Iran war impact ‘not as big as feared’ in economic boost for Burnham

The war in Iran has done less damage to the UK’s public finances than was first feared, Andy Burnham will reportedly be told in what will be a boost to the incoming prime minister - but he is still facing a major black hole in the public finances as a result of unfunded defence pledges.

Mr Burnham is expected to be briefed by the Treasury in within days about the economic situation facing the UK, with sources telling the Financial Times that the conflict in the Middle East - which sent oil and gas prices spiralling and triggered an increase in inflation - has only dealt a modest blow to the £23.6bn “headroom” built by the chancellor at the last budget.

The news will come as a boost to Mr Burnham, who is widely expected to take over from Sir Keir Starmer in the coming weeks, and makes it less likely that he would be forced to put up taxes in the Autumn budget.

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James Reynolds3 July 2026 11:00

Watch: Iran begins public mourning for Ayatollah Khamenei with funeral to draw 20 million

James Reynolds3 July 2026 10:45

Watch: Body of late Iranian supreme leader Ayatollah Khamenei arrives in Tehran as thousands gather to pay tribute

James Reynolds3 July 2026 10:15

What does Khamenei's funeral mean for Iran?

Iran's ruling clerics are preparing days of mass funeral rites for Ayatollah Ali Khamenei as a show of public devotion to the Islamic Republic and proof that its revolutionary fervour still burns strong.

“The large public turnout at the funeral procession of the martyred leader and the other martyrs will, in effect, be another referendum for the Islamic Republic,” Qom Friday prayer leader Ayatollah Mohammad Saidi declared to state media.

To make their point, authorities hope to mobilise millions of supporters to flood Iran's cities, laying on transport, accommodation and food, to proclaim the might of their theocratic state after it survived what they saw as an existential war.

But behind the veneer of unity and devotion, public support for the Islamic Republic has worn paper thin, analysts say.

Across the country, many Iranians are tired of decades of sanctions throttling their economy and angry at the repression meted out in the name of a 1979 revolution that only older people in a mostly young population can remember.

When people poured onto the streets in December and January in demonstrations triggered by inflation, many were chanting for the death of Khamenei and authorities could only crush the unrest by shooting thousands of protesters.

After news of Khamenei's killing began to circulate in the first days of the war, Tehran residents reported sounds of cheering erupting from behind the windows of houses and apartments in parts of the city.

James Reynolds3 July 2026 09:30

Ayatollah's son not expected to attend funeral

Mojtaba Khamenei is not expected to attend his father’s funeral in Tehran on Saturday due to security risks, according to reports.

Millions of people are set to attend the delayed six-day funeral for Ayatollah Ali Khamenei, which begins this weekend in the capital of Iran.

But his son will probably avoid the weekend ceremony due to threats from Israel and uncertain ‘surveillance risks’, according to Ayatollah Kakim Elahi, the current leader’s representative in India.

Elahi told India today that the younger Khamenei “wants to come out” and meet people, but security will not allow it.

"They said 'it is very dangerous and we cannot provide security for him'. I think he will not come out," he added.

Mojtaba Khamenei is understood to have been severely injured in the strike on a government residence in Tehran that killed his father, wife and 14-month-old daughter on 28 February.

James Reynolds3 July 2026 08:45

International delegates participate in a farewell ceremony for Iran's late Supreme Leader Ayatollah Ali Khamenei

Alisha Rahaman Sarkar3 July 2026 08:30

Iran speaker ties Khamenei's revenge to ending US and Israeli 'oppression'

Iranian parliament speaker Mohammad Bagher Ghalibaf has claimed that avenging former supreme leader Ali Khamenei meant freeing Muslims from oppression at the hands of the US and Israel.

"Without a doubt, avenging the martyred leader of the revolution means nothing other than freeing all Muslims from the oppression of the United States and the Zionist regime," Ghalibaf said during a meeting with senior Amal Movement official Khalil Hamdan.

Ghalibaf also said the "great lesson" from Khamenei's leadership is the need for Muslims and Shi'ites to remain united.

Alisha Rahaman Sarkar3 July 2026 08:00

Iran war has created growing rift between Trump and Saudi Crown Prince: report

A widening rift has opened up between Saudi Arabia and the United States because of the war in Iran, a report claims.

Officials told the Wall Street Journal the partnership between Washington and Riyadh is souring over disputes on how President Donald Trump has handled the war, which began after joint US-Israel strikes on Iran in February.

The US is reportedly now considering reducing its military presence in Saudi Arabia and instead putting its forces in countries it feels were more supportive during the war, including Israel and Jordan, according to the WSJ.

More here.

Alisha Rahaman Sarkar3 July 2026 07:30

Iran's Revolutionary Guard deploys special forces to track ships

The Islamic Revolutionary Guard Corps has reportedly deployed special forces along Iran's Persian Gulf coastline to identify vessels transiting the Oman-side route through the Strait of Hormuz before they enter the waterway.

According to the sources, the Guard operatives are also attempting to obtain, through Omani sources, the schedules and transit coordination details of ships using the southern route through the Strait of Hormuz, Iran International reported.

The sources said the Guard special forces are equipped with land-based, naval and aerial intelligence-gathering systems and have recently been assigned to identify in advance any vessel planning to use the southern route and issue warnings about its passage.

Alisha Rahaman Sarkar3 July 2026 07:00

Alisha Rahaman Sarkar3 July 2026 06:30