technology has driven a third of the UK’s productivity growth since 2019.” Fleming notes that “among the five biggest European economies, Britain has produced the biggest rise in information technology output since 2019.” (Despite Brexit!)
Fleming:
“It can’t be entirely coincidental that the sector most susceptible to fast-paced AI diffusion is driving both GDP growth and productivity gains,” says Bruna Skarica, at Morgan Stanley, who sees Britain’s ICT sector as one of the most productive globally. She calculates that the sector has been responsible for about a third of Britain’s growth over the past three years, compared with just a sixth in the three years preceding the pandemic. The UK has captured nearly half of European venture capital so far this year, in part thanks to its rapidly growing tech industry, according to Dealroom, the data platform for start-ups.
Despite Brexit!
However promising the link with AI, there is the danger of being overwhelmed by American competition. Surviving that will be tough, but it will be impossible if racing to net zero by 2050 means British AI-related firms lack access to attractively priced, reliable power necessary to remain in contention.
Yes, net zero again. As is evident in sector after sector (including oil and gas), there is no way that Burnham can help foster a revival of Britain’s growth without carving a path for it through the corpse of net zero. Whether he has the willingness, ability or inclination to do so is, for now, a mystery.
A revived British economy will also depend on a return of what Keynes referred to as “animal spirits,” much needed in a land with the lowest rate of business investment in the G7. But much of the mood music coming out of Burnham’s circle (or those who would like to be in it) would do the opposite. A CapX survey of some of those who are or who could well be advising Burnham makes for grim reading. Their wish lists include (or have included) wealth taxes, (more) “windfall” taxes on energy firms, higher income taxes, alternative minimum corporate taxes, higher taxes on capital gains and dividends.
Wait, there’s more. Higher property taxes might be on the way, perhaps seasoned with some vintage Georgist neo-feudalism (an idea for which WFB regrettably had some sympathy). There’s talk of an exit tax too. Presumably this would bear some resemblance to the Weimar Republic’s Reichsfluchtsteuer, a precedent, one would imagine, to be avoided, and an incentive for entrepreneurs to get out while they can.
And, via The Spectator:
Neal Lawson, a Gordon Brown bag-carrier who runs the centre-left pressure group Compass, has been a close Burnham ally since they first met playing for the Labour football team ‘Demon Eyes’. Lawson’s economic greatest hits include likening economic growth to cancer, describing the OBR as ‘anti-democratic and tyrannical’ and posing the question: ‘Do we need a fixation on growth at all?’… Then there’s Mathew Lawrence, who styles himself online after the guillotined French revolutionary Georges Danton and is involved with the Burnham-founded group Mainstream. The state and workers should take over private firms because shareholder rights are ‘unjustifiable relics secured by power’.
Another potential adviser, Jim O’Neill, a former chief economist at Goldman Sachs, believes that there is room for more borrowing, for “investment,” of course, with ideas approved by an “independent” body, of course.
The details will be what they will be, but if Burnham secures the top job, there will be more taxing, more spending, and more borrowing. Much of the money would go to higher welfare benefits, more social housing (the UK already has twice the EU average), nationalizations, and so on. There’s also a defense build-up to be paid for, a deficit to be serviced, and (wait for it) the ever-ballooning cost of net zero (another £240 billion just dropped).
All is not lost. Burnham’s popularity is declining even before he becomes prime minister. According to YouGov, as of June 29, his net favorability rating had slumped to –11 percent, down seven percentage points after winning the special election that put him in a position to frighten Starmer off.
For all that, if Burnham becomes prime minister there’s a decent chance that he will call a snap election, especially if, with the BBC and its accomplices elsewhere in the media doing their best, a honeymoon can be conjured up. It looks (so far) as if Burnham’s program will be a destructive, self-contradictory mix based on a great deal of wishful thinking, or, to put it another way, an invitation to a bond market panic. Under the circumstances, with the right still divided between the Conservatives, the populist Reform UK, and, further to the right, Restore Britain, his best course of action may well be to go to the polls before the storm hits.
The Capital Record: Sound & Vision
We released the latest in our series of podcasts, the Capital Record. Follow the link to see how to subscribe (it’s free!). The Capital Record, which is hosted by financier David L. Bahnsen, makes use of two formats to deliver Capital Matters’ defense of free markets. The original podcast continues, but if you want to watch David talk, please click on the YouTube link.
