AJ Bell: Bad day for markets, NS&I reputation bruised
“Investors look like they’re fed up with the hot and cold messages around Iran peace talks,” says Dan Coatsworth, head of markets at AJ Bell.
Summing up the day, Coatsworth says:
“The fact the Vix fear index jumped 6% and oil prices rose by 5% would suggest recent market optimism about a resolution in the Middle East is fading fast.
“Stock markets fell around the world as investors expressed their frustration. A gloomy economic outlook report from the OECD didn’t help matters, flagging the impact of the Middle East crisis on inflation. Investors will have already been aware of the risk of costs going up but seeing it in black and white in the OECD report brought home the severity of the situation.”
And on the NS&I scandal, he adds:
“NS&I effectively competes with the banks as a savings brand and is extremely popular with individuals up and down the country.
“News that thousands of bereaved families faced delays accessing their relatives’ Premium Bonds will be bruising for its reputation.
“Trust is incredibly important in financial services and savers might not look so fondly at NS&I following operational failures in the business.”
Closing post
Time to recap…
The boss of National Savings and Investments has been forced out after it emerged that long-running operational errors at the bank had left it owing bereaved families close to £500m.
The state-backed savings institution is in discussions with the Treasury to repay about 37,500 people who collectively have £470m in deposits trapped in the bank.
The government has parachuted in a new chief executive and promised that those affected would be paid compensation “where appropriate”.
The pensions minister, Torsten Bell, told the House of Commons on Thursday that NS&I’s chief executive, Dax Harkins, had been replaced on an interim basis by Jim Harra, who led HM Revenue and Customs for more than five years before leaving in 2025.
Bell told MPs that people’s savings were “100% safe and they are guaranteed by the government”, and insisted there was “no need for individuals to waste money on a claims management company or solicitor”.
He said:
“I want to reassure people that the onus is not on them but on NS&I to act, to contact estate representatives and to reconnect beneficiaries with the money they are due.”
In other news:
European stock markets have dropped, and oil has risen, as the Middle East conflict continues.
Diesel has hit its highest level since Christmas 2022 in the UK.
The boss of Next has said clothing prices could rise by 4% to 10% if conflict in the Middle East extends into the autumn and factories are hit by higher fuel and fabric costs.
The conflict in the Middle East will damage the UK’s economy more than any other industrialised nation, according to analysis by the Organisation for Economic Cooperation and Development (OECD), which warned over rising inflation.
Explainer: What to do if you’re affected by NS&I missing savings crisis
A woman has told how it took nearly six years to receive £2,000 in Premium Bonds from NS&I after her father died.
Tracy McGuire-Brown, from Newbury in Berkshire, said she had a “very long and drawn-out” experience dealing with NS&I, eventually receiving what she was entitled to last month.
She said her father died in 2020 and “after he died, obviously there were a lot of affairs to sort out and we knew he had some Premium Bonds”.
The 61-year-old said NS&I was contacted several times but initially said there was no such account, “even though we gave all the details and more and explained the situation”.
“Finally in 2024, we started to get some movement that there was an account and eventually they said yes there was and then it started.”
She told the Press Association she sent various documents by post, adding “there would be weeks in between” and “still it went on”.
The former care home manager said she eventually received a letter suggesting that before the money was used she should pay off any debts or funeral expenses. She added: “My father had been dead five years by then, I just found that was the final insult.”
After complaining, she received £150 “to say sorry for all the expenses that I’d had, but that doesn’t cover the distress, the time, you know, and it was £2,000, we weren’t talking hundreds of thousands... it was just ridiculous, it was a horrible time”.
She added:
“Really, should it be that difficult, that awful and that much of a trial?
“It’s just frightening, really. To make it so difficult and so insensitive is just appalling, I think.
“The weeks that passed by in between and the hoops that you had to jump through.
“Even when you have got all the information and you give them all the information, my experience was appalling... to the extent that I definitely would not invest in Premium Bonds now.
“And that’s a shame... when you are dealing with the bereavement of a close relative, to have this just keep going on, it just rakes stuff up as well, you just want to sort it, that’s all.”
She highlighted continuity issues in the process when she was speaking to NS&I staff, “so if you did get to speak to someone you had to explain everything again and again and again, just really bad”.
Today’s sell-off in UK government bonds has come as investors anticipate several interest rate rises from the Bank of England this year.
The money markets are now very nearly pricing in three quarter-point rises by December, which would lift Bank rate back to 4.5%.
It’s been another rough day for UK government bonds too.
Reuters has the details:
British government bond yields surged by 10-11 basis points on Thursday, rising by more than U.S. and euro zone borrowing costs, as oil prices jumped following Iran’s rejection of U.S. proposals to end four weeks of conflict.
Ten-year gilt yields increased to 4.95%, up 11 bps on the day and close to their second-highest close since 2008. Interest-rate sensitive two-year yields were up a similar amount to 4.52%.
European markets fall as oil pushes higher
It’s been another day of losses on Europe’s stock markets, as yesterday’s optimism over de-escalation in the Middle East has vanished.
In London, the FTSE 100 index has closed below the 10,000-point mark, ending the day at 9,972 points, a fall of 134 points or 1.33%.
