Time. to wrap up….

The UK government has paid the highest yield since 1999 at an auction of 10-year debt today.

Investors forced the Debt Management Office to accept an average yield of 5.383% on a sale of debt maturing in 2036.

Bloomberg reports:

“The auction was on the weaker side, which adds to the narrative that investors continue to be reluctant to add duration here despite attractive yield levels,” said Evelyne Gomez-Liechti, a multi-asset strategist at Mizuho International Plc.

Demand for UK mortgages slumped to a 32-month low in August as buyers were deterred by rising costs linked to the war in Iran.

Just 54,918 mortgages for new home purchases were approved in August, the Bank of England reported on Tuesday, the lowest monthly total since December 2023.

The data, which is seasonally adjusted, shows the impact of the rise in UK mortgage rates since outbreak of the war in Iran in late February began pushing up the price of oil, and sinking hopes of interest rate cuts.

AstraZeneca has made a $2bn strategic equity investment in Summit Therapeutics, to develop and test anti-cancer drugs.

In the AI world, Anthropic is telling investors that advanced AI could pose “catastrophic or existential risks to humanity”, according to reports, as it prepares for a potential $2tn (£1.5tn) flotation….

…as rival OpenAI scraps the release of a next-generation ⁠AI model after researchers raised safety concerns ⁠during internal testing.

The boss of Britain’s biggest insurer has said that homes being built now in England could become uninsurable in the future because they are sited in flood-risk areas.

Eek. US consumer confidence has fallen to the lowest level since 2014.

Pessimism is rising about the economy and the US jobs market, according to the Conference Board’s gauge of confidence – which has decreased by 6.7 points to 81.9 points.

Dana Peterson, chief economist at the Conference Board, says:

“Consumers’ write-in responses regarding factors affecting the economy were mostly pessimistic in September.

References to prices, the high cost of goods and services, and oil and gas prices in particular, rose to new heights.”

Over in the US, the number of job vacancies available has dropped.

There were 7.079m job openings available in August, according to the latest JOLTS survey, down from 7.335m in July.

Firms did take on more workers, though. Hires rose to 5.192m, up from 5.146m in July, while the number of Americans quitting their jobs was little changed at 3.066m.

Shares in UK water companies are dipping on the stock market, after UK prime minister Andy Burnham pledged to repeal a ban on the public ownership of water companies.

Speaking at the Labour Party conference in Liverpool today, Burnham cites the water industry as a symbol of what has gone wrong with Britain.

Burnham says the water companies have “siphoned out easy money while the public picked up the bill for the sewage in our seas.”

He goes on to promise tougher regulation, saying:

It stinks. I will not allow it.

Today I can confirm Angela Eagle will present a strengthened water bill to parliament. The centrepiece of that bill will be this – the repeal of Margaret Thatcher’s ideological [ban on the public ownership of water] …

It will strengthen public control. Mayors will have new powers to hold water, companies to account …

It will close loopholes used to pay excessive bonuses. Where private companies serve the public interests, we will support them. But the consequences will be clear for those who do not, including taking back control or public ownership.

Shares in Severn Trent are down 0.8%, with Pennon Group down 0.6%.

[Pennon own South West Water, who have just been fined for sewage failings].

Our Politics Liveblog has full details of Burnham’s speech:

Newsflash: South West Water has been fined more than £7.8m for committing environmental offences across Devon and Cornwall over a six-year period.

It is the largest ever fine imposed for environmental offences in the region, according to the Environment Agency.

And it follows an unpleasant wave of sewage spills, totalling many hundred in total, which took place over six years at popular bathing spots in the region.

The offences took place between January 2015 and July 2021 in locations across Cornwall and Devon: Bodmin, Harlyn, Playing Place, Polperro and Plymouth, and will be stomach-churning for anyone who holidayed in the regions at that time.

For example:

• On 24 August 2019, “untreated sewage gushed through the harbour wall on a bank holiday weekend” at Polperro Harbour.

• On 231 occasions between January 2016 and July 2021, untreated sewage was discharged onto Harlyn beach, a location popular with locals and tourists.

• At SWW’s sewage works near Bodmin, there were 336 illegal spills in the seven years to March 2020.

Clarissa Newell, area environment manager at the Environment Agency, says:

Hundreds of pollution incidents occurred at some of the most scenic locations in Cornwall and Devon, including bathing waters, a designated Special Area of Conservation and a priority habitat.

