Yesterday Chancellor John Healey gave his maiden budget under Andy Burnham’s leadership, announcing measures to cut energy bills funded by a windfall tax on banks. He characterised his plan as “a budget built on fiscal discipline” fit to face “global economic storms” that are driving up up energy prices.

Does Healey’s budget represent a break with the past, or is the lower-than-expected tax on banks just another example of tinkering around the edges by another Chancellor fenced in by self-imposed fiscal rules?

Hilary Osborne, the Guardian’s money and consumer editor and the Guardian’s economics editor Heather Stewart are answering questions from readers now!

She is talking about her decision to step down as president next February now. She wants to be be able to speak freely on non-monetary policy matters, she explains.

There is never a good time to leave, but it’s embedded in the governance of the ECB that presidents, board members have to leave because they cannot be up for renewal. So the end of my term, in any event, would have been October 2027.

The reason I’m anticipating the end of my term by leaving in February of 2027 instead of October is, as I have said to colleagues, members of staff, and governors, because I want to have the freedom of speech, the freedom of expression, and the freedom to engage on matters that are not monetary policy matters.

As you all know, as president of the European Central Bank, and my colleagues on the executive boards and on the Governing Council are under pretty much the same constraints, we have an obligation of neutrality.

We comment on the situation with a focus on monetary policy. We are driven by one mandate, and we don’t get out of that mandate because that’s the price we pay for being independent.

At this time, in relation to many corners of the world, not just European corners, not just Europe, I think that my voice can help, my action can help, in relation to principles that are dear to my heart.

I don’t think that I can remain neutral. I don’t think that I can be comfortable in that neutrality at the present time, and I’m interested in the truth, and I see the truth being very ften damaged, contradicted by misrepresentation, and from the position that I have had for the last 20 plus years of my life in economic and financial matters on the international scene as managing director of the IMF, as president of the ECB, there are things that I can say. Whether people will listen or not is another story.

But I feel that I should say those things, and I cannot do so in my current position.

But don’t worry about the ECB’s continuity, she adds, describing it as a “solid” institution, a “rock”.

The ECB is going to carry on with perfect continuity of business.

A process has already started to identify my successor, there are plenty of excellent candidates, much better than me actually.

So don’t worry about continuity of business. Don’t worry about decision making in limbo. No, absolutely not.

The institution is solid, strong, like a rock, and it will continue being so.

She will be at the next press conference on 17 December.

That concludes today’s press conference.

European Central Bank president Christine Lagarde is now talking about the rise in bond yields in recent weeks.

She notes that bond yields have risen around the world, partly driven by higher inflation and expectations of higher interest rates, as well as American AI companies issuing a lot of corporate debt.

We look at the entire curve. The long end of the curve across the world, not specifically for a member state, not specifically for the whole of Europe, but across the world, has risen significantly.

This is caused by expected inflation, this is caused by the expected interest rate path, and we think that the debt issuance by some of the hyperscalers [large technology companies]… increasing the volume of long-term bonds that are issued also plays a role, but that has affected the entire market.

Second observation, and that applies also to all countries: those countries with a high debt have to factor into their fiscal policy plans the fact that interest rates are higher and will probably remain higher for a period of time in Europe. If you apply that principle, what it means is that policy measures have to be adopted as part of a plan that is always submitted to Brussels, and that has to comply with the European fiscal framework.

She reiterates the central bank’s earlier statement that it stands ready to intervene in markets if necessary.

Should market development threaten the smooth transmission of our monetary policy, including through unwarranted and disorderly market movements, we have instruments available to respond, and the criteria and conditions under which this applies are well known, they are published.

French and other eurozone bond yields have fallen following the ECB’s announcement, probably because the central bank said it stood ready to intervene in markets if “unwarranted, disorderly” moves pose a “serious threat” to its mandate to keep price growth stable.

The yield, or interest rate, on the 10-year French government bond fell more than 5 basis points to 4.89%. On Wednesday last week, it jumped above 5% for the first time since 2002.

The spread between French and ultra-safe German 10-year bonds fell 4.17 basis points to 151.42, after hitting a 15-year high of almost 178bps last week, when protests and riots brought chaos to a country that is grappling with high public debt levels.

