Inflation jumps to 3.5 per cent

Good morning,

Inflation is up to 3.5 per cent, driven by fuel price hikes from the war in Iran. And the debt pile has tipped over £3 trillion, with September borrowing figures above expectations at £25bn. According to Schroders, an interest rates hike in November is a “done deal”.

Meanwhile, with that crucial Budget just a week away now, top City chiefs are sounding the alarm on plans for a punishing tax raid on banks. The CBI chief executive Rain Newton-Smith has described the policy as an “own goal for our competitiveness”.

And the government has given the green light for production at the Jackdaw gas field.

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

Matt

Ministers are now scrambling around to cook up schemes to subsidise something that their policies have made too expensive. This is farce dressed up as governing. Economists have warned that a marked slump in hiring among the smallest businesses could be a sign of a very chilly winter ahead, writes City AM Editor-in-Chief Christian May.

Beneath the higher rate of inflation, the Office for National Statistics said services inflation edged up to 3.7 per cent while core inflation, which strips volatile items such as energy, rose by 2.8 per cent per cent in the last 12 months, up from 2.6 per cent in August.

City economists had long warned that a spike in global oil prices would slowly ripple through the economy given delays on the energy price cap and the time it takes for businesses to pass additional costs onto consumers. 

London’s blue-chip index is set to reverse some of its losses earlier in the week as investors weigh up the rising price of oil.

Brent crude – the international benchmark for oil prices – surged above $110 per barrel on Wednesday, resuming its advance following mixed reports on diplomatic progress between the US and Iran.

The Jackdaw site, a large offshore natural gas field 150 miles east of Aberdeen, has received the official stamp of approval from the government and is expected to supply gas to the UK “by the end of the month”.

The project was first green-lit the project back in 2022, but has faced successful legal challenges from activists over its climate impact.

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The partnership, initially announced in 2024, will be renewed and upgraded, making Airwallex the Formula 1 constructors’ champions’ AI finance partner.

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