Healey's £35bn dilemma

Good morning,

If the last couple of Budgets felt like an array of political choices from Labour, there is now less choice available to the government than ever before. A new analysis from the Institute for Fiscal Studies (IFS) has shown that rampant inflation means John Healey will have to find an extra £35bn of government spending. According to Helen Miller, director of the IFS, there is no option now for a “steady-as-she-goes” Budget.

Meanwhile, finance vacancies in the Square Mile are down 30 per cent over the last month. That’s according to recruiter Morgan McKinley. A director at the firm said “the Budget on 28 October could add to that caution”.

The FTSE 100 is set for gains this morning, and oil has dipped to below $104 a barrel as Trump looks set to import diesel from Russia.

So, here’s everything you need to know this morning. We’ll be back in your inbox at noon with Midday Markets.

Matt

John Healey might have to top up department budgets by as much as £35bn by the end of the decade to stop the real-terms value of spending being eroded by rampant inflation, the Institute for Fiscal Studies (IFS) has said.

The Chancellor has been warned that soaring borrowing costs could cause his fiscal headroom to all-but vanish, though the influential think tank has said inflation poses a bigger challenge.

The IFS has found that higher interest rates on government debt will push up borrowing by about £10bn in 2029-30, though much of this would be offset as rising inflation pushes up tax revenues. 

The UK’s blue-chip index is set to make gains on Monday morning, picking up where Friday’s rally left off. Oil prices fell in early trading, as Brent crude – the international benchmark for oil – dipped below $104 per barrel following President Trump’s plans to import Russian diesel.

City vacancies tumbled 30 per cent to 1,200 by the end of the third quarter, compared with 1,719 in July at the start of the three-month window according to recruiter Morgan McKinley.

Jobs were down six per cent quarter-on-quarter and 11 per cent annually following more jitters around employment costs and broader economic turmoil.

“Selectivity comes against a fragile business backdrop… the commercial case for each new hire is coming under greater scrutiny,” Mark Astbury, director at Morgan McKinley, said.

About 360 pubs are expected to have called last orders in the whole of 2026, with 295 watering holes having shut for good so far this year, according to research from the British Beer and Pub Association (BBPA). 

Andy Burnham has put support for pubs at the centre of his pledge to revive British high streets, but the industry body believes the Prime Minister still needs to tackle “the root of the problem”.

Within the unregulated waters of whisky cask investment schemes, there be sharks. The sector has certainly had a bad press, and there has been lots of squabbling and finger-pointing, often by those with a vested interest. Tom Bruce-Gardyne lifts the lid on this murky world for City AM’s Whisky Business.

Far from a cycling decline, unused bike parking at offices proves London’s developers have solved the wrong problem, writes Lime’s head of government relations Stef Lehmann.

The funding round values the business, which runs five clubs in Denmark, four in the UK and is building its first in Spain, at an undisclosed eight-figure sum, it said.

Rocket Padel says the UK is its biggest growth market, with court time at its flagship Battersea Power Station club 95 per cent fully booked, and the company is actively seeking further sites in London and beyond.

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