Remote Work’s Growing Damage (Podcast/YouTube)
The Covid-19 era claims that working in an office was over — an unnecessary relic rendered obsolete by the realities of Zoom and the cloud — have spent the last five years being decimated by rediscovery of the facts of human nature. Company after company has backtracked, admitted failure in remote work allowance, and attempted to salvage the damage done to brand, culture, and mentorship by telling people they didn’t need to come to work. But a new study has gone further, and the results should not surprise any of us who understand the human person. They should disturb any of us who claim to care about the wellness of human beings.
Is Growth Doomed? (Podcast/YouTube)
When a who’s who of progressive economists, some Nobel laureates, all academics, take to the pages of the, ummm, Guardian, to say that “growth is doomed” and that “poverty is manufactured,” is it time for policymakers to reverse course and embrace the policy solutions these “experts” present to “change the rules of the global economy”? Or, rather, is this the ideal time for lovers of freedom who believe in human flourishing to double down on the only things the world has ever seen that manufacture prosperity?
The Capital Matters week that was . . .
Air Conditioning
There are other factors holding back the spread of AC in Europe. Asceticism is one of them. AC is often frowned upon as too much of a luxury, its unseemliness made worse by its taint of Americanness. Climate warriors and other environmentalists have weighed in. No hairshirt is too uncomfortable for eco-ascetics, especially if they can force others to wear them. What’s more, they want heat to be difficult to bear, both as a punishment for the Western world’s supposed sins and to attract new recruits to their ranks . . .
One person who would have been astonished by the fight over air conditioning is Lee Kuan Yew, the man who more than any other individual steered Singapore to extraordinary success . . .
Europe’s struggles with air conditioning appear to have taken a hierarchical turn at European Commission headquarters in Brussels’s Berlaymont building. The building does have AC (will no one think of the planet?), but the current heat wave has proved too much for its cooling system, reaching 95 degrees on Friday (a level reached or exceeded on over a hundred days in Phoenix last year, but perhaps it’s unkind to point that out) . . .
ESG
The destructive investment “discipline” better known as ESG is too valuable to the political, financial, and economic ecosystem it feeds for its promoters to put it out of investors’ misery. Nevertheless, aware of the criticism and derision that ESG has belatedly attracted, at least some of those who back it have been keeping a lower profile.
However, it has returned to the headlines with the news that MSCI, which among other businesses designs and operates numerous stock indexes (“including more than 1,500 equity and fixed income ESG indexes”), is giving SpaceX its lowest possible ESG rating . . .
SpaceX
SpaceX’s stock flew up after its recent IPO, causing many to claim that Elon Musk had become the first trillionaire by stealing money from the poor. Every day’s increase caused a new freakout.
Well, all those post-IPO gains have now disappeared . . .
Drones
Drone development is a work in continuous progress, an example, in some respects, of the longstanding Japanese concept of kaizen as well as more radical innovation. UGVs, a couple of which I saw trundling around at the training facility, appear to be at an earlier, if already impressive stage. I wrote a bit about them in January and again last month, including an account of how a lone UGV armed with a machine gun had defended a position from repeated Russian attacks. The implications of this for Ukraine, fighting a war of attrition against a much more heavily populated opponent, are obvious . . .
Social Security
HALE is the cleverly appropriate acronym for Health-Adjusted Life Expectancy, a fancy way of saying how many years people can live in good health.
As I noted in my recent article on U.S. birth rates, the increase in Americans’ life expectancy has not been matched by increases in HALE . . .
Solar Power
Big Climate has long warned that climate change was going to heat the planet up. Fine, but there is plenty of room for disagreement about the extent of that potential warming, the extent of the threat it really poses, and the best response to it. Climate warriors, however, infected by millenarianism and aware of the value of a scare story, have stressed the more extreme scenarios (one of which and its successor have recently been, rather awkwardly, withdrawn). The planet was “boiling” and so on, and it was going to get even hotter soon. If that is what they genuinely believed, their British division may not have been thinking things through . . .
Gas Prices
Gouging is a wayward concept. Prices are a function of scarcity and naturally rise when there is a reduction in the supply of a commodity that is in high demand. To artificially mandate that the price remain low rather than naturally find its higher level encourages hoarding — which also reduces supply and doesn’t help consumers, even if politicians can preen that they’ve dealt with the “gougers” . . .
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