Thames Water and other water companies could be prevented by the industry regulator from paying any bonuses, under rules due to come into effect next month.

Environment Secretary Steve Reed said new measures would stop water companies dumping a “tidal wave of sewage into our rivers while pocketing millions of pounds of bonuses”.

Regulator Ofwat has been able to stop firms using customer money to fund bonuses, but the new rules mean they could not use funds from shareholders or lenders either.

Thames’ chairman has told MPs that bosses could get millions in bonuses as part of a recent £3bn loan with the firm saying it is “critical” it keeps the staff “best placed” to improve its performance.

Thames Water is the UK’s biggest water company, serving about a quarter of the UK’s population, but has come under fire in recent years.

It has huge debts and is struggling to fix leaks, sewage spills and modernise outdated infrastructure.

Earlier this year, it secured £3bn in emergency funding, which it said would give it the space needed to complete a restructuring of its debts and attract a cash buyer.

Subsequently it picked US private equity giant KKR as its “preferred partner” to buy the firm.

Under its new powers contained in the the Water (Special Measures) Act, Ofwat will be able to ban “undeserved bonuses when high standards on the environment and financial management of water companies are not met”.

It could mean that Thames Water’s bonuses could be blocked as soon as next month.

The ban would also be retrospective, meaning bonuses paid in the last financial year could be clawed back.

“The government will ban the payment of unfair bonuses for polluting water bosses,” Reed said. “The days of profiting from failure are over.”

Earlier this week, Thames chairman Sir Adrian Montague told MPs that hundreds of thousands of pounds worth of recent bonuses for bosses had been justified.

“We live in a competitive marketplace and we have to provide the right sort of packages to these people otherwise the head hunters come knocking,” he said.

Sir Adrian said top executives could get millions of pounds in bonuses as part of the emergency loan agreement.

It’s not a boom, but it is something to be roundly welcomed.

Today’s economic figures may reflect erratic trade war factors, and bounceback from stagnation at the end of last year.

The growth may prove short lived if the gravitational pull of US tariffs and tax rises do hit hard.

The valid caveats, should not, however, get in the way of the main story here.

The UK economy did far better than doom-laden predictions for the first three months of this year.

It was nowhere near a recession.

A growth rate of 0.7% beat expectations.

It is a return to normal, healthy levels of growth, at least in that quarter.

On successive governments’ favourite metric – the growth of the rest of the G7 advanced economies – the UK will now be the fastest growing. This is subject to confirmation of Japan and Canada’s numbers in the coming days, but they will be lower.

While almost everybody expects growth to slow in the current quarter, after months of tariff uncertainty and April’s tax rises, this figure should alter the frame of thinking about the British economy.

Are millions of families still suffering from the cost of living squeeze? Yes.

Are small businesses especially in retail and hospitality under suffocating pressure from rises in employer National Insurance and the National Living Wage? Also yes.

But away from those important sectors, there is definitely resilience, and it seems even more than that.

The impact of interest rate cuts, and relative political and economic stability, may have been more much more important.

Real incomes are up, and for many businesses outside retail and hospitality, the rise in National Insurance contributions has been accommodated by a squeeze to profit margins and wage rises.

The flipside of the National Living Wage rise, is, of course, a more robust consumer amid a demographic that does spend in the shops.

The UK is a world away from the predictions of early January when widespread doom-mongering equated a rise in government borrowing rates – mainly driven by global factors – with the risk of a UK-specific mini Budget style crisis.

There are obvious challenges.

The shadow chancellor is right to say there should no champagne corks, but no bubbles were in evidence when Rachel Reeves spoke at the Rolls-Royce factory after the numbers were published.

But this number provides an opportunity for the chancellor after a growth stutter, partly self-inflicted, under this government.

A robustly growing economy, stable economic policy, falling interest rates, and a graspable positioning in the current global trade tumult as an oasis of tariff stability, are decent selling points in an uncertain world.

It is why Reeves resisted my suggestion that her welfare cuts might be negotiable after an apparent backbench revolt: “We will take forward those reforms,” she said.

The chancellor may have more work, however, in convincing businesses that growth is this government’s number one priority, given the prime minister’s focus on an immigration crackdown.

Some interesting conversations will soon occur with businesses, for example the construction companies meant to deliver 1.5m homes, and the new infrastructure which has been planned, or merely even to staff care homes.

For now it is a relief that the British economy appears resilient and robust.

It may be temporary, but we should not assume that. These figures provide an opportune moment for some optimism and a hard sell of the UK to the rest of the world.

The UK government has hit back at suggestions the tariff agreement it reached with the US last week could be damaging to China.

It said there was “no such thing as a veto on Chinese investment” in the deal.

The UK-US agreement rowed back on big hikes in tariffs on metals and cars imposed by President Donald Trump, but it also included conditions requiring the UK to “promptly meet” US demands on the “security of the supply chains” of steel and aluminium products exported to America.

Beijing fears this could see it being excluded from supplying US-bound goods to the UK, telling the Financial Times it was a “basic principle” that bilateral trade deals should not target other countries.

At a regular press conference on Tuesday China’s foreign ministry spokesperson was asked about the UK’s trade agreements with the US and India.

Lin Jian said: “As for the trade agreement… between the UK and relevant countries, I would like to point out that cooperation between countries should not target or harm the interests of third parties.”

China is the world’s second biggest economy and the UK’s fifth biggest trading partner. In 2024 total bilateral trade hit £98.4bn.

In response to the latest comments from China, the UK government said the agreement with the US was “in the national interest to secure thousands of jobs across key sectors, protect British businesses and lay the groundwork for greater trade in the future”.

Any “external provisions” in the agreement were “not designed to undermine mutually beneficial economic relations with any third country”, it said.

“As the Chief Secretary to the Treasury clearly stated, there is no such thing as a veto on Chinese investment in this trade deal.”

It added that “trade and investment with China remain important to the UK.”

Under the UK-US deal Trump’s blanket 10% tariffs on imports from countries around the world still applies to most UK goods entering the US.

But the deal has reduced or removed tariffs on some of the UK’s exports, including steel and aluminium.

The terms of the agreement say the UK will “work to promptly meet US requirements on the security of the supply chains of steel and aluminum products intended for export to the United States and on the nature of ownership of relevant production facilities”.

The US and China have been engaged in a tariffs war since the beginning of this year.

The US buys much more from China ($440bn) than it sells to it ($145bn), which is something Trump has long been unhappy with.

His reasoning in part for introducing tariffs, and higher ones on countries which sell more to the US than they buy, is to encourage US consumers to buy more American-made goods, increase the amount of tax raised and boost manufacturing jobs.

However, on Monday, Trump said talks over the weekend between the US and China had resulted in a “total reset” in terms of trade between the two countries, with tariffs either being cut or suspended on both sides.

The result is that additional US tariffs on Chinese imports – that’s the extra tariffs imposed in this recent stand-off – will fall from 145% to 30%, while recently-hiked Chinese tariffs on some US imports will fall from 125% to 10%.

The move is seen as helping to defuse the trade war between the world’s two biggest economies.