Good morning. Tensions escalate between India and Pakistan. US and China trade officials will meet this week. And voting for the new pope gets underway. Listen to the day’s top stories.
India conducted military strikes against Pakistan, which said it shot down five Indian jets in retaliation. India said it only targeted “known terror camps” and hit no civilian, economic or military targets, a statement disputed by Pakistan. Read our explainer to get caught up on the conflict and what’s at stake.
US Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will travel later this week to Switzerland for trade talks with China led by Vice Premier He Lifeng, seeking to de-escalate a tariff standoff. China, meantime, reduced its policy rate and lowered the amount of cash lenders must keep in reserve, as Beijing ramps up efforts to support the economy.
More trade: The UK and US are in intensive discussions about an economic agreement that would reduce the impact of some tariffs, with a team of British officials in Washington to negotiate terms this week, people familiar said. Read how the UK is set to unveil a new industrial policy for its film sector on tariff concerns.
Donald Trump said it’s not a good time to invite Russia to rejoin the G-7, months after saying he’d like to see the nation reinstated to the group. Meanwhile, Russia is considering changing its key budget-building mechanism in response to sliding oil revenue.
Coming up:Poland’s central bank is set to cut interest rates for the first time since 2023, just days before an important election. Czech policymakers will probably lower rates again after inflation slowed more than expected.
Nigel Farage. Photographer: Darren Staples/Bloomberg
Reform UK leader Nigel Farage and Britain’s main opposition Conservative Party attacked Prime Minister Keir Starmer over the country’s new trade deal with India.
Under the deal, Indian employees of Indian firms seconded to the UK won’t have to pay Britain’s national insurance payroll tax for three years, with the same terms applying to British employees and firms in India. Read more about the agreement here.
The blowback over the double taxation agreement cast a shadow over the bilateral deal, which was supposed to be a feel-good story for Starmer as he seeks to bounce back from weak local election results.
The Bank of England can get ahead of the curve with an outsized half-point cut this week, Marcus Ashworth writes. UK policymakers should acknowledge that slow and steady easing isn’t sufficient to keep the economy afloat. And sometimes, the less-risky course of action is to act decisively.
Firefighters install a temporary chimney on the roof of the Sistine Chapel. Photographer: Mario Tama/Getty Images Europe
Some 133 cardinals will gather at the Sistine Chapel today to elect Pope Francis’ successor. They won’t leave until a new pontiff is elected and there’s no telling how long the conclave will take.
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