The Papers: 'Divers bring bodies ashore' and 'jobs tax looms'

A photo of divers with a body bag is the sombre main image on the front of the Financial Times. Like most of Thursday's front pages, it reports the recovery of the remains of five people from the wreck of the superyacht carrying UK tech entrepreneur Mike Lynch, off the Italian island of Sicily. UK pay battles make the business daily's main headline which says that public sector unions are challenging the new Labour government to "repair losses" from a "decade of pay cuts".

"Labour jobs tax looms" is a headline in the Daily Telegraph, which quotes Chancellor Rachel Reeves as saying she was "shocked" by the state of public finances after official figures showed the previous government had borrowed almost £5bn more than forecast this year. "Difficult decisions" lay ahead, she added. However, the paper chooses to lead on better news: an "Alzheimer's wonder drug" has been approved for use in the UK. Lecanemab has been found to slow cognitive decline by 27% in sufferers, the paper reports.

If the Telegraph leads on good news for older Britons, the Times has got wind of potential new opportunities for the young: a possible "free movement" scheme that would allow UK citizens under the age of 30 to live and work in the EU for three years in return for reciprocal rights for their EU counterparts. Government sources have told the paper that ministers recognise they will have to "give ground" as part of a post-Brexit reset of relations. According to the paper, the new government also plans to "speed ahead with 20mph traffic zones".

Labour "has no real plan to fix UK sewage crisis", clean water campaigner Feargal Sharkey warns in the i newspaper's splash. He backs the paper's campaign for an overhaul of the water regulator Ofwat. A photo of the dapper former frontman of legendary punk band the Undertones is upstaged, however, by one of Rachel Reeves over news that the chancellor intends to keep the two-child benefit cap in place.

The Guardian's latest take on the new government's challenges is that there are "fresh calls" for the chancellor to end the two-child benefit cap. Leading the paper is a story about the National Crime Agency warning it may seek the extradition of people suspected of blackmailing young Britons over sexual images. "Sextortion" gangs are often based in west Africa, the paper says. On a happier note, the Black Blues Brothers, who hail from Kenya, pose in sleek suits, ties and trilby hats against a blue summer sky in Edinburgh in the Guardian's splash photo, which celebrates the "rising stars" of the city's fringe festival.

Grim news leads the Daily Mirror which reports the deaths of a mother and her three children, photographed together, in a "house blaze horror" in Bradford. A man has been arrested over a "suspected arson attack", it says. Meanwhile, for Hollywood stars Jennifer Lopez and Ben Affleck, "it's divorce".

Under a picture of the couple in happier times, the Daily Mail promises an exclusive look into how "J-Lo and Ben's dream unravelled". Most of its front page is devoted to the superyacht disaster under the headline "hope lost".

As early editions of the paper hit the streets, the identities of the five bodies recovered from the yacht have not officially been given but the Daily Express quotes its own sources as saying they include Mr Lynch and his daughter Hannah. Jeremy Hunt, Rachel Reeves's predecessor as chancellor, says in another headline that there is "simply no reason or excuse to raise taxes".

One MP's call for Taylor Swift to be awarded the freedom of the City of London for bringing Britain's economy a £1bn boost through her Eras Tour makes the front of Metro.

Boffins get the day off in Thursday's Daily Star as a python bares its fangs from inside a toilet bowl to illustrate a lead story about a gentleman whose private parts were snagged by a 12ft snake as he sat upon a lavatory. To dispel any doubt as to which actual parts were bitten, the paper tosses an image of a pair of plums into its flying circus of metaphors.