South West Water have promised the public that one pollution is too many, and our officers are out every day holding them to account.

We hope this record fine will influence a new approach for South West Water, where protecting the environment takes priority in spending decisions.

Labour plans to allow regional mayors to borrow against revenues they generate from local tourist taxes in their areas, as part of sweeping new devolution powers expected to be announced before Christmas, the business secretary has said.

Jonathan Reynolds said the government would announce the details of a new “rewiring the state” white paper before Christmas, my colleague Richard Partington writes.

As part of it, he said directly-elected mayors would be given powers to borrow against the revenues of tourist taxes to fund priorities in their local areas.

Reynolds says:

“Fiscal devolution in terms of taxation, like the visitor levy, that’s how people will use it. They will have a revenue stream they can borrow against.”

Reynolds also said the government will take into account the “significant ask” placed on businesses from tax rises at next month’s budget, as he said his department was pushing for action to cut energy costs.

Speaking in conversation with the boss of the British Chambers of Commerce at Labour’s annual conference in Liverpool, the business secretary said he had made “offensive and defensive asks” of the chancellor, John Healey, before next month’s budget.

He added:

“There’s been a significant ask of business, the prime minister used these words, in previous budgets. I think that has to be taken into consideration.”

Consumers were determined to carry on spending last month, despite high fuel prices, the latest credit survey from the Bank of England shows.

Consumer credit flows were strong in August, surprising analysts after the month-to-month change in net consumer credit – the “net flow” from lenders to consumers – hit the highest on record (measured in pounds), my colleague Phillip Inman writes.

Rob Wood, chief UK economist at Pantheon Macroeconomics, said it was significant that the net flow was the highest since the Bank started collecting the data in 1993.

The figure for August was £2.5bn in August, up from £2.1bn in July, and above the six-month average of £1.9bn.

He said the next highest was a £2.3bn net flow in consumer credit posted in January 2005.

Wood said the strength of consumer credit was “far from just a flash in the pan caused by the energy shock” when it has been trending upwards since late 2024.

After the turbulent Tory years, it seems that consumers are more willing to bet that under the Labour administration they can afford to borrow without too many shocks to derail their repayment plans.

Consumers are also using their savings to maintain their spending habits.

In a slice of good news for John Healey ahead of next month’s budget, Wood said the impact of a more resilient consumer would be felt in official figures estimating economic growth. He said growth was likely to be 0.4% in the third quarter while his 0.1% forecast for the fourth quarter could be revised upwards.

The chancellor will also have appreciated figures that showed lending to businesses remained strong.

However, Paul Dales, chief UK economist at the consultancy Capital Economics, was more circumspect, saying the consumer credit boom could soon run out of steam.

“It seems unlikely that households will continue to fund increases in their real spending by borrowing more and reducing their saving rates, as they did in August, for much longer.

He added:

“Households won’t be able to cushion the blow to their real incomes from higher energy prices indefinitely. At some point, they will have to rein in their spending. We suspect that could happen in the fourth quarter.”

Back in the pharmaceuticals world, Denmark’s Novo Nordisk has secured the rights to a new weight-loss drug developed in China.

Novo will pay up to $2.6bn to Jiangsu Hengrui Pharmaceuticals for the rights to its experimental weight-loss pill, called HRS-1596. The deal expands Novo’s pipeline through a second GLP-1 treatment deal with a Chinese partner.

HRS-1596 is approved in China to initiate Phase I clinical trials for weight management and type 2 diabetes.

The tie-up could help Novo to compete in the weight loss drugs market. It had emjoyed an early lead in this market with its Wegovy and Ozempic products, but rivals such as Eli Lilly have been grabbing market share with their own weight loss pills.

Newsflash: the price of diesel in the UK has moved closer to £2 a litre for the first time.

The average price of a litre of diesel has hit a new all-time high this morning, at 199.53p, a day after hitting a new record high of 199.18p.

Since the Iran war began, the average price of diesel has risen by 40%, as the jump in crude oil prices drove up the cost of refined products too.

Attacks on Russia’s oil refinery by Ukraine have also pushed up diesel prices, prompting warnings that motorists and businesses are facing painfully higher prices at the pumps.

Motor fuel prices across Europe have hit record levels in recent weeks, prompting calls for political leaders to take action to safeguard consumers against rising cost pressures.

Business secretary Jonathan Reynolds has suggested he’s fighting for more support for businesses with their energy costs, ahead of next month’s budget.