The ECB said:

Moreover, the Transmission Protection Instrument (TPI) is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.

The TPI allows the central bank to purchase securities issued by eurozone member states whose financing conditions have deteriorated for reasons not justified by the country’s fundamentals.

The euro dipped after the ECB’s announcement, falling as much as 0.4% to $1.1105, and is now down 0.17% at $1.1133.

The European Central Bank has left its three key interest rates unchanged, as expected, after raising them twice since June.

It is expected ⁠to hike rates further in the ​coming months as policymakers seek to put a lid on rising inflation after an oil-price shock linked to the Iran war, in an effort to stop it feeding into other prices and wages.

The governing council explained in a statement:

Energy prices have continued to rise, posing upside risks to the inflation outlook and downside risks to the growth outlook. While the full effects of the energy shock are still unfolding, underlying inflation has remained broadly stable so far and wages do not show a material response at this stage. The increased magnitude and duration of the energy shock, as well as the implications for indirect and second-round effects, are likely to drive up inflation and lower growth. Financing conditions have tightened since the Governing Council’s last meeting, which is likely to weigh on inflation and growth. The Governing Council is committed to setting monetary policy to ensure that inflation stabilises at its 2% target in the medium term.

The governing council remains well positioned to navigate the current elevated uncertainty. It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, the governing council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The governing council is not pre-committing to a particular rate path.

Outgoing president Christine Lagarde will give a press conference in about 25 minutes.

The US economy grew by 3.4% in the third quarter, more than expected, while a closely watched inflation measure slowed.

Growth picked up from an annualised growth rate of 2.2% in the previous quarter, according to an advance estimate from the US Bureau of Economic Analysis.

Economists had expected 3.2% growth.

Increases in investment, consumer spending, and government spending were partly offset by a decline in exports.

The personal consumption expenditures (PCE) price index – an inflation measure that is closely watched by the US Federal Reserve increased 2.1%, down from an increase of 5% in the prior quarter. The PCE price index excluding food and energy increased 2.5%, versus an increase of 3.3% previously.

We heard from Premier Inn owner Whitbread this morning, which welcomed John Healey’s budget measures on business rates – they will be frozen for two years.

We have spoken to other, small business owners about what the budget means for them. My colleagues Sarah Butler and Joanna Partridge report:

“It is like letting the tyres down and then handing you a pump,” says James Nye, assessing the relief handed to businesses in Healey’s first budget as chancellor.

The managing director of Norfolk’s Anglian Country Inns argues that the budget made a “couple of steps towards helping” but added more labour costs for already burdened companies.

Nye, who employs 500 people at the height of the season at its 10 venues across Norfolk and Hertfordshire, was among those business owners watching Healey carefully on Wednesday, after two previous Labour budgets under Rachel Reeves had loaded extra costs on to businesses.

Healey aimed to help high street operators by removing the business rates burden from more small businesses and limiting the rise in the minimum wage for younger workers.

The chancellor put a lid on increases to business rates, so they will only rise in line with inflation for two years, and clamped down on VAT dodging by online sellers, among other measures intended to help high streets. However, some businesses argued Andy Burnham’s chancellor could have gone further.

Dean Richmond, the owner of the Pets Corner chain, says the chancellor has not fixed the “fundamental problem” that its costs are rising faster than it can increase sales.

Ireland’s economy grew rapidly for a second quarter, adding to hopes for continued expansion across the eurozone despite surging energy costs.

It expanded at a quarterly rate of 5.5% between ⁠July and ⁠September, down from 10.2% in the previous quarter, according to preliminary estimates.

Ireland’s statistics office said growth was driven in part by information and communications, which includes AI-related activity.

The government has long ‌cautioned against using GDP to accurately measure economic growth as it is routinely distorted by multinational activity. Its ‌preferred measure, modified domestic demand (MDD), is not included ​in the early estimates.

GDP is still used to calculate Ireland’s share ⁠of activity across the eurozone ​and ​can be ​subject to large revisions. ​GDP was ‌3.9% ​higher ​on a year-on-year basis in the third quarter.

The Institute for Fiscal Studies said Wednesday’s budget was “broadly the budget that many people were expecting”.