Italy’s FTSE Mib lost 0.75%, while Germany’s DAX index was down almost 1.5% in late trading.
Donald Trump’s claim today that Iran was ‘begging to make a deal’, after Tehran rebuffed his earlier claims of progress, has not cheered investors.
Oil is pushing higher too – Brent crude is now up 6.6% at $108.93 a barrel.
BoE's Taylor: Better to hold interest rates until impact of Iran war is clearer
Bank of England policymaker Alan Taylor is arguing today that it would be better to hold borrowing costs until there was greater clarity on the impact of the war in Iran on the economy.
Taylor, a normally dovish member of the Bank’s Monetary Policy Committee, will tell a conference in New York later today:
“Given massive uncertainty around future energy prices, and our starting point, I currently see a high bar to hiking.
“Holding policy steady is preferable until the impact becomes clearer.”
The number of Americans filing new claims for unemployment support has risen slightly.
There were 210,000 fresh ‘initial claims’ for jobless benefits last week, up from 205,000 a week earlier. That’s still a low level in historic terms, though, suggesting US firms are holding onto their staff.
Jobless Claims - 3/26/26
— Neil Sethi (@neilksethi) March 26, 2026
Initial claims little changed remaining near 50-year lows while continuing claims fall to the least since May 2024https://t.co/5koN4ItK2U https://t.co/L7B9PeVCLL pic.twitter.com/yjF2vwGBzB
Nancy Vanden Houten, lead US economist at Oxford Economics, says:
The latest jobless claims figures are consistent with our view that while labor-market conditions have stabilized and layoffs remain low, the US/Israel war with Iran has made the labor market more vulnerable. We think downside risks to the labor market leave the Fed on track to lower rates twice this year with the first cut coming in June.
The head of the European Central Bank has warned that the world economy is facing “a real shock” from the Iran war, that is “probably beyond what we can imagine at the moment.”
In an interview with The Economist, Christine Lagarde said the financial markets may be being “overly optimistic”, hoping that the world will return to normality quickly. That, though, is not what the technical experts are predicting.
Lagarde says:
“Most people are actually talking about years. I think might also happen, because we’ve experienced it, is that you understand the actual consequences gradually as you read through the facts, the supply chain consequences, the kind of raw materials that is critically important for a particular manufacturing. I’ll give you an example, helium, which transits through the Strait of Hormuz, is critically for microchips. Well, unless you figure that out, you figured that out.
“You’re not certain that there will be instant or relatively quick consequences on the cost of microchips because of the rarity that will result from not having available one of the raw materials. And I think this is a crisis where we are learning almost bit by bit, day by day, what the actual consequences will be, what countries will be most affected, what of the commodities will be the most in demand. And, I think that... Leads to a sort of a delayed assessment of how serious this current crisis is.”
Diesel hits its highest price since Christmas 2022
The Iran crisis has driven the price of diesel in the UK to its highest price since Christmas 2022.
The RAC has reported that diesel is now averaging 177.66p a litre - a price last seen on Christmas Day 2022, 10 months after Russia invaded Ukraine.
A litre of petrol is set to break through the 150p mark tomorrow, the RAC predict, for the first time since May 2024.
RAC head of policy Simon Williams says:
“Our analysis of wholesale fuel data points towards petrol continuing to rise to 152p a litre and diesel to 185p, possibly higher. While soaring costs at the pumps are putting a strain on drivers, as long as the cost of oil remains around $100 prices should begin to stabilise.
Back in the financial markets, shares have fallen on Wall Street in early trading as hopes of de-escalation in the Middle East appear to fade.
The Dow Jones industrial average is down 113 points at 46,315, a dip of 0.25%.
The broader S&P 500 share index is down 0.65%
Investors will be watching a cabinet meeting, where Donald Trump has insisted that Iran is “begging to make a deal”.
He said:
Just so we set the record straight, because I’ve been watching the Wall Street Journal’s fake news and all these stories that get printed like, oh, I want to make a deal. They are begging to make a deal. Not me. They’re begging to make a deal.
Trump added that “They are begging to work out a deal. I don’t know if we’ll be able to do that”….
Our Middle East crisis liveblog has full details:
NS&I case highlights how bereaved customers are failed
The NS&I case highlights the pain many bereaved families go to when winding up estates, my colleague Hilary Osborne writes.
On Guardian Money we frequently hear from people who are trying to close down accounts and settle final bills and instead of receiving efficiency and compassion are repeatedly put through the ordeal of explaining their loss.
Last September the Guardian’s Consumer Champion, Anna Tims, wrote about some of the most egregious cases she had seen, including an insurer writing to a customer thanking her for notification of a change, when they change was that she had died.
More recently, Anna told how energy company ScottishPower repeatedly sent paperwork to a man they had been told had died, to the great distress of his widow.
So far putting a spotlight on these failings has not persuaded companies to invest on being better. Hoepfully this latest case will make some of them reexamine how they treat people.
The Middle East crisis is costing German shipping company Hapag-Lloyd between $40m and $50m of extra costs each week, Reuters reports.
Chief executive Rolf Habben Jansen said today this burden was “not sustainable for a long time”, as he explains how six of the company’s vessels, with 150 crew members, remain stranded in the Persian Gulf.
