Franklin FTSE United Kingdom ETF

FLGB

Market cap $873M

As political uncertainty grows in the United Kingdom, investors are increasingly focused on the country's fiscal outlook and rising government borrowing costs. Bloomberg Opinion Columnist John Authers says concerns over spending, debt, and political instability are pushing gilt yields higher, reviving memories of past market crises that helped topple governments from Harold Wilson to Liz Truss.

Britain said shipowners and operators who recklessly damaged subsea internet cables could face tougher penalties, including prison sentences, under proposals to ​help deter Russia and other hostile states from sabotaging vital national ‌infrastructure.

Market expectations that the European Central Bank will hike interest rates this year have already contributed to tighter financial and lending conditions. The "transmission of tighter policy is already underway," Goldman Sachs noted.

A carousel of leaders has taken its toll, driving up borrowing costs and dragging down investment.

Britain's benchmark FTSE 100 index fell on Thursday, snapping a seven-day winning streak, as renewed hostilities between the United States and Iran weighed on investor sentiment and clouded hopes of reopening the Strait of Hormuz. The blue-chip FTSE 100 index fell 0.8% to 10,418.33 points by 1013 GMT.

The European Central Bank's decision to keep rates ​unchanged last month was ‌a close call for some policymakers as signs of persistently high ​inflation made it hard ​to look past the energy-driven shock, ⁠the accounts of the ​meeting showed on Thursday.

Share markets across Asia fell on Thursday after reports of fresh US military strikes on Iran and missile attacks linked to Kuwait unsettled investors and weakened optimism surrounding a possible peace agreement in the Middle East. Oil prices surged while Treasury yields climbed as investors reacted to escalating tensions and growing concerns over inflation ahead of key US economic data.

Sentiment among Britain's consumer-facing services businesses fell to its lowest since February 2025 this month and a recent ​rebound in business services morale reversed course, a survey from ‌the Confederation of British Industry showed on Thursday.

U.K. government regulator Ofgem said Wednesday that its household energy price cap would rise by 13% in July. “Ongoing conflict in the Middle East is impacting the price we pay for energy,” the head of the regulator said.

UK shares moved higher on Wednesday as hopes of progress in the Iran conflict pushed oil prices lower and improved investor sentiment. Gains in defence companies and upbeat corporate updates also supported the market rally.