Crypto News: Starmer in Berlin as Cabinet Feuds Simmer

Keir Starmer has just taken to the podium in Berlin as this email lands in your inbox, following a meeting of the "quad" — the British, French, US and German leaders — this afternoon. Top of the agenda was, of course, the situation in the Middle East.

The prime minister joined the US's renewed push for a cease-fire in Gaza following Israel's killing of the Hamas leader Yahya Sinwar. "Now is the time to move on," Joe Biden told reporters after landing in Berlin for the meeting. "Move on, move toward a cease-fire in Gaza." Starmer echoed those sentiments, and added a warning to Israel that the world will not tolerate any more excuses on humanitarian assistance.

He emphasized the UK's support for UNWRA and again reiterated a call for a ceasefire in Lebanon. One area to watch for next is a decision on whether to sanction two senior Israeli ministers as part of efforts to put pressure on the country to act within international law. Starmer said at PMQs on Wednesday that he is "looking at" that option, describing comments from the pair as "obviously abhorrent." Today my colleague Ellen Milligan reveals that the UK government has issued warnings to the two ministers privately as well.

For all of its complexity and severity, Starmer may well be relieved to find himself abroad again and dealing with foreign affairs, rather than grappling with the cabinet row that has been engulfing his government at home. We set the cat amongst the pigeons on Wednesday with our scoop that cabinet ministers have been writing to him directly to protest against cuts due to hit their departments, going over the head of Chancellor Rachel Reeves.

While Downing Street continues to say this is all very normal, the true sense behind the scenes is that the government is trying to put out a fire that threatens their messaging. It might be usual to see back-and-forth between departments and the Treasury, but going over the head of the chancellor to appeal directly to the prime minister — and then the press finding out about it — is far from usual. As Andrew Marr said on his LBC show yesterday: "This is the sort of thing that brings down budgets."

And the clashes are continuing. Deputy Prime Minister Angela Rayner is still in a stand-off with Reeves over cuts to her department, I understand, even though the deadline for final spending allocations fell two days ago.

The cabinet revolt has reintroduced the "a" word back into political discourse. Reeves and Starmer repeatedly promised that there will be "no return to austerity," but that may well rely on a technical definition rather than, as ministers fear, the feeling in the country as spending decisions hit home.

Morgan McSweeney told special advisers on Tuesday that "investment" is the key message of the coming budget, rather than cuts, higher taxes, or higher borrowing. But cabinet infighting this week has made it harder for the new Downing Street chief of staff to ensure that is the message that gets through. And perhaps clashing with that investment message is what we reported earlier today, that the chancellor is looking at cutting a capital gains tax easement known as business asset disposal relief, which allows entrepreneurs to pay a reduced tax on profits, according to people familiar with the matter.

We'll have much more on the political framing — and arguing — around the budget in our Saturday read on the Bloomberg website tomorrow. Have a lovely weekend.

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David Lammy, the foreign secretary, arriving at Downing Street for cabinet on Tuesday. Photographer: Hollie Adams/Bloomberg

David Lammy arrives in China today to seek a revival of UK relations with China, even as Beijing carries out military drills around Taiwan and before the British government's own audit of the bilateral relationship.

Lammy will have talks and dinner with Chinese counterpart Wang Yi in Beijing during his two-day visit, to discuss climate and trade cooperation as well as Russia's war against Ukraine, before heading to Shanghai to meet British business leaders. The envoy will also raise national security and human rights issues, people familiar with the matter said.

Chinese Foreign Minister Wang Yi said that ties with the UK "stand at a new starting point," in the clearest signal yet that Beijing is eager for a thaw after the Labour party took power in London. But the new Labour government's plan for a deep-dive look at UK-China ties will only get underway this week.