New GB wind power generation record set
Great Britain has set a new wind generation record after gusty weather helped the country’s wind farms to produce nearly 24 gigawatts (GW) of electricity, enough to power the equivalent of over 23m homes across the country.
The National Energy System Operator, which is owned by the government, confirmed that the new record was between 13:30 and 14:00 on Wednesday afternoon, beating the previous record of 23.8GW set on 5 December last year.
The windy weather and sunshine helped to generate enough wind and solar power to drive the market’s use of gas-fired electricity to just 2.3%, helping to cushion the market from soaring global gas prices.
Kayte O’Neill, Neso’s chief operating officer, said:
“This is a world-leading record, showing that our national electricity system can run safely and securely on large quantities of renewables generated right here in Britain.”
The wind power record emerged as the government set out plans to grant up to £64m to Port Talbot in Wales, to help make it the first port in the Celtic Sea specifically developed to support the burgeoning floating offshore wind.
Unlike traditional fixed offshore wind turbines, floating turbines can be rolled out further from the coast in deeper waters where wind speeds are even greater. These next generation wind farms are expected to play a key role in the UK’s wind power growth in the decades to come.
O’Neill said:
“We’ve come on leaps and bounds in wind generation in recent years. It really shows what is possible, and I look forward to seeing if we can hit another clean energy milestone in the months ahead: running Britain’s electricity grid entirely zero carbon.”
US ambassador Warren Stephens has been speaking to businesses at the BCC Driving International Trade conference and grabbing the attention of delegates with some spiky remarks towards the UK, my colleague Phillip Inman reports.
In a speech, the long-time friend of Donald Trump and former banker from Little Rock, Arkansas said that more needs to be done to implement the trade deal signed last year between the US and UK. He said it was not good to sign a document and do little to implement it.
“We want the UK to succeed. So we need honesty, but good relationships also need action. No one shakes hands on a deal and then refuses to deliver on the promised product or service.
Our countries took bold steps towards each other last year through the economic prosperity deal alongside agreements on technology coopweration and critical minerals. Those landmark agreements promised to bring our countries closer together, but to benefit our people and businesses we must see the sustained delivery and implementation needed to give business the confidence to invest here.”
In what appeared to be an attack on footdragging by No10, Stephens said:
“I am encouraged to see the ongoing dialogue in London and [Washington] DC to make sure our countries reap the full benefit of these agreements. Because to continue our analogy, to sign a deal and then wait a year for the contracts to come through is no way to do business.”
Stephens also gave a warning to the UK about its closer ties with Brussels.
“The relationship between the US and EU is a lot more diffult than with the UK,” he said, before hinting that this gap might be closing.
“The extent to which, I saw this week, the British government is going to put 76 rules back on the books. The extent to which that affects US trade and requirements... that is going to be a problem. I know the EU is an important market for the UK, and you’ve got to do what’s best for you, but that will not be favourably viewed in Washington.”
Stephens issued his warning shot following speculation that Sir Keir Starmer plans to bring 76 EU directives back on to the UK statute book in the King’s Speech next month.
Stephens also said he was disappointed that the UK prevented US planes from using Diego Garcia and that this extended the number of times US pilots needed to refuel.
He then went on to lament the pilots who lost their lives in a refuelling plane crash in the early stages of the attack on Iran.
In a question and answer session, he also said it would be a “mistake” if King Charles turned down an invitation for a state visit and address both houses of Congress.
He added that trust between the UK and the US was so high that his embassy in London was the only one in the US network that did not “listen in” on domestic goverment call traffic [something I am sure Washington would quickly deny].
Updated
Away from the NS&I scandal…Andy Haldane, the new president of the British Chambers of Commerce, set aside the war in Iran to give an upbeat outlook for global trade at a trade conference this morning and to extoll the benefits at a trade to the UK.
Urging businesses to grab the opportunity offered by selling to other countries, the former Bank of England chief economist said it was “difficult to imagine a backdrop less propitious for driving international trade” but that the gains were huge for individual firms and the UK.
Haldane said:
“These are both the worst and best of times for trade. Reports of the death of globalisation are premature and under-appreciate the adaptability of global supply chains.
“If there is a rupture in the world order it is to the Achilles, not the aorta. In other words painful but – provided we play our policy cards right - not fatal.”
Delegates to the “Driving International Trade” conference in London could be forgiven a frown as Haldane spoke because they had probably seen on their phones that Iran had rejected the latest US negotiating offer, sending Brent crude prices up above $105 a barrel again.
Haldane said he heard politicians citing the disruption caused by US tariffs and the attack on Iran as a reason for the UK to be more self-sufficient and reduce a reliance on imports and exports.
“This is thinning and shortening global supply chains in the name of resilience. For companies, it has meant “just-in-case” is now taking priority over “just-in-time”.
He criticised economists who promoted free trade for failing to acknowledge the dangers of relying on a narrow source of vital goods, such as the gas and oil suppliers who use the straits of Hormuz. And the distributional effects – on incomes and regions – of allowing those who gain from trade keeping all their gains for themselves.
But this critique did not undermine the need for gloabl trade and the good news was that businesses were already finding ways to work around tariffs and bottlenecks.