IFS director Helen Miller told journalists at a press briefing:

A relatively small cost of living package and a handful of tax rises. Borrowing higher across the rest of the decade. Nods that there are bigger things to come, including in the 10-year plan.

One surprise was the length of the scorecard. There were a whopping 98 measures. Some of this seemed to be in the spirit of the prime minister’s ‘everyday fixes’ – small measures that make things better. Sadly, there was also a lot of small, unhelpful fiddling with the tax system.

Sticking with the big picture for now, I am left thinking what I thought before the budget. Public service spending plans look extremely tight. They don’t look to me like plans that this government would want to deliver. Whether or not they are delivered matters because the spending plans underpin the plan to bring down borrowing.

Christine Lagarde, the eurozone’s top central banker, is stepping down nine months early.

The European Central Bank announced this morning that Lagarde would step down as its president on 7 February 2027; her term was scheduled to run until the end of October next year.

The ECB’s governing council thanked Lagarde warmly and gave her a long standing ovation, as it met to set interest rates across the eurozone.

Lagarde has been seen as a candidate to take over the running of the World Economic Forum, which holds its annual meeting in Davos each January. WEF founder Klaus Schwab stepped down last year after being accused of financial and ethical misconduct – which he denies.

Lagarde’s early departure fires the starting gun on the race to replace her as ECB chief, at a time when the eurozone is strugging with weak growth and above-target inflation. Potential candidates include Dutch central bank governor Klaas Knot, Pablo Hernandez de Cos of Spain, German central bank chief Joachim Nagel, and Nadia Calvino, the President of the European Investment Bank.

Lagarde joined the ECB in late 2019, shortly before the Covid pandemic. During her tenure the ECB also faced the economic consequences of the Ukraine and Iran war, and Donald Trump’s trade war.

The ECB is widely expected to keep interest rate on hold at lunchtime.

Mortgage approvals across the UK sank to a near three-year low last month, while consumer lending grew at the fastest rate in eight years.

British ⁠lenders approved 53,443 mortgages ⁠for ⁠house purchase ​in September, the ⁠lowest number since December 2023, ⁠according to the latest Bank of England money and credit data.

UK mortgage approvals for house purchase fell to 53,443 in September 2026, down 2.5% month-on-month and down a rather more troubling 19.4% year-on-year.

Economists polled by ⁠Reuters had expected mortgage ​approvals to ​dip ​to ​54,000.

Anthony Codling, who heads up equity research on UK housebuilders and global building materials at RBC Capital Markets, said:

This marks the third consecutive monthly decline, an unwelcome hat-trick, making Halloween for housebuilders more trick than treat, and takes approvals to their lowest level since December 2023. The current run-rate sits 10.8% below the five-year average and 16.9% below the ten-year average, pointing to demand that remains stubbornly subdued. The value of approvals fell even faster, down 4.9% month-on-month and 17.7% year-on-year to £13.7bn. The UK housing market is not a market with positive momentum, happy Halloween.

Mortgage lending fell to £3.9bn in September, from £4.2bn in August, below the previous six-month average of £4.9bn.

Consumer ​lending ‌grew ‌at an annual rate ‌of 9.8%, the fastest rate since April 2018. However, consumer credit fell on a monthly basis, to £1.9bn in September from £2.7bn in August. Credit card lending slowed to £700m from £1.3bn while other borrowing such as car dealership finance and personal loans declined to £1.2bn from £1.4bn.

Volkswagen has slumped to its biggest loss in more than a decade in the latest quarter, as Germany’s largest carmaker suffered from falling sales in China.

The Wolfsburg-based carmaker lost €4.2bn (£3.5bn) before tax between July and September, the highest since the end of 2015, it said on Thursday. Its operating loss was €5.8bn, driven by a previously announced impairment of €6.4bn on its stake in the Porsche sportscar subsidiary, and another €1bn on its Chinese operations.

Sales in the first nine months of 2026 fell 11% to 5.9m, with a “shrinking” market in China to blame, according to Arno Antlitz, Volkswagen’s chief financial officer.

Antlitz said the company’s earnings were “too low to continue investing strongly in our future”.

