Closing post
Time to wrap up
UK borrowing costs have fallen, helped by hints that taxes will rise in the budget to keep the government within its fiscal rules.
Both 10 and 30-year bond yields fell today, after Rachel Reeves told Sky News that “Of course, we’re looking at tax and spending as well,” when asked about plans for her budget on 26 November.
Cautious comments from Bank of England governor Andrew Bailey about the weakness in the UK jobs market also boosted UK debt, lifting expectations of further interest rate cuts.
Reeves also announced new sanctions on Russia’s oil industry, during her visit to the International Monetary Fund’s annual meeting.
The IMF warned that government debt across the world is on course to hit 100% of global gross domestic product (GDP) by 2029, the highest level since the aftermath of the second world war.
In its Fiscal Monitor report, the IMF said aggregate government debt had risen more rapidly than expected before the Covid pandemic, when policymakers stepped into protect citizens and bail out hard-hit businesses.
It urged governments to switch spending to growth-friendly areas such as infrastructure and education to help bolster the world economy and make debts more sustainable.
President Donald Trump has suggested his administration is considering terminating cooking oil purchases from China, in retaliation for Beijing refusing to buy U.S. soybeans.
UK regulators will speed up bonus payouts for high-earning bankers, watering down another important change introduced after the 2008 financial crisis.
Vets in the UK could be forced to cap prescription prices after an investigation by the markets watchdog found pet owners may be paying twice as much for some common medicines from practices than online.
A farely subdued day’s trading in London ended with the FTSE 100 share index down 28 points, or 0.3%, at 9424 points.
EasyJet (which had been lifted by some flaky takeover speculation earlier this week) was the top faller, down 4%, followed by defence companies Babcock (-3.2%) and BAE Systems (-2.7%).
Advertising firm WPP led the risers (+3.6%) followed by Burberry (+3.4%), which benefitted from strong results from fellow luxury firm LVMH.
Ukraine’s prime minister Yulia Svyrydenko has revealed she has discussed a new four-year lending program with the International Monetary Fund’s chief, Kristalina Georgieva, during her trip to Washington.
Ukraine currently has a four-year $15.5bn program with the Fund, one of the country’s key lenders, and has already received $10.6bn from it.
Posting on X, Svyrydenko explains:
“It is important for us that the next program seamlessly continue the previous one.
We agreed to arrange a new visit from a negotiating team soon, as our government continues implementing the necessary reforms.”
The team and I held meetings with the leadership of the International Monetary Fund — Managing Director Kristalina Georgieva and newly appointed First Deputy Managing Director Dan Katz.
— Yulia Svyrydenko (@Svyrydenko_Y) October 15, 2025
We continued the practical implementation of the agreements initiated last week by the… pic.twitter.com/06AUIKjelv
Gold’s sizzling rally is continuing today.
The price of bullion has jumped another 1.45% to abover $4,200 per ounce, driven (it appears) by rising expectations for interest rate cuts in the US and the UK.
Fawad Razaqzada, market analyst at City Index, says:
“Investors appear largely unfazed by renewed US–China trade tensions, brushing off President Trump’s latest warning on cooking oil imports. But this seems to have helped gold, if anything.
Meanwhile, solid US bank earnings have bolstered confidence in corporate resilience, keeping equities supported despite the ongoing US government shutdown. The dollar’s pullback mirrors both improving global risk sentiment and dovish remarks from Fed Chair Powell, who suggested that rising labour market risks justify another rate cut.”
Wall Street is shaking off its trade war fears today, with investors pushing shares higher.
The Dow Jones industrial average has gained 344 points, or 0.75%, in early trading to reach 46,615 points. The broader S&P 500 share index is up 1.1%.
This morning’s solid results from Dutch firm ASML is bosting the US tech sector, reports Kathleen Brooks, research director at XTB:
The S&P 500’S tech sector is higher by 1.5% led by semiconductors, after ASML reported strong earnings earlier this morning. Overall, the fact that stocks have managed to rally this week, and investors are now ignoring the tariff risks between the US and China is a sign of how strong market sentiment is. A strong earnings season is helping to boost sentiment. Earnings season in the US has got off to a good start. So far, 39 out of the 500 companies listed on the S&P 500 have reported positive sales and growth surprises. Sales growth is higher by 7.9% and earnings growth by 14%, largely led by the finance sector.