“This means globalisation is not dying. It may have entered a period of less exuberant growth with supply chain resilience rightly given greater emphasis. But there remains no better engine for tackling the twin challenges of lifting living standards and curbing the cost of living, no more adaptable and resilient global network.”
“We should do so recognising the errors of the past where too little attention was paid to the costs of deindustrialisation and the fragility of global supply chains, with severe societal consequences. Yes trade needs surgery. But this should not and need not be life-threatening. The gloomsters, doomsters and undertakers of globalisation need putting back in their box.”
And finally…
Q: It will come as a huge shock to some estates when they find that matters they thought were settled are in fact not settled. Will the minister meet with groups who are affected?
Torsten Bell replies that administering the affairs of deceased familiy members or friends is “always challenging, emotionally and administratively”; that’s why NS&I now have to get this situation right.
Bell adds that he’s “very happy” to meet with those affected.
Updated
Conservative MP Sir Julian Lewis calls for a word of praise for the consumer affairs team at the Daily Telegraph, for their coverage of the crisis at NS&I.
Torsten Bell, though, criticises our compadres at Telegraph HQ, accusing them of “incredibly inaccurate” reporting, citing a claim that 160,000 cases had been brought to the Financial Ombudsman Service, when the true figure is in the hundreds.
The pensions minister adds:
And overnight today they’ve talked about taxpayers’ money being used to pay to reunite people with funds. That is entirely inaccurate for the reasons I’ve set out today, and I worry that it will have worried some members [of parliament] and some members of the public.
Torsten Bell adds that the Treasury recognises that some estates will be concerned about the implications of the NS&I savings scandal on the amount of taxes that are due.
He says he will set out how the governmnet intends to address that in May.
[some estates may not have paid the correct inheritance tax, if the true value of an estate was not reported due to NS&I’s blunders].
Q: Will all monies that are owed to families will definitely be paid, and will NS&I handle these cases very sensitively?
Torsten Bell says he can reassure MPs that everyone will receive the money they are due, saying:
We will make every endeavour to reconnect people with their funds
That will include directly contacting the representatives of the estate.
Bell also says it is “a deep regret” to him and NS&I that people administering estates have encountered such problems.
Compensation and compensatory interest will be paid to NS&I customers
Q: What compensation will be available to customers who have lost money due to NS&I’s failings?
Torsten Bell says the government will ensure that “appropriate compensation is paid”, inline with the Financial Conduct Authority’s policies on best practice in this area.
Bell explains:
That will include compensation [and] compensatory interest where funds have been withheld from estates for longer than they should have been them.
More complicated cases will be considered on a case by case basis, Bell adds.
Liberal Democrat spokesperson Bobby Dean tells the House of Commons that the missing savings scandal is a “hammer blow” to trust in NS&I.
Dean adds:
The fact that these cases involve bereaved families make it particularly damaging.
Pensions minister Torsten Bell replies that “it’s really important” to remember that no funds have been misplaced and that everybody will be entitled to every penny of their, savings.
Bell adds that he has “put new leadership in place” at NS&I to help rebuild trust in the institution.
Sir Jim Harra, the new interim CEO, will be in a position to “give us the full truth” about how he sees the situation, Bell adds, explaining that he has asked Harra to report back in three months.
Bell: NS&I must present delivery plan as soon as May
MPs are now asking questions about the NS&I crisis.
Q: How will the government raise awareness that savers don’t need to use claims management services?
Pensions minister Torsten Bell reiterates that the government’s priority is to make sure people are reunited with their money, without incurring costs.
Bell says he has been clear with NS&I that they must set out a delivery plan as soon as May about how they’re going to reunite people with their money.
That will involve contacting representatives of estates in the first instance, he adds.
I want to be really clear with the public today that the onus is not on them. The onus is on NS&I to contact the people who deserve their funds to be reunited with them, and that is what we will all be focussed on.
Bell: NS&I's departing CEO has resigned and didn't get a bonus
Responding to Bell, shadow pensions minister Mark Garnier tells MPs that bereaved families have been “shortchanged” by NS&I.
Garnier says:
This is a scandal that is affecting tens of thousands of people, and it is a scandal that could end up costing taxpayers many millions of pounds.
Garnier also asks Bell why it took three months for him to update MPs on the issue, as NS&I warned the Treasury about problems last December.
Garnier also asks if departing NS&I CEO Dax Harkins resigned or was sacked?
Torsten Bell says the government had intended “for some time” to update the House on the issue.
He confirms that the former chief executive of NS&I [Dax Harkins] “has resigned today” and he did not receive a bonus last year.
Bell also criticises “some deeply misleading reporting” over the last 24 hours, insisting that the money that is being returned to estates belongs to those estates. Ie, it is not taxpayers’ money.
Updated
New 'interim' CEO of NS&I appointed over lost savings scandal
The boss of National Savings and Investments appears to have been dismissed over the £476m savings scandal at the bank.
Pensions minister Torsten Bell has told MPs that he has appointed Sir Jim Harra, a senior civil servant, to take over as the chief executive of NS&I on an interim basis, replacing Dax Harkins.
Bell says Harra, a former first permanent secretary at HMRC, will provide “a fresh start for NS&I”, following its failure to trace missing savings belonging to customers who have died.