Volkswagen, which used to vie with Toyota to be the world’s largest carmaker, is cutting as many as 100,000 jobs, many of them in Germany, as it tries to turn itself around and fight back against the wave of Chinese manufacturers that dominate the electric vehicle industry.

Volkswagen blamed its decline in profitability on a long-running price war in China that is spilling into other markets around the world, as well as the increased share of lower-margin electric vehicles.

However, Micheal Dean, senior autos analyst at Bloomberg Intelligence, said the carmaker’s guidance suggested a “sharp rebound” was likely in the last three months of 2026 after a “messy” third quarter. He said:

An 11% higher European order book and Audi recovery underpin the 4Q improvement and bode well for 2027 as restructuring savings build, helping offset China weakness, BEV [battery electric vehicle] mix margin dilution, rising costs and negative pricing.

Britain’s hospitality sector has breathed a sigh of relief after the budget.

Premier Inn owner Whitbread said this morning that the ⁠budget will significantly ease its cost burden, and now expects ⁠its business rates ⁠bill ​to be as much as £60m lower over the next couple of years.

John Healey froze the level of ‌business rates paid by hospitality, leisure and retail businesses for two years, until 2028, so that no property faces an above inflation increase.

Whitbread, one of the hospitality sector’s most vocal critics of last year’s budget, was facing a hefty increase in costs due ‌to the sharp rise in business rates announced by Healey’s predecessor Rachel Reeves.

Here are some more ⁠details:

Whitbread expects its total business rate payments to rise by just £7.5m ⁠to £12.5m over the coming year, against its previous estimate of £35m, with a similar benefit the following year.

It expects business rates payments to ​be between £45m and £60m lower than previously expected by fiscal 2029.

Dominic Paul, the chief executive, expressed relief:

The business rate measures announced in the UK budget will do much to mitigate the damaging impact of the past two budgets on the hospitality sector, and we are grateful that the government has listened to our concerns.

Limiting the increase in business rates over the next two years to inflation, together with a more reasonable increase in the national living wage and national minimum wage, will make a significant difference to our business. This provides further momentum as we execute our five-year plan which is on track to deliver a material increase in margins, cashflow and returns for shareholders.

John Healey said on Wednesday that higher inflation and interest rates had hit the government’s finances, ratcheting up the government’s interest bill by £14bn this year alone, but promised to stick to Labour’s fiscal rules.

The Office for Budget Responsibility (OBR) said the chancellor would meet the most important rule – to balance day-to-day spending with tax revenues – with a diminished headroom of £15bn by the target date of 2029-30, against the £24bn his predecessor Rachel Reeves had built up in the spring.

Borrowing is scheduled to be higher than expected in the short term, but the chancellor promised to rebuild the buffer against the rules to £22bn by the end of the five-year forecast period.

Investors and analysts said the budget left Britain’s fiscal outlook largely unchanged, which explains the muted impact on financial markets.

Barclays currency strategist Lefteris Farmakis said:

A ’continuity budget’ with fiscal headroom upside potential pushes the pound’s perceived fiscal risks to the background.

Matt Tickle, chief investment officer at the insurance group Howden Employee Benefits, said:

The new chancellor has successfully navigated his first budget without spooking gilt markets. Albeit, that is partially thanks to helpful changes to OBR growth assumptions, which have offset the falling fiscal headroom due to rising yields. We should also remember that the substantial changes have been pushed back to the 2027 spending review.

The chancellor was facing an uphill struggle given elevated bond yields seen in both the UK and across the G7. Bond yields will continue to face short term headwinds from global events in the spectre of rising energy prices and knock-on effects to broader inflation. However, the combination of fiscal discipline and the Bank of England’s sensible overhaul of its quantitative tightening program should support lower gilt yields over the medium term. We remain positive on gilts over a two-year timeframe.

The pound is steady and gilt yields dipped, a day after John Healey delivered a cautious set of tax and spending plans in his maiden budget to help households hit by “global economic storms,” as he put it, which had little impact on markets.

The stock market has risen, with the FTSE 100 index 42 points ahead at 10,736, a 0.4% gain. Shell is the top riser, up 3.2%, after profits in the latest quarter doubled.

Sterling – the best performing major currency against the dollar this month with a 0.5% gain – dipped 0.1% against the greenback to $1.3310. It has gained a similar amount against the euro in October.