While it is early days in the Q3 earnings season, this is a fantastic start. Although there is a lot of geopolitics and geoeconomic noise in the background, investors are focusing on the fundamentals, and so far this points to further gains for stocks as it boosts the market mood.
U.S. Treasury Secretary Scott Bessent has said he doesn’t believe Beijing wants to be an “agent of chaos.”, when asked about the row over China’s restrictions on rare earth minerals.
“It’s very difficult to know,” Bessent said in a press conference in Washington on the sidelines of the annual meetings of the International Monetary Fund and World Bank.
Bessent told reporters:
“[a Chinese official] showed up uninvited in Washington and said, quote, ‘China will cause global chaos if the port shipping fees go through.’ I don’t believe China wants to be an agent of chaos.”
Vitor Gaspar, director of the Fiscal Affairs Department at the IMF, is concerned that government debt is heading for its highest level since 1948 (see earlier post).
Gaspar says policymakers must act now to keep debt under control and contain debt risks, explaining:
“The years between the global financial crisis and the pandemic were marked by unusually easy conditions for sustaining debt. Rising debt was accompanied by falling interest rates, leading to an overall stable interest bill on budget. But the situation is now starkly different. Interest rates have increased considerably in global markets, and their path forward is highly uncertain.”
Top US and Chinese officials are expected to join a meeting of the Global Sovereign Debt Roundtable today, where a key topic will be the lack of transparency about bank loans that have complicated developing countries’ debt restructuring efforts.
International Monetary Fund strategy chief Ceyla Pazarbasioglu said the continued participation of the world’s two largest economies in the roundtable, despite a fierce trade war dividing them, showed their commitment to keep addressing the high debt levels hurting developing countries, Reuters reports.
Reeves announces new sanctions on Russian oil
While in Washington for the IMF annual meetings, where she will attend a roundtable on Ukraine later today, Rachel Reeves has announced fresh sanctions on major Russian oil companies.
The measures, which will also be announced by foreign secretary Yvette Cooper in the House of Commons, cover the oil giants Rosneft and Lukoil, which between them export 3.1m barrels a day. Other sanctioned entities include eight LNG tankers and a Chinese LNG terminal, which the UK claims is importing Russian gas.
Reeves said:
“We are sending a clear signal: Russian oil is off the market.
As Putin’s aggression intensifies, we are stepping up our response. The UK will continue to strip away the funding that fuels his war machine.
We will hold to account all those enabling his illegal invasion of Ukraine.”
Updated
Global growth is subdued and debt is rising. Governments must act now—improving how money is spent and reallocating resources to infrastructure, human capital, and R&D—to boost resilience and build a more prosperous future.
— Kristalina Georgieva (@KGeorgieva) October 15, 2025
Read our latest Fiscal Monitor: https://t.co/encwYC9tbI pic.twitter.com/cnbtIc0gV9
Bloomberg have spotted that UK government bonds are on track for their best four-day run in six months.
They reckon that dovish comments from the UK’s top central banker are helping:
UK bonds jumped and investors bet on more Bank of England interest-rate reductions after Governor Andrew Bailey flagged a weaker jobs market.
Ten-year gilt yields — already at a two-month low — slid five basis points to 4.54% and are headed for their biggest four-day drop since April. Money markets, meanwhile, are wagering on policymakers delivering a quarter-point cut by February to spur the economy — with another to follow by the third quarter next year, according to swaps tied to policy-meeting dates.
Updated
IMF warning over global government debt
Government debt across the world is on course to hit 100% of global gross domestic by 2029, according to analysis by the International Monetary Fund, the highest level since the aftermath of the second world war.