Updating MPs on the crisis over deceased customers’ savings, Bell says he wants to make sure NS&I has “the very best leadership” in place.
Bell tells MPs:
Sir Jim will undertake a review over the next three months to spell out in detail the background to this tracing problem and to set out what lessons must be learned for NSI going forward.
Bell: NS&I savings are 100% safe
Pensions minister Torsten Bell adds that it is “right” that NS&I are apologising over the missing savings crisis.
Bell says the government will ensure that beneficiaries of those customers who have passed away are reunited with any funds that NHSN holds.
He adds:
These deposits belong to customers. Returning them in no way represents an additional liability to the taxpayer. And for the avoidance of doubt, let me spell out that those savings are 100% safe.
Pension minister: Up to 37,500 customers affected by NS&I deceased customer crisis
Over in parliament, pensions minister Torsten Bell is giving a statement about the crisis at National Savings & Investment (NS&I) involving bereaved families.
Bell tells MPs that NS&I informed the Treasury on 18 December 2025 about an “operational failure” to comprehensively trace accounts for some customers who had passed away.
The result of this failure is that not all savings were identified by NS&I and paid to the beneficiaries of their estates, as they should have been. Specifically, processes failed to comprehensively trace some customer holdings where those were spread across multiple profiles or systems.
Bell then explains that the Treasury has engaged external advisers to identify the scale of these errors, with 34 million customer records having been revised.
This work suggests that a maximum of 37,500 customers, with up to £476m in deposits, are affected by the problems, Bell adds.
That represents less than 0.2% of NS&I’s customers, but is “still far too many”, Bell tells the Commons.
Norway's central bank signals rate rise is likely
Norway’s central bank has signalled that it expects to raise interest rates, to battle the inflationary hit from the Iran war.
The Norges Bank left its policy rate unchanged today, at 4%. But its monetary policy committee also signalled that it will probably be “appropriate” to raise rates at one of the forthcoming monetary policy meetings.
Norges Bank governor Ida Wolden Bache says:
“Norges Bank is tasked with keeping inflation close to 2% over time. Inflation has remained above target for several years, and the outlook indicates that inflation will be higher ahead than previously projected.
Uncertainty is greater than normal due to the war in the Middle East, but the Committee judges that it will likely be necessary to raise the policy rate at one of the forthcoming monetary policy meetings.”
Back in the City, shares in the electricals retailer Curry’s have dropped 7.5% after the CEO who engineered the firm’s turnaround announced his departure.
Alex Baldock is stepping down after eight years as group chief executive “to take a new external position”, Curry’s told shareholders this morning.
Baldock steered Currys through Covid-19 and the cost of living crisis.
Dan Coatsworth, head of markets at AJ Bell, said this morning:
The resignation of Alex Baldock is a £141 million loss to Currys, judging by the amount wiped off its market value on the news.
The CEO leaves on a high. He not only fought off an activist investor trying to take over the business on the cheap but also steered the ship out of a rocky patch and took it to new heights.
Finding someone of Baldock’s calibre as a replacement will not be easy. He has achieved the rare task of keeping a high street retailer relevant in the digital age.
Curry’s also told investors that it has traded in line with expectations since its last trading update on 21 January, implying that it hasn’t seen a hit from the Iran war.
Updated
UK inflation expected to hit 4% this year
The latest OECD report sees UK inflation at 4% for 2026, a nasty upgrade of 1.5 percentage points compared to their prediction only three months ago.
That figure may found familar to regular readers, as Prof Costas Milas of Liverpool University explains:
It looks like OECD staff carefully read the Guardian Business (live) as we predicted the very same percentage point increase in inflation (due to the oil shock) only last week:
Public inflation expectations are almost certain to take into account the rising oil prices (which will lift wage demand pressures), in which case, the MPC will have no other choice than firing a “warning shot” in terms of a 25 basis points increase in Bank Rate. 30 April (when the MPC decides on interest rates and issues new forecasts of the UK economy) should be a memorable one!
Updated
Donald Trump has warned Iran to “get serious soon” about peace talks.
Posting on his Truth Social site, the US president warned that the consequences ‘won’t be pretty” otherwise, writing:
The Iranian negotiators are very different and “strange.” They are “begging” us to make a deal, which they should be doing since they have been militarily obliterated, with zero chance of a comeback, and yet they publicly state that they are only “looking at our proposal.” WRONG!!! They better get serious soon, before it is too late, because once that happens, there is NO TURNING BACK, and it won’t be pretty! President DJT
Brent crude remains over $106 a barrel …
Trump also took a pop at Nato, claiming that its members have done “absolutely nothing to help” with Iran, something the US will not forget …
Updated
Oil now over $106
Brent crude oil has now risen over $106 a barrel, up 3.75% today.
Investors seem to be getting jittery about how the Iran war may develop over the weekend, as Donald Trump’s five-day deadline for Tehran to open up the strait of Hormuz runs out.
Joshua Mahony, chief market analyst at Scope Markets, says:
The market rollercoaster continues, with travers waking up to the high likeliness that Trump’s five-day extension passes without an agreement.