Government borrowing costs also eased. The yield on the 10-year benchmark gilt dipped 3.7 basis points to 5.308% this morning while two-year, five-year and 30-year yields are also down.

Jonas Goltermann, chief markets economist at Capital Economics, said the “No harm” budget has kept gilts out of the firing line.

The UK budget announcement has proven the non-event that newly-minted chancellor Healey had signalled in advance. While his first budget is hardly inspiring, it contrasts favourably with the initial efforts of some of his recent predecessors. By sticking to a gradual fiscal tightening path, and to the expectations set over the past couple of months for a muddle-through budget, Healey has probably done enough to keep the gilt market on side for now.

We think that gilt yields will fall over the coming year as the UK’s fiscal risk premium remains contained and the Bank of England policy takes a less hawkish path than money markets discount.

The chancellor said he will raise taxes on banks, gambling, savers and landlords, while also tightening VAT rules for online marketplaces. Its £4.4bn cost of living support package has been criticised as “badly targeted” by the Resolution Foundation this morning, though.

Speaking on BBC radio 4’s Today programme this morning, Healey vowed to cut the welfare bill before the next election, with a “tough” approach to young people who do not accept support to get a job or training.

Lloyds Banking Group’s chief financial officer William Chalmers said the bank hopes that the tax increase on banks announced in the budget is a “temporary measure,” as the lender’s quarterly profits doubled.

John Healey used the budget to double the additional levy banks pay on their profits, to 6%.

The additional bank tax will only last for 15 months and marked a less significant rise than some in the industry had feared. Banks’ share prices were among the highest risers in the blue chip FTSE 100 index on Wednesday.

This morning, the Lloyds share price fell as much as 6% in early trading, and is now down 3.1%, despite the bumper results. Jefferies analysts say revenue missed expectations by 1%, and the net interest margin was also below forecasts.

The bank’s pre-tax profits in the latest quarter doubled to £2.3bn, with a 10% rise in net interest income, as the bank continues to benefit from higher interest rates. The figure was flattered by a £800m hit it took on motor finance provisions this time last year which was not repeated, thereby boosting the year-on-year comparison.

Chalmers said:

We lend out 99 pence of every pound we receive in deposits and our ambition is to do more. In this context, we know that the increase in the surcharge announced by the chancellor yesterday, we recognise that tax is a matter for the government. The fiscal environment is challenging.

Ultimately, it is important that the UK banking sector is able to deliver banking services to businesses and households and communities in a cost effective way.

In order to promote UK growth, it is also important that the sector is internationally competitive and not disadvantaged compared to other financial centres. Additional taxes make both of these objectives harder to achieve. We therefore very much hope that yesterday’s tax increase is indeed a temporary measure to help ensure the business environment remains consistent with supporting long term investment.

Richard Hunter, head of markets at the trading platform interactive investor, said:

With provisions for the motor finance investigation all now but buried and with higher income flowing through, Lloyds has enjoyed a bumper quarter which puts the bank in prime position to meet its full year targets.

Some of the clouds which have been overhanging the sector leading up to the budget, and the domestic banks in particular, have now partially parted. The increase to the bank surcharge was less than feared, manageable and temporary and led to a small relief rally in Lloyds’ shares yesterday. Other concerns also remain on the back burner, with the level of defaults and arrears low and stable, although in typically conservative fashion Lloyds has increased impairment provisions for the quarter to £313m, or £930m in the year to date.

This of course anticipates potential rather than actual losses, such that releases are possible in the future should the bad debts fail to materialise. The higher figure is based on several scenarios, such as the inflationary impact of the Middle East crisis, lower GDP growth in the UK, a rise in unemployment and limited gains in residential and commercial property prices. Even so, at the moment, there are few if any signs of deterioration across its lending book.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The £4.4bn cost of living support package delivered by John Healey’s budget on Wednesday is “badly targeted,” which means that even families receiving help face higher energy bills than during the last energy price shock, according to the Resolution Foundation.

The poorest half of households will gain £158, on average, from support measures this year and next – just £14 more than the £144 received by the richest half – highlighting a “complete failure to target help at those who need it most,” the think tank said.

Typical energy bills net of support are forecast to be £1,750 this year (2026-27) – higher in real terms than during the last energy price shock (2022-23) when net bills were £1,685.

The chancellor raised taxes on banks and landlords to fund a £100 winter handout for 20 million families as official forecasts made clear there is no end in sight for the cost of living crisis.

The Resolution Foundation’s analysis found that UK tax rises stand out globally. The UK’s internationally remarkable consolidation in its public finances, touted by the chancellor in his budget speech, is entirely due to a rising tax take during the current parliament. The £76bn improvement in the UK’s primary balance – the gap between receipts and non-interest spending – between 2023-24 and 2028-29 is more than fully accounted for by £107bn of higher tax revenues.

Whitehall gets a bigger boost than households. The budget included a £9bn top up to departmental budgets over the current spending review period – twice as much as the £4.4bn cost of living support package.

Past gain, future pain for living standards. Median real annual disposable incomes for working age households are set to grow by a paltry £600 over the course of the Parliament. Worse still, those gains are already behind us. Between now (2026-27) and the end of the parliament (2028-29), typical incomes are forecast to fall by £1,050 (3%).

Ruth Curtice, chief executive of the Resolution Foundation, said:

Faced with a tough backdrop amid global economic turmoil, the chancellor delivered a scattergun budget that did little to address the sharp challenges facing Britain. Cost of living support is being spread far too thinly and will leave even those families receiving help facing higher energy bills than they did during the last energy price shock.

Stepping back, this parliament is increasingly looking like one of two halves, which yesterday’s budget did little to address. The first half has been marked by rising living standards, solid economic growth and extra funding for public services – funded by huge tax rises – none of which was enough to prevent dramatic half-time substitutions in Downing Street.

The new occupants will hope for better political fortune in the second half, but it could prove tough going against a projected £1,000 fall in disposable incomes. A more dramatic change of tactics may be needed, and we did not learn how the government will choose between public service ambitions and household incomes. Next year the choices will unavoidably get starker.

The US Federal Reserve left interest rates unchanged on Wednesday during its last board meeting before the midterm elections, keeping rates at one of the highest pre-election levels seen in over 20 years.

Two out of 12 board members voted against the pause, preferring to raise rates by a quarter point this meeting, the Fed board said.

Last month, Fed officials raised rates for the first time since 2023, citing rising inflation, bringing rates to a range of 3.75% to 4%. Inflation has hovered for years above the Fed’s target rate of 2%, and for most of this year, the annualized inflation rate has remained above 3%.

Though inflation rose higher in September, going from 3.4% in August to 3.7%, the pause signals the central bank is taking a wait-and-see approach ahead of the midterms next week.

During a press conference on Wednesday afternoon, the Fed chair, Kevin Warsh, told reporters that the upcoming election played no role in deliberations.

Today, the European Central Bank is also expected to keep rates unchanged at the end of its meeting.

The decision is expected to be overshadowed by questions about bond-market turmoil in France and ECB president Christine Lagarde’s future.

The eurozone’s central bank has already raised ⁠rates twice since June and is expected ⁠to hike further in the ​coming months as policymakers seek to prevent an oil-price shock linked to the Iran war from feeding into other prices and wages.

The UK oil and gas giant Shell doubled quarterly profits to $10.8bn between July and September, the highest since 2022, after the Middle East conflict led to energy shortages and drove up the price of oil and gas.

The company said this morning that it will hand back more cash to shareholders, lifting its quarterly share buyback programme to $5bn from $3bn.

In financial markets, oil prices have fallen amid hopes for fresh peace talks. US vice president JD Vance sought to revive negotiations by sending a letter to the Iranian Security Council chief Mohsen Rezaei, the Wall Street Journal reported.

Brent crude, the global oil benchmark, declined 0.6% to $114.62 a barrel.

The Agenda

• 9am GMT: UK joint water regulator report on company performance

• 9.30am GMT: Bank of England consumer credit and mortgage approvals for September

• 10am GMT: Eurozone consumer confidence for October

• 10.30am GMT: Institute for Fiscal Studies verdict on UK budget

• 12.30pm GMT: US GDP for third quarter

• 1.15pm GMT: European Central Bank interest rate decision

• 1.45pm GMT: ECB press conference