Asked about soaring costs in a fringe meeting at Labour conference this morning, Reynolds said:

“I go to bed thinking about industrial energy prices, and I wake up thinking about it.”

He highlighted the existing British Industrial Competitiveness Scheme which will cut costs for some firms - but hinted he would like to do more, saying:

“It’s one of the strongest causes I fight in government and I have done from day one and I continue to do that - and I think my arguments are strong.”

Jo Bertram, the chief executive of mobile giant O2’s business operation, is leaving the company after eight years, my colleagues Anna Isaac and Mark Sweney report.

Bertram, a former senior Uber executive who also sits on the board of Sainsbury’s, will be replaced on an interim basis by Matt Riley, the chair of O2 Business.

Bertram joined the telecoms company in 2018 after abruptly leaving Uber after the ride hailing service battled regulators which at the time had banned it from operating in London.

Her departure comes after seeing through the initial phase of the combination of O2 Business and telecoms group Daisy Group, which merged last year to create a £3bn business telecoms group with hundreds of thousands of customers including Sainsbury’s, the NHS and British Sugar.

In April the operation, initially branded as O2 Daisy with Virgin Media O2 holding a 70% stake, was rebranded as O2 Business.

Bertram was originally hired by Telefonica in March 2018 as chief digital and strategy officer of O2.

Two years later Virgin Media, then 100% owned by US cable giant Liberty Global, and Telefonica announced a £31bn mega merger of their UK operations.

Earlier this month the business, which is jointly owned by Liberty Global and Telefonica, reportedly kicked off a £600m cost-cutting programme including job cuts as it looks to deal with a £22bn debt pile.

A spokesman for VMO2 confirmed Bertram’s departure, saying:

“Jo has held a number of executive positions during her time within the company and played a pivotal role in the completion of the merger between O2 Business and Daisy Group, successfully leading integration activity during the first year of the new business.

We’d like to thank Jo for her leadership and significant contribution during her time at the company.”

Newsflash: Britain’s government has paid the highest interest rate since 1999 on a sale of 10-year bonds this morning.

An £4.25bn auction of a new UK gilt maturing in 2036 has just concluded, with bond investors successfully demanding an average yield of 5.383% when bidding to buy the debt.

That’s the highest yield, or interest rate, since September 1999, Reuters reports.

The auction, held by the Debt Management Office, received bids for more than three times as much debt as was for sale, showing investors were still keen to buy UK debt, but at a price….

This results follows months of turmoil in the government bond markets, driven by inflation fears, which has driven up the yield on debt traded between bond investors.

Today’s auction highlights that those moves have real implications for the government, as higher bond yields push up the cost of servicing the national debt.

Earlier this month, the UK government was forced to pay the highest interest rate for a 30-year bond since 1998.

These costs have obvious implications for the government’s spending plans, ahead of Andy Burnham’s speech to Labour’s party conference at 2pm today….

The fall in mortgage approvals last month shows that higher borrowing costs are taking a toll on activity in the housing sector, reports Paul Dales, chief UK economist at Capital Economics.

Dales told clients:

Even though the Bank of England has not (yet) raised interest rates, the further fall in mortgage approvals from 56,000 in July to 54,900 in August (the lowest since December 2023) shows that the sharp rise in mortgage rates is restraining activity.

At face, value, that’s consistent with house price inflation slowing from 1.7% in August to around 0% in six months’ time.

Newsflash: the number of mortgages approved by UK lenders has fallen to its lowest level since the end of 2023.

Just 54,918 new home loans were approved in August on a seasonally-adjusted basis, new Bank of England data shows, as rising borrowing costs deterred potential home buyers.

That’s the lowest since December 2023, and some way below the average of around 60,100 over the previous 6 months.

Stripping out seasonal adjustments and there were 54,918 mortgages approved, the lowest since January (in the post-Christmas lull).

The number of approvals for remortgaging decreased to 34,000 in August, from 34,600 in July.

The BoE’s data also shows that the ‘effective’ interest rate on new mortgages increased to 4.60% in August, from 4.45% in July.

That increase was driven by rising government bond yields over the summer, as the rise in the oil price fuelled predictions of higher inflation, forcing central banks to raise interest rates.

UK mortgage rates have nudged higher this morning, Moneyfacts reports.

They say:

• The average 2-year fixed residential mortgage rate today is 5.93%. This is up from 5.91% the previous working day.