In its Fiscal Monitor report, just released, the IMF said aggregate government debt had risen more rapidly than expected before the Covid pandemic, when policymakers stepped into protect citizens and bail out hard-hit businesses.
It urged governments to switch spending to growth-friendly areas such as infrastructure and education to help bolster the world economy and make debts more sustainable.
A 100% global debt-to-GDP ratio would be the highest since 1948, when the world’s large economies had been devastated by six years of war and the costs of rebuilding their ravaged countries.
The report named the UK as among the G20 countries whose ratio would peak above 100% of GDP on the IMF’s definition in the coming years – alongside France, Japan, Canada, China and the US.
UBS loses $440m Greensill-linked lawsuit against SoftBank
Credit Suisse has lost its $440m London lawsuit against Japan’s SoftBank Group over losses linked to collapsed finance firm Greensill Capital.
Greensill’s collapse made Credit Suisse close $10bn of funds linked to the financial firm and, along with other scandals, led to the 2023 state-backed rescue of the 167-year-old Swiss bank by rival UBS Group.
UBS pursued the case against SoftBank, with a trial heard at London’s High Court in June. Judge Robert Miles said in a written ruling that he had dismissed the lawsuit, Reuters reports.
The case, which centred on funds Greensill lent to Katerra, a SoftBank-backed U.S. construction group, was the latest concerning Greensill’s demise, which caused heavy losses for investors and prompted lawsuits and regulatory probes.
Credit Suisse alleged that Greensill, at SoftBank’s behest, gave up rights to Katerra’s debts in return for shares which it then passed on to a SoftBank Group entity, leaving Credit Suisse out of pocket in relation to $440m of notes.
But Miles said in a summary of his ruling that SoftBank “believed in good faith” that the $440m would be used to pay noteholders.
Analysts at Investec say tax rises are Rachel Reeves’s only ‘way out’ of the fiscal black hole.
They told clients that the government may be forced to break its manifesto commitments (it pledged not to increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT).
They told clients today:
Longer-term we suspect that the government will attempt to make savings on welfare expenditure, but this sits uncomfortably with backbench MP rebellions on attempts to scrap Winter Fuel Payments and on the Welfare Bill.
For now, lifting taxation remains the only way out. But even here it is limited by its election manifesto pledges not to increase Corporation Tax, VAT, employees’ National Insurance Contributions or the basic, higher or additional rates of income tax. Taking measures such as freezing personal allowances, limiting tax relief on pension contributions and reforming Stamp Duty Land Tax could raise considerable sums.
The risk is clear though that the sum of all that is politically feasible from measures such as these is not sufficient, and that the government retreats from some of its manifestos promises to tap into more substantive revenue rises.
Osborne: UK has missed the boat on crypto
Former chancellor George Osborne has said the UK has “missed the boat on crypto” in the 10 years since he left government.
Osborne, speaking at a forum hosted by the cryptocurrency platform Coinbase, said:
“Britain has missed the boat on the crypto, and other jurisdictions have kind of taken a lead, for example, in the Middle East or in Asia.
“I think there was a kind of laziness that said, well, the US is so hostile that we can just be a little bit less hostile.
“This is not a partisan point, this was true of previous successor governments and various Conservative prime ministers.
“They kept saying, we’re going to do lots of things for crypto and then this Labour government came in and said: we’re going to be all for innovation. And nothing happened…until very, very recently retail customers can’t get a Bitcoin ETF.”
“The UK is sitting way behind the US and that is not the right place for us to be.
“In the last few weeks, you’ve begun to hear from the Chancellor, from the governor of the Bank of England, from the [Prudential Regulatory Authority] and the [Financial Conduct Authority] in particular, a kind of more ambitious approach. And I think that’s a good thing.”
Osborne, who is a member of Coinbase’s advisory council, served as chancellor in the coalition government between 2010 and 2016.
This summer he wrote in the Financial Times that the UK was at risk of being left behind in the crypto space.
Speaking to cryptocurrency professionals in the City this morning, he added the UK had “allowed in all sorts of areas regulators that become too disconnected from what the collective government is trying to achieve”.