The tone taken by Iran may simply be posturing, but their desire to teach the West a message means that there is a high likeliness they continue this conflict until energy prices reach uncomfortable levels. For equities, the negative relationship between inflation expectations and stockmarket sentiment means that the rise in crude seen today has dampened sentiment in European markets.
Bank of England's Breedon: Iran war making it harder to get onto property ladder
A senior Bank of England policymaker has warned that the Iran war is making it harder for UK first-time buyers to get on the property ladder.
Sarah Breeden, the Bank’s deputy governor for financial stability, said:
It is clear there is going to be an impact on affordability because mortgage rates have risen.
She said the Bank stood ready to raise interest rates in response to the conflict, but cautioned against City expectations for rapid rate increases.
Speaking at an event on home ownership challenges hosted by the Resolution Foundation, Breeden said it was too early to tell whether the Bank would need to drastically increase borrowing costs.
She said:
Is the market pricing the right amount of tightening?... we don’t really have a good sense of that yet.
Financial markets are pricing in at least two quarter-point rate increases this year, from the current level of 3.75%.
City expectations have swung wildly in recent days, amid volatile conditions in global oil and gas prices fuelled by the US-Israeli war on Iran.
The Bank last week warned a rise in borrowing costs could be needed to tackle higher inflation unleashed by an energy shock, upending hopes for rate cuts before the outbreak of the war. The Bank’s nine-strong monetary policy committee (MPC) - including Breeden - voted unanimously last week too keep rates on hold.
Breeden said the Bank stood ready to respond, but appeared to downplay the short-term reaction in financial markets, saying:
Regardless of what the recent sensitivity of short-term rates to daily movements in the Middle East might suggest, you can’t draw a straight line between oil and gas prices and the likely path for Bank rate.
She highlighted that the fallout from the Iran conflict was hitting against the backdrop of a sluggish economy and labour market. This could help prevent inflation from becoming entrenched, she said, adding:
Where we are now is very different to 2022 when we had the last energy shock. Right now inflation would otherwise have been at 2%. Bank rate, we think, is restrictive; there is slack in the labour market and it’s rising, and the outlook for activity was lacklustre even before the energy shock.
All of that means firms and workers are likely to have less pricing power, less wage bargaining power; meaning second round effects should be less likely.
However, she cautioned that inflation had been above the Bank’s 2% target for the past four years. She said the MPC would have a better idea on the risks by the time of its April meeting.
[There is] huge uncertainty... so it’s on us to remain alert given the need to manage the risk of second round effects taking hold. But risks are on both sides, and and we’ll be watching closely for signs of either side crystallising.
Updated
UK five-year mortgage rates now highest since December 2023
UK mortgage rates have continued to climb today, a day after hitting their highest average level since summer 2024.
Data provider Moneyfacts reports that the average 2-year fixed residential mortgage rate today is 5.67%. That’s the highest since August 2024, and up from 5.56% yesterday.
The average 5-year fixed residential mortgage rate today is 5.62%, the highest since December 2023, and up from 5.54% on Wednesday.
So, we’re still in the unusual position where it’s cheaper to borrow for five years than for just two (normally, longer fixed-rate mortgages cost more).
Please assume the brace position...today average rates on two and five year residential mortgages climbed to 5.67% and 5.62%. If this continues we could be over 6% by next week - stamping on any hopes of a blooming spring market. pic.twitter.com/ZhvnOsUq4x
— Emma Fildes (@emmafildes) March 26, 2026
Middle East conflict will damage UK’s economy ‘more than any other’
The conflict in the Middle East will damage the UK’s economy more than any other industrialised nation, according to analysis by the Organisation for Economic Cooperation and Development (OECD), which warned over rising inflation.
In the first major assessment by a leading international thinktank of the economic impact from the attack on Iran, the OECD said the UK economy would grow by just 0.7% this year, compared with its last forecast, made in December, of 1.2% for 2026.
Noting a weakening of the UK jobs market and a contraction in business investment towards the end of 2025, the OECD attributed the downgrade to a lack of momentum going into 2026 as well as the shock from rising oil and gas prices as a result of the US-Israel attacks on Iran.
Newsflash: The escalating conflict in the Middle East has knocked the global economy off a stronger growth path, the Organisation for Economic Cooperation and Development is warning today.
In its latest forecast, the OECD flags that the near-halt in energy shipments through the Strait of Hormuz threatens to push inflation sharply higher.
Global GDP growth is now projected to fall to 2.9% this year, down from 3.3% in 2025, before a slight recovery to 3.0% in 2027.
That 2.9% forecast matches the OECD’s previous estimate – but before the Iran war started it had seen signs that growth could have been 3.2% this year.
Germany’s lower house of parliament has approved initial measures to curb surging fuel prices.
Under the legislation, petrol stations will be permitted to increase prices only once daily, at 12:00 local time, while reductions may be made at any time. Forecourts who breach the rules could face fines of up to €100,000.
This comes a day after Shell’s chief executive warned that Europe could face a shortage of energy and fuel as soon as next month unless the Strait of Hormuz reopens.
Updated
FTSE 100 index back below 10,000 points
Back in the City, the FTSE 100 share index has sunk below the 10,000-point mark again.
The blue-chip shares index is now down 128 points, or 1.26%, at 9,980, amid anxiety over the Iran conflict.
