Closing post
Time to wrap up…
John Healey should “stay the course” and continue repairing the UK’s public finances, the International Monetary Fund’s top economist has said, after the fund lifted its growth forecast for Britain.
Little more than a fortnight before Healey’s first budget, Silvana Tenreyro, the IMF’s economic counsellor, said the UK “stands out” among G7 countries in having a plan to narrow its deficit.
“The UK has already started a consolidation process,” she said. “The message for the UK is simply, stay the course.”
The owner of Phase Eight, Hobbs and Whistles has said its websites and IT systems have been hit by a cyber-attack that may have compromised customers’ personal data.
The South-African listed TFG London said it identified the “cybersecurity incident” at the three UK-based retail chains on Sunday. Its two other UK brands, Inside Story and White Stuff, are not affected.
TFG said its stores had stayed open and trading but some of its IT systems “remain unavailable” and it had paused all online orders as a “precautionary measure”.
An “investigation is ongoing, including establishing whether any personal or other sensitive information has been compromised,” the company said.
In other news…
The UK’s cost of living squeeze means fewer people plan to ringfence money for holidays abroad next year, the travel industry has warned.
The new Your First Home programme for first-time buyers could increase the number of houses British builder Bellway produces each year by 10%, its boss has said.
US stock market joins chip sell-off
The chip sell-off is continuing in the US stock market today – the blue chip S&P 500 share index is practically flat, down by 0.02%. But the tech heavy Nasdaq fell by 0.4% at the opening bell.
Chip designer Nvidia has slipped by 0.9%, while Micron is down by 4.7%. AMD is also down by 2.7%.
Whitbread CEO says UK tax hikes mean new hotels were scrapped
The boss of Premier Inn owner Whitbread has blamed UK tax hikes for forcing the firm to cut back on planned UK hotel investments.
Dominic Paul, chief executive of the hospitality giant, said the industry has been “hammered” by higher taxes and labour costs linked to recent budgets.
And in a bit of pre-Budget pressure, he urged the government to freeze property taxes.
Paul told the Press Association:
“We need this Budget to be a turning point for the industry.
“What we have seen in recent budgets meant that we have had cut potential investments in hotels, which would have created more jobs.”
According to Bloomberg, the Premier Inn-owner is shouldering an additional £100m in tax costs; last year’s budget ended pandemic-era business rates relief and introduced higher property valuations from April 2026.
Your First Home scheme ‘could boost Bellway’s house output by 10%’
The new Your First Home programme for first-time buyers could increase the number of houses British builder Bellway produces each year by 10%, its boss has said.
Faced with a chronic shortage of homes, the government has made housing one of its top priorities and Andy Burnham’s surprise announcement of the YFH scheme a fortnight ago sent housebuilders’ shares soaring by more than 10%.
Jason Honeyman, who has led Bellway since 2017, welcomed the new programme, which will be more targeted than previous help-to-buy initiatives. It features household income caps to exclude those with big salaries, and price caps to ensure people can only buy modest houses.
He said:
Based upon our past experience with help to buy, the new scheme has the potential to boost volumes by around 10%, and with a market recovery, provide a path back to at least 10,000 homes a year and a return on equity of 15%.
Full details of the scheme, including the launch date, are expected be announced by John Healey in his first budget as chancellor on 28 October.
Goldman Sachs earnings beat forecasts; equities traders revenue soars
Goldman Sachs’ earnings for the third quarter have beat forecasts, with net income of $5.3bn for the period – ahead of expectations of $4.2bn and almost 30% higher than a year ago.
The US bank’s equities traders performed particularly well, with their revenue up 72% to $6.4bn compared with the same time last year.
However, earnings from its fixed income, currencies and commodities trading fell 1% to $3.5bn.
Shares in Goldman are up by 3.4% in pre-market trading.
The FCA CEO has admitted that new rules meant to stamp out bullying and sexual harassment won’t be enough to change working culture across the City.
The Treasury Committee pushed Nikhil Rathi for his views on how regulation would influence behaviour of bad actors still operating in the financial services industry.
Labour MP Julie Minns referred to the committee’s 2024 Sexism in the City inquiry, which discovered there was “a very stark gender pay gap, harassment and widespread sexual harassment, bullying, misogyny persisted across the industry. It was a broken system of whistle blowing and widespread misuse of NDAs.”
She asked whether FCA rules and guidance, including a recent decision to expand its it’s so-called non-financial misconduct rules beyond banks, to hedge funds, asset managers and insurers was “ever going to be sufficient to change the working culture in this sector”.
Rathi responded, saying: “No, not on their own.”
He explained some cases would remain matters for the police and other authorities.
Rathi added:
We can’t do it on our own. There’s been other legislation that’s come through and that’s come into force, including for all employers around prevention of, of harassment. And at the end, the tone on this comes from the leadership of organisations.”
Under the expanded financial misconduct rules, companies are expected to report any serious cases of non-financial misconduct to the regulator.
They’re also required to pass on reports of bad behaviour – including racism, sexual harassment, violence and intimidation – to that person’s potential future employer, to help prevent cases of “rolling bad apples”, where rogue bosses move to new firms without consequence.
Updated
FCA boss urges small businesses to take out cyber insurance
The Financial Conduct Authority’s CEO has warned every small City business to take out insurance against growing cyber security risks from the booming AI sector.
Speaking to MPs on the Treasury Committee this morning, Nikhil Rathi said he recognised that, out of the roughly 45,000 firms that the regulator supervises, “not all of them are going to be able to invest” in frontier AI technology in the way larger companies can.
The panel of FCA executives referenced the fact that they, and some of the bigger companies they supervise, had been given access to Anthropic’s now infamous frontier AI model, Mythos - which has been credited with being able to rapidly identify gaps in company’s cyber security system - under Project Glasswing.
AI models like Mythos, Rathi explained, posed both an opportunity and a threat.
The FCA chief said:
One message I’d give to every small businesses, you should consider making sure you are insured.”
He added:
Cyber insurance is absolutely fundamental and businesses, large and small, must consider their insurance footprint, just as they would think about employer liability insurance and other forms as an absolutely core requirement.
And the cyber insurance market is actually anchored in the UK and Lloyd’s of London. It’s active, it’s open. “
Updated
JPMorgan Chase earnings miss expectations
JPMorgan has reported a rise in its third-quarter profit, but missed expectations after the US bank reported a slowdown in its fixed income trading division.
The biggest bank in the US said its net income landed at $15.4bn for the quarter, below expectations of $16.3bn.
Revenue from its fixed income division dropped 4% compared with the same period last year, the bank said – bringing total trading revenue to $10.3bn for the third quarter.
Chief executive Jamie Dimon said in a statement:
The U.S. economy continued to be fueled by strong business investment and ongoing consumer spending. However, large fiscal deficits, sticky inflation, elevated asset prices, rising interest rates and geopolitical conditions continue to shift under the surface. These forces may be manageable, but we remain prepared for a wide range of outcomes.”
Shares in JPMorgan are down by about 3% in pre-market trading. Goldman Sachs and Citigroup will also be reporting their earnings later this afternoon.
Updated
Rogue AI models may 'self-replicate' to hijack household devices, Anthropic says
Claude developer Anthropic has warned that rogue “AI worms” will soon be able to hijack household smart devices such as ovens and TVs.
The company said in a blog post on Monday that AI agents could be “months away” from “self-replicating” across “internet-of-things” devices, such as smart ovens and off-brand Android TVs.
It is the latest in a series of warnings by AI researchers and companies, as developments in the field continue at pace.
Anthropic said in a research post that it is “seeing signs of life for AI worms.”
We don’t yet have a full rogue replicator, but agents are becoming increasingly capable of completing the individual steps in the replication chain (and passing on their adaptations to future copies of themselves).
…It’s uncertain exactly what form autonomous AI replication will take. It could be a slow, distributed “digital slime mold,” living on relatively insecure compute. It could also be a powerful cyber model that breaches datacenters at a high pace, or a model that scams people for compute credits.
Smart devices in homes could be the first target for attacks as they are connected to the internet and historically have had minimal security measures in place, Anthropic said.
Hobbs and Whistles owner hit by cyber-attack
The owner of Phase Eight, Hobbs and Whistles has said its websites and IT systems have been hit by a cyber-attack.
The Foschini Group (TFG) told its investors that it had identified a “cybersecurity incident” on 11 October which affected some of its IT systems, specifically its Phase Eight, Hobbs and Whistles brands. It said its Inside Story and White Stuff brands were not affected.
The company, which is listed in South Africa, said in a statement to the stock exchange:
The Group immediately activated its incident response and business continuity plans. TFG London has engaged external cybersecurity specialists to contain the incident. The incident has been reported to the relevant UK authorities.
TFG London’s stores remain open and trading, although several of its IT systems remain unavailable. The Group’s operations in TFG Africa and TFG Australia run on separate systems and are not affected.
The investigation is ongoing, including establishing whether any personal or other sensitive information has been compromised. Should the investigation establish that such information has been compromised, TFG London will notify affected individuals or organisations, as appropriate.
The Board will continue to assess the situation and will communicate any material developments by way of a further SENS announcement if required.
It comes just a week after hackers gained access to the app system at the fashion retailer Asos, sending a push notification to thousands of customers.
Updated
UK holiday demand may have peaked amid cost of living squeeze, says travel industry
The UK’s cost of living squeeze means fewer people plan to ringfence money for holiday abroad next year, the travel industry warned on Tuesday.
Despite war, wildfires and EES border checks, the numbers of Britons taking holidays climbed back to pre-pandemic levels this year – but rising costs may mean the numbers have peaked, according to an annual travel industry report.
Numbers taking holidays both at home and abroad continued to rise, although late bookings and shorter city breaks have been an increasing feature of holidays through 2026, according to research from the industry body Abta.
Updated
Court date set for legal challenge to FCA's £9.1bn motor finance compensation scheme
A court date has finally been set for a legal challenge to FCA’s £9.1bn motor finance compensation scheme.
The Upper Tribunal has confirmed it will hold a hearing from 16 to 26 February 2027, which means consumers will continue waiting for compensation.
The scheme is being challenged by lenders - Volkswagen Financial Services, Mercedes Benz Financial Services, and Crédit Agricole Auto Finance – as well as a consumer group, Consumer Voice.
The lenders and Consumer Voice are coming at this from different angles (lenders arguing it is unfairly punitive, and Consumer Voice arguing that it short changes victims), adding to the complexity of the legal challenge.
The FCA continues to insist that its scheme is “the quickest, fairest and most efficient way to compensate consumers” and has pledged to “defend it robustly.”
However, the FCA is also warning lenders to prepare for the possibility that this could all fall apart, leaving them to handle individual claims through the court system, which could prove to be far more expensive and draw out the process even further:
Firms should plan for the possibility that, if the scheme or parts of it are quashed, there may be no motor finance compensation scheme and no complaint handling pause. In that scenario, lenders would need to be operationally and financially ready to resolve complaints through the usual complaint-handling process and within the usual statutory timescales.
We expect lenders to plan rigorously for this scenario, make the necessary financial provisions and engage with their auditors.”
AI ranked as biggest global risk by insurers - ahead of climate change
Artificial intelligence is now ranked as the biggest global risk by insurance experts, according to the insurer AXA.
Climate change is still considered the biggest risk by the general public, with AI & big data ranked second, up from seventh last year.
But among insurance experts, AXA found that AI is considered the top risk, bumping climate change to second place.
AXA chief executive Thomas Buberl said that “living in a world of ‘polycrises’ has become the new normal”.
For the first time, experts worldwide rank risks related to artificial intelligence and big data as their top concern, ahead of climate change. This does not mean that climate is less worrying – it remains the number one risk for the general population, with unprecedented levels of perceived vulnerability – but it shows that AI is now seen as a structural risk, on a par with major environmental and geopolitical threats.
Among both experts and the general public, 34% of AXA’s survey respondents said they identified AI as the top risk because of issues related to human rights, bias and the misuse of data. AI’s impact on employment was also a frequently cited reason, as well as the “black box effect” – the inability to understand or explain decisions made by AI systems.
AXA’s findings echo a warning today from the IMF that the threat of an AI sell-off in stock markets is affecting the world’s financial stability.
Athanasios Vamvakidis, the deputy director of the IMF’s monetary and capital department, said:
The exposure of the rest of the world to US assets, particularly AI, is the highest it has ever been. So this is supporting the global economy through wealth effects today; but if we get a market correction it could have broad implications.”
An AI crash was one of three “salient risks” to stability identified by the IMF, alongside rising government borrowing costs and the threat of a big cyber-attack.
It called this trio of factors “plausible near-term catalysts for a sharp tightening of financial conditions and market turmoil”.
Updated
UK government bonds are rallying this morning, after the IMF said it had increased its growth forecast for the country this year.
Yields (which fall when bond prices rise) are down by about 5 basis points for the 10-year gilt, and down by 4 basis points for the 5-year.
There have been some dramatic moves in the global band market recently, largely thanks to the persistently high cost of oil. Last week, the yield on 30-year UK bonds hit 6% for the first time since 1998, before easing slightly later in the day. Its yield has since fallen back to about 5.81%.
Kingfisher appoints Sebastian Gundel as new CEO
Kingfisher, the owner of DIY retailer B&Q, has appointed Sebastian Gundel as its new chief executive.
Gundel, who was most recently chief executive of the German home improvement company OBI, will start on 1 February 2027.
Gundel said in a statement:
It is a privilege to be appointed chief executive officer of Kingfisher. I have long admired the strength and diversity of Kingfisher’s retail banners, its scale and its strategic ambition. The industry is evolving rapidly, creating significant opportunities across trade, digital, marketplaces, services and new customer propositions. I am much looking forward to working with the team to build on those opportunities and create sustainable long-term value.”
Kingfisher’s current chief executive Thierry Garnier, who has been in his post since 2019, will remain in the job until the end of the year. He is leaving to take the helm at Ahold Delhaize – one of Europe’s largest supermarket chains.
He said:
It has been an honour to lead Kingfisher, and I am proud of what our teams have achieved together. Sebastian brings deep sector expertise, a strong customer focus and a proven track record of performance. I am confident that he will successfully lead Kingfisher through its next chapter.”
European stock markets have opened tentatively higher this morning. The UK’s FTSE 100 is leading the pack so far, up by almost 1% – its best performers are the chemicals company Croda International, up 3.6%, and JD Sports Fashion, which is up 3.1%.
Premier Inn owner Whitbread is up 2.9% after it urged its shareholders to vote against an activist investor demanding a seat on its board.
The Stoxx Europe 600 is up by a modest 0.3%. The German Dax is up 0.2%, while the French Cac 40 is up by 0.4%.
Europe is being weighed down by some of its biggest tech stocks, including Dutch chip designer ASML, which is down 3.4%, and German Infineon Technologies, which is down by 4.9%.
Updated
UK grocery inflation rises to 2.5%
In some unwelcome news for shoppers – UK grocery price inflation has risen again, up to 2.5% in the four weeks ended on 4 October, up from 2.3% in the prior month, according to new figures from Worldpanel by Numerator.
Fraser McKevitt, head of retail and consumer insight at Worldpanel by Numerator, said:
With the autumn budget fast approaching, the cost of living continues to weigh heavily on the minds of shoppers. And the cost of filling up a car is only adding to the pressure on household budgets. More than half tell us they’re very or extremely worried about petrol prices, and almost one in three say it’s already taking a real toll on their finances.
Until the chancellor sets out his plans, we expect that caution to carry on showing up at the till, with shoppers leaning more heavily on promotions to keep their grocery spend under control.”
The analysis also found that German discounter Lidl led the way in terms of growth in market share, which now stands at 8.6%, up from 8.2% this time last year. The supermarket reported last week that its sales in Great Britain jumped 10% to more than £13bn this year.
Silvana Tenreyro, the IMF’s economic counsellor, tells CNBC that the world’s economic resilience is being tested. She said:
We’ve seen rerouting of supplies from the Middle East, increased production outside the conflict region, drawdown of inventories, increases in energy efficiency, and switches to other sources of energy, including renewables-all that played out to contain the shock.
But some of these margins are getting really thin, including inventories and efficiency gains. We are reaching those limits, so it’s very important to start replenishing that resilience, and that’s part of the message. We need to replenish supply-side resilience and also fiscal buffers because they have been used up to contain many of the shocks that we’ve had over the past six, seven years.
Susannah Streeter, chief investment strategist at the broker Wealth Club, says the tech-light nature of the FTSE should give it some protection from the AI sell-off in Asia when the UK’s market opens shortly.
The sell-off drama has been concentrated in Asia, with South Korea’s Kospi plunging by around 6% and Japan’s Nikkei falling by more than 2% as semiconductor stocks sold off. The tech-heavy Nasdaq in the US also looks set for another slide as worries creep in about just how much tougher the landscape will be ahead, just as the Fed weighs whether further rate rises will be needed in the months to come.
Advances by China’s CXMT have sent a shiver of apprehension through the market, after the company reported ‘key progress’ on a new cell architecture designed to bolster memory density, with plans for a product rollout. This is a highly competitive field, with rivals Samsung Electronics and SK Hynix also hard at work at this edge of innovation. It’s raised big questions yet again about valuations based on bumper earnings projections and the scarcity of products, given the progress of rivals.
With further interest rate rises a possibility, there are also fresh niggles of worry about the huge costs of staying ahead. Tech giants are borrowing billions to fund research and develop new models, and retail investors are also leveraging their bets through loans, which have been helping to support valuations to some extent. A deeper crisis of confidence could set off a wave of selling, which could shake the industry ahead.
Turning back to the UK, on the corporate front this morning…
Whitbread, the owner of Premier Inn, has urged its shareholders to vote against activist investor Corvex Management’s demand for a seat on its board.
The hotel operator has defended its five-year turnaround plan, which has included the closure of some of its branded restaurants and cuts to thousands of jobs. It said it will hold a general meeting on 9 November to consider Corvex’s resolution to add a new board member.
The company also reported that its revenue in the first half of the year nudged up 2% to £1.57bn, but its pre-tax profit fell 62% to £109m.
Meanwhile housebuilder Bellway has said that it expects its profit margins to come under further pressure next year.
The FTSE 250 company said its margin will likely be squeezed by lower completions, rising mortgage rates and cost pressures amid the Middle East conflict.
BP has also updated today, telling investors that it expects its gas marketing and trading result to be significantly higher in the third quarter compared with the previous three months.
Upstream production is forecast to be in the range of 2.19 million to 2.24m barrels of oil equivalent per day, compared with about 2.2m barrels in the previous quarter.
IMF economic counsellor tells UK to 'stay the course'
Launching the IMF’s report in Bangkok, Silvana Tenreyro, the IMF’s economic counsellor, warned, “the global economy has been resilient, but that resilience is reaching its limits”. She urged policymakers to, “move from just coping, to rebuilding”.
Tenreyro, a former member of the Bank of England’s monetary policy committee, added that the UK “stands out,” from other G7 countries in having a plan to repair its public finances.
“The UK has already started a consolidation process,” she said. “The message for the UK is simply, stay the course”.
The IMF has also warned today that the threat of an AI share price crash rippling out across global markets is putting world financial stability at risk.
In its twice-yearly Global Financial Stability Report, the IMF highlighted the sky-high valuations for AI companies along with their increasing debt pile as one reason that risks in the system are “elevated”.
“The consequences of an AI correction could be global,” it warned. Aside from the US, Asian markets would be most exposed, and the UK and euro area potentially more insulated – though investors with US holdings would be hit.
Looking over at Asian stock markets today, it seems a timely warning – the MSCI index of Asia-Pacific shares is down 2%, its lowest level since late July, led by a sell-off in Asian chip companies.
The South Korean Kospi, which relies heavily on its chip makers Samsung Electronics and SK Hynix, is down 6.6% on fears around an AI slowdown.
The sell-off followed a drop in US chip makers yesterday, after a reports of rapid developments by Chinese rival ChangXin Memory Technologies (CXMT). Japan’s Nikkei 225 index is down 1.9%, while Taiwanese stocks are down 2%.
Introduction: IMF upgrades UK growth outlook for this year
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
The International Monetary Fund has increased its growth forecast for the UK this year, but has said that it expects a modest slowdown in 2027 as higher energy prices take effect.
The upgrade will be welcome news for the chancellor, John Healey, who will arrive in Bangkok later this week to attend the IMF’s annual meetings for the first time.
The IMF, which publishes its World Economic Outlook twice a year, has predicted GDP growth of 1.3% for the UK this year – up 0.3 percentage points from its most recent update in July.
However, the IMF also warned that high oil prices and rising interest rates meant growth was likely to “edge down” in 2027, “as higher energy prices and long-term interest rates weigh on consumption and investment”.
It cut its UK growth forecast for next year modestly to 1.2%, from 1.3%.
The IMF singled out the UK as among the countries where core inflation – which excludes volatile commodities such as energy – is not expected to return to the 2% target until late next year.
It expects average inflation in the UK to be 3.3% this year, and to remain at 2.8% in 2027 – a challenge for Healey and the prime minister, Andy Burnham, who are promising to offer voters a “breathing space” from rising costs.
It comes just weeks ahead of Healey’s first budget on 28 October. He is expected to focus on plans to devolve more tax revenues to mayoralties, as well as measures to help households cope with higher energy bills ahead of the winter.
The Institute for Fiscal Studies (IFS) warned this week that the budget would be a “work of fiction” unless Healey explained how he would deal with what it said were £35bn of future spending pressures.
The IMF’s growth upgrade follows from the fact that UK GDP has been stronger than expected in early 2026, at 0.6% in the first quarter and 0.5% in the second quarter.
The agenda
7am BST: Reach trading statement, Marston’s trading statement, Bellway full-year results, Whitbread interim results
8am BST: Worldpanel by Numerator UK grocery inflation report
9.45am BST: Nikhil Rathi to face questions from the Treasury Committee
12pm BST: JP Morgan, Citigroup and Wells Fargo Q3 earnings
12.30pm BST: Goldman Sachs Q3 earnings