Updated
Rachel Reeves has welcomed today’s proposals to force vets to cap prescription prices.
Welcome news for millions of pet owners that they could save hundreds every year on their vet bills.
— Rachel Reeves (@RachelReevesMP) October 15, 2025
I will carefully consider the CMA’s findings to make sure that the sector is working for pet owners, working for vets, and working for business. https://t.co/aG8VQifKTu
Andy Haldane, the former Bank of England chief economist, has a new role.
He’s just been elected the next President of the British Chambers of Commerce (BCC) taking over from Martha Lane-Fox.
BCC members elected Haldane at their Annual General Meeting today. He will take up the role on Sunday 1 February 2026, a month after Baroness Lane-Fox steps down.
The BCC is a network of accredited Chambers of Commerce across the UK, representing businesses across the country – a role which grew in importance after the recent crisis at the CBI.
Haldane says:
“The Chambers have been celebrating and supporting the brilliance of British business for many decades. Yet their role has never been more important than it is today. I am hugely looking to working with the BCC and its members to bring even more of the dynamism the UK needs to flourish, domestically and internationally.”
Haldane, a man who can be relied upon for a punchy quote, has been busy since leaving the Bank. He founded the charity Pro Bono Economics, is chair of the National Numeracy Leadership Council, Ambassador Patron of National Numeracy and Speakers for Schools, chair of the Advanced Manufacturing Research Centre’s Industrial Board and a member of the Advisory Board of the Bradford Literature Festival and the South Yorkshire Mayor’s Economic Advisory Council.
He was formerly the Chief Executive of the Royal Society of Arts (RSA), before announcing in February he was retiring to take a break…
Bank of America profit rises on investment banking boost
Back in the banking world… Bank of America has reported a jump in profits, lifted by an increase in its fees.
BofA grew its net income to $8.5 bn in July-September, up from $6.9bn in the third quarter of 2024.
The increase included a 43% surge in investment banking fees, which hit $2bn in the quarter.
Revenues from consumer banking grew 7%, while revenues at BofA’s Global Wealth and Investment Management arm jumped 10% thanks to higher asset management fees (lifted by the rise in stock market valuations).
The pound is having a better day against the US dollar, as risk sentiment broadly improves.
Sterling is up a third of a cent at $1.3350.
The dollar is generally weaker, after Federal Reserve chair Jerome Powell signalled he could support another cut to US interest rates soon, as “the downside risks to employment have risen”….
Analysts at Goldman Sachs are expecting Rachel Reeves to announce around £30bn-worth of tax rises and spending cuts in the budget.
In a research note today, they say:
We now expect the government to deliver around £30bn (or 1% of GDP) of fiscal measures in the Budget (vs £20bn before). The adjustment is likely to come on the tax side, including an extension of threshold freezes, new gambling taxes, reduced tax avoidance measures, as well as changes in pensions and property taxation.
We expect these measures to exert an additional demand drag of 0.3% over the coming years and believe the government will avoid raising inflationary taxes.
Regulators: This will cut complexity and boost competitiveness....
The UK regulators insist that their bonus changes won’t encourage reckless behaviour among bankers.
Sam Woods, deputy governor of prudential regulation and CEO of the PRA, said:
“These new rules will cut red tape without encouraging the reckless pay structures that contributed to the 2008 financial crisis. These changes are the latest example of our commitment to boosting UK competitiveness.”
Sarah Pritchard, deputy CEO at the FCA, said:
“Streamlining our remuneration rules by 70% will cut unneeded complexity and make them simpler to follow.
And we’re working faster and smarter to support growth by letting firms apply the changes to this year’s pay cycle.
“The new rules also mean senior managers will continue to follow our high standards and remain on the hook where poor decisions affect consumers and markets”.
Updated
As well as speeding up bonus payouts, the UK’s financial regulators are watering down restrictions on how bonuses are deferred, and allowing bankers quicker access to the cash element of their bonuses.
They say their new changes to senior banker pay include:
Lifting restrictions on the proportