Microsoft have now resolved this issue ans services are now working as expected.

Microsoft are continuing to investigate and have provided the following further information

The majority of problems reported are for impact to Microsoft Teams. Impact may include, but is not limited to:

Microsoft Teams
- Users may be unable to send and receive messages.
- Users may be unable to create new Chats or Channels.

Other services impacted include

Exchange Online
- Users may be unable to send or receive email.

Power Apps
- Users may be unable to access the service.

Power Automate
- Users may be unable to access the service.

Some users may be experiencing problems with Microsoft 365 services, including Teams and Outlook, Microsoft are aware of the issue and are investigating.