• The average 5-year fixed residential mortgage rate today is 5.94%. This is up from 5.93% the previous working day.

This lifts the average two-year fixed residential mortgage rate to the highest since 10 July 2024, while the average five-year rate has returned to its highest since 10 October 2023.

Shares in AstraZeneca have jumped by 2% at the start of stock market trading in London, hitting a two-month high.

That puts them among the top risers on the London Stock Exchange, along with a group of mining companies including Antofagasta (+1.9%) and Anglo American (+1.75%)

In another example of the risks of AI, OpenAI is scrapping the release of GPT-6.1 Astra, a next-generation ⁠model planned for an October debut, over safety concerns raised by researchers ⁠during internal testing.

The ⁠Wall ​Street Journal reported on Monday that the model, expected to appear in ChatGPT and ⁠Codex, was designed to handle more complex tasks without human assistance.

However, it has failed OpenAI’s ‘alignment tests’, which assess whether a ​system follows human intent:

• The model showed more deception than its predecessor, including at times failing to accurately disclose actions it had or had not taken.

• It also had problems with “scope authorization”, pushing ahead with ​tasks ​without requesting user permission ​and sometimes attempting to use external tools ​or services ‌when doing so could ​be ​unsafe.

Pharmaceuticals news: AstraZeneca is investing $2bn in biopharmaceutical oncology company Summit Therapeutics, as part of a tie-up to jointly develop and test anti-cancer drugs.

Announcing the deal, AstraZeneca says the two companies will collaborate on a ‌series of studies testing their cancer treatments together.

They hope to accelerate the development of ivonescimab, a next-generation cancer treatment licensed by Summit which stops tumor growth and help the body’s immune system attack cancer.

Ivonescimab works by simultaneously blocking PD-1, which helps cancer evade the immune system, and VEGF, which tumors use to grow blood vessels, helping the immune system better find and attack cancer cells.

Susan Galbraith, executive vice president for oncology haematology R&D at AstraZeneca, explains:

“A core pillar of our oncology strategy is to broaden the reach of our ADC portfolio as the backbone of treatment across tumour types with combinations alongside next-generation immunotherapies.

Bispecifics targeting PD-1 and VEGF are rapidly advancing in development and have the potential to improve on current immunotherapies, particularly in lung, breast and gastrointestinal cancers. This opportunity to combine ivonescimab with AstraZeneca’s ADC portfolio, including with Sone-Ve, could enable new regimens that raise the bar for patients with cancer across the treatment landscape.”

Under the deal, AstraZeneca is paying $2bn to receive 12% of Summit’s shares.

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

Anthropic’s plan to float on the stock market has provided a sobering insight into the risks that AI poses, even as it attempts to pull off a massive share sale to the public.

Reuters has taken a look at Anthropic’s IPO prospectus – the legal document that outlines a company’s financial details before it floats on the stock market – and found that it includes a warning that advanced AI could be a “catastrophic or existential risks to humanity.”

The filing explains:

“Our development of highly advanced models, platforms, and applications and expansion of use cases could further increase the risk that our models cause harm.”

And following a flurry of stories about AI models going rogue, Anthropic flags that its models could conceal information and exhibit behavior resembling blackmail, and resist efforts to shut them down.

It cautions:

“Potential model awareness of our evaluation efforts creates a significant limitation on our ability to assess model safety.”

Such warnings appear across 80 pages (!) devoted to risk factors in the prospectus, almost a third of the document.

Despite these warnings, Anthropic – which created the Claude chatbot – is aiming for one of the largest stock market flotations ever, which could value it at more than $2tn.

The IPO prospectus shows that Anthropic’s revenue grew 12-fold in 2025 to nearly $4.6bn – with nearly a quarter coming from just two customers.

But… its operating loss swelled to over $8bn last year, from nearly $3bn in 2024.

The IPO is expected to take place after the US midterm elections in November, and will be a serious test of investor interest, and concern, around AI.

Yesterday, a group of senior AI executives – and two of the “godfathers” of the technology – warned governments to prepare for an AI “intelligence explosion”.

The agenda

• 9.30am BST: Bank of England mortgage approvals data

• 10am BST: UK to auction a 2036 government bond

• 1.30pm BST: Canadian GDP report for July

• 2pm BST: US house price data

• 3pm BST: US JOLTS survey of job vacancies

• 4.30pm: Bank of England policymaker Alan Taylor gives a speech