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Good morning. Today we're talking about interest rate cuts, more trouble for Thames Water and the UK government demands for Apple.

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Big Stories

Rate and growth cuts

The Bank of England cut interest rates by 0.25 percentage points to 4.5% and halved the UK’s 2025 growth forecast to 0.75%. While the rate cut aims to stimulate economic activity, the Bank acknowledged the persistent challenge of inflation, driven in part by rising natural gas prices which have jumped in recent weeks in response to a prolonged spell of colder-than-expected weather across much of Europe. Households are also facing further cost of living pressures with the upcoming rise in water bills in April. The Bank warned that inflation - currently 2.5% - is likely to remain above target of 2% throughout the year. This move comes as the UK economy has shown signs of weakness, with growth stalling in recent months. The Bank emphasised a "gradual and careful approach" to further rate cuts, noting that inflation is following a “bumpy path” creating the need to balance economic growth with price stability.

Troubled waters

Thames Water could run out of money within weeks if a deal to restructure the company cannot be agreed, the High Court has been told. The UK's largest water supplier is burdened by £16bn debt and an aging infrastructure plagued by sewage overflows. The company is locked in a legal battle with two groups of creditors over a crucial short-term funding package, essential to prevent imminent insolvency and potentially force government intervention. This funding is crucial to keep the company operating while it seeks to raise billions of pounds in new equity investment to address its weak financial situation. A company plan has been drawn up by key investors to keep the company running until 2026 with a funding package worth up to £3bn. But it is being challenged by another group of creditors, who claim their rival ‘B plan’ would provide the same funding on better terms. The search for new investors has been hampered by the company's significant debt burden and concerns about its long-term financial viability. The threat of government intervention, potentially leading to nationalisation, looms large as the company grapples with its mounting financial challenges.

UK v Apple

The UK government has issued a secret order demanding Apple provide access to encrypted user data stored on iCloud, regardless of the user's location. This unprecedented demand, issued under the Investigatory Powers Act, compels Apple to create a "backdoor" into its encrypted cloud storage, allowing UK security officials to retrieve any user's data worldwide. Apple, fiercely protective of user privacy, views this as a serious breach of trust and is likely to resist, potentially by ceasing to offer encrypted iCloud storage in the UK. The government argues that encryption hinders law enforcement efforts in combating crime, including child abuse. However, critics argue that weakening encryption poses significant risks to user privacy and security, potentially creating vulnerabilities that could be exploited by malicious actors.

Elsewhere...

Cancelled plans: Nissan looks set to step back from merger talks with rival Honda calling into question a $60bn tie-up to create the world's no.3 automaker.

In the black: Spotify celebrated its first full year of profitability since the service was launched in 2008 after a jump in premium subscribers.

Cutting back: Beauty firm Estée Lauder is shedding twice the number of jobs than planned, pointing to uncertainty around US President Donald Trump's tariffs as cause for concern.

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