At current prices, the Footsie has lost most of its gains from earlier this year.
Derren Nathan, head of equity research at Hargreaves Lansdown, says the FTSE 100 has fallen as investors look for “concrete signs of progress” towards a peace deal between Washington and Iran and the resumption of oil and gas transit through the Strait of Hormuz.
Nathan adds:
So far, the main communication channels appear to be traditional and social media, as well as third-party states. It may take a formal agreement or at least a move to the negotiating table to steady markets further. While the bears may have the edge this morning, there could be bulls waiting in the wings if moves towards a resolution gather pace.
Updated
ONS: gas and electricity prices jumped last week
New data from the Office for National Statistics shows how the UK has been hit by soaring energy prices since the Iran war started.
The ONS reports that the System Price of electricity increased by 31% in the week to Sunday 22 March, compared with the previous week, and was 6% higher than a year ago.
The System Average Price (SAP) of gas increased by 8% compared with the previous week, and was 34% higher than a year earlier.
A prolonged Iran war could bring German economic growth to a near-standstill this year, a leading economic research institute has warned.
The Düsseldorf-based Macroeconomic Policy Institute (IMK) said has estimated that if the conflict in the Middle East drags on or escalates, Germany’s gross domestic product would grow by just 0.2%
Back in December, IMK economists had projected growth of 1.2% for 2026.
Next’s warning on rising costs could be echoed by other retailers in the weeks ahead.
Chris Beauchamp, chief market analyst at IG says:
Today’s figures from Next contain a hint that the rise in fuel costs is bound to extend beyond increases at the pumps. The retailer’s decent figures underline another good period of performance, but the group highlighted the possibility of price rises should the conflict in Iran go on for longer than a few weeks.
This kind of update is all we have to go on until UK March inflation comes through in late April. After a strong start to the year, Next and other retailers are facing tougher times, just like UK consumers.
Updated
Next shares jump after profit forecast upgrade
Next’s shares have jumped by over 6% at the start of trading, despite its warning that three months of disruption from the Middle East conflict would cost it £15m.
Investors are impressed that Next has lifted its pre-tax profit guidance for the year to January 2027 by 4.5% to £1.21bn.
The company also reported a 14.5% increase in profit in the last financial year, to £1.158bn.
Markets drop amid doubts over US-Iran peace deal
European stock markets have opened lower, as hopes of a peace talk breakthrough in the Middle East fade.
In London, the FTSE 100 share index has dropped by 64 points, or 0.63%, in early trading, to 10,042 points. Mining companies, a gauge of economic growth prospects, are among the top fallers on the index with copper producer Antofagasta down 3.9%.
Jim Reid, market strategist at Deutsche Bank, says:
For markets, the issue is there’s still plenty of doubt about whether a US-Iran deal can be reached, given how Iran have publicly rejected the US on several occasions. So that’s seen markets become increasingly sceptical about positive headlines from the US side, because we haven’t seen similar noises from Iran.
Germany’s Dax dropped by 0.9% at the open in Frankfurt, with France’s CAC 40 down 0.65% in Paris.
Updated
Zoe Gillespie, investment manager at RBC Brewin Dolphin, has pointed out that the scale of the problem at NS&I remains unclear.
Gillespie told Radio 4’s Today Programme:
The NS&I is currently working through a £3bn modernisation programme which is years behind, so there appears to be some issues with potential tech or customer service problems.
Complaints against NS&I include that the state-owned bank withheld Premium Bond prizes from the families of deceased savers, with some reporting that the bank delayed payments and lost track of investments.
Updated
NS&I set to 'pay millions' over savings failures
National Savings and Investments (NS&I) is under rising pressure today after being accused of losing track of investments, delaying payouts and withholding premium bond prizes owed to bereaved families.
NS&I has apologised anyone who has not received the customer service “they should expect” following a bereavement.
This follows reports that some families have incurred thousands of pounds in additional costs trying to recover their money from NS&I, or even paid fines to HM Revenue and Customs after receiving duff information from the UK’s savings bank.
The Daily Telegraph has reported that some bereaved family members have received letters incorrectly addressed to their dead relatives, creating more stress and grief.
An NS&I spokesperson said:
We recognise that dealing with bereavement can be challenging and would like to apologise to anyone who has not received the customer service from NS&I that they should expect, particularly at such a sensitive time.
According to the BBC, NS&I is expected to pay hundreds of millions of pounds for mis-managing customers’ money, with pensions minister Torsten Bell expected to address the issue in a statement in the House of Commons as soon as today.
Updated
Oil rising after Iran rejects Trump peace proposal
The oil price is rising this morning, after Iran rejected a US ceasefire proposal last night.
Tehran rebuffed Donald Trump’s 15-point plan to end the war, calling it “extremely unreasonable”.
Trump has hit back, insisting Iran is still interested in a deal, and claimed Iranian negotiators feared being killed by their own side.
9am UPDATE: Brent crude is up 3.3% to $105.50 a barrel, a day after dropping amid hopes of a ceasefire breakthrough.
Victoria Scholar, head of investment at interactive investor, explains:
Oil prices are staging gains with brent crude up sharply reflecting the reduced likelihood of an immediate ceasefire after Iran’s foreign minister said he was reviewing a US proposal but that there was no intention to hold talks to end the conflict.
Meanwhile President Trump said the US would hit Tehran harder if Iran fails to back down and argues that Iran wants a deal ‘badly’. US futures are pointing lower, on track to give back some of yesterday’s gains as investors continue to keep a close eye on US-Iran headlines.”
Ipek Ozkardeskaya, senior analyst at Swissquote, says it is too early for investors to ‘price out’ the Iranian war, given the risk that the conflict continues.
Donald Trump insists that peace negotiations are ongoing, describing developments in the Middle East as “big”, but he is no longer controlling the narrative. One of Iran’s senior military figures mocked the US, saying: “Has the level of your inner struggle reached the stage of you negotiating with yourself?” This reflects where we stand in negotiations.
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Next: Costs have been offset by savings elsewhere, but....
In the short term, Next says the £15m of additional costs if the Middle East crisis lasts three months have been offset by savings elsewhere, so they do not affect its guidance.
However, if those costs persist beyond the next three months, the company will begin to pass costs through as higher pricing.
Today, that is “a contingency not a plan”, but it’s a sign that the economic damage from the conflict will increase, the longer it goes on.
£15m isn’t a massive hit for Next, which expects to make pre-tax profits of £1.21bn this financial year.
Updated
Next: Three-month Middle East conflict would cost us £15m
The Middle East crisis is expected to cost UK retail chain Next millions of pounds, and could hurt its sales the longer the conflict continues.
Next has told the City this morning that it has accounted for £15m of additional costs that are likely to arise from the conflict, such as fuel and air freight, on the assumption that the disruption lasts for three months.
The company also warns that if the conflict persists, the costs are likely to be reflected in higher prices to consumers and disruption to its supply chain, which will both hurt its sales.
Next says the conflict may restrain growth in the Middle East, which makes up around 6% of its total turnover. It is also likely to have “knock-on effects on costs, selling prices and consumer demand in the rest of the business”, Next points out, adding:
At this point, the longer term implications of the conflict are uncertain, and NEXT is not well placed to make predictions.
As yet, we have no feel for the medium-term effects on supply chain resilience, freight rates, factory gate prices and consumer demand. Much will depend on how long the conflict persists, and how much permanent damage is done to the world’s energy infrastructure.
Updated
The money markets continue to price in at least two rises in UK interest rates by the end of the year.
The money markets indicate Bank rate will have risen by 64 basis points (0.64 percentage points) by December, which implies two quarter-point hikes are fully priced in.
UK consumer confidence has ‘collapsed’ during Iran war, retail industry says
Consumer confidence in the UK has “collapsed” since the start of the Iran war, according to new research from the British Retail Consortium.
The sharp rise in energy prices caused by the effective closure of the strait of Hormuz and attacks on infrastructure in the region has led to fears of higher inflation and weaker growth across oil-importing countries.
Asked about the state of the UK economy over the next three months, 64% of respondents told a survey they expected it to get worse. Just 11% thought it would get better. The resulting balance of -53% was sharply lower than the -20% reading a month earlier.
Introduction: Average UK mortgage rate hits 5.50% for the first time since August 2024
Good morning and welcome to our rolling coverage of business, the financial markets and the world economy.
The UK’s cost of living squeeze is tightening by the day, as the Iran war sends inflationary pressures rippling through the global economy.
The average UK mortgage rate has now hit 5.50%, data from Moneyfacts shows. That’s the highest rate since August 2024, as lenders have scrambled to reprice mortgage products as hopes of UK interest rate cuts this year have faded.
This means the typical annual cost of borrowing £250,000 over 25 years has risen by more than £1,075 per year – anyone looking to buy or remortgage this year needs to prepare for substantially higher costs than previously expected.
Adam French, head of consumer finance at Moneyfactscompare.co.uk, explains:
“The Moneyfacts Average Mortgage Rate has hit 5.50% - heights last seen more than 18 months ago, marking another unwelcome milestone for borrowers this month. These rising costs are in direct response to the conflict in the Middle East which has dramatically shifted market expectations around inflation and future interest rates, with lenders scrambling to keep up with rising funding costs.
“Moneyfacts’ analysis of more than 30 years of historic rates data shows mortgage rates have historically averaged around 1.5-1.75 percentage points above Base Rate. If a couple of rate rises materialise as markets are currently predicting, this could see the overall average mortgage rate stabilise at around 5.75%-6.00%. This would leave borrowers paying £1,500-£2,000 more per year on a typical mortgage compared to just a few weeks ago. However, given the volatility of events this is subject to change in either direction.
Unusually yesterday, UK mortgage rates ‘inverted’. The average rate on two-year fixed rate mortgages overtook the equivalent five-year product – which would usually be more expensive.
Here’s the details:
Average 2-year fix rose from 4.83% at the start of March to 5.56%, the highest since September 2024.
Average 5-year fix rose from 4.95% at the start of March to 5.54%, the highest since January 2024.
The agenda
7am GMT: GFK’s Consumer Confidence survey for Germany
9.30am GMT: ONS: housing affordability in England and Wales in 2025
10am GMT: OECD Interim Economic Outlook Report
1.30pm GMT: US weekly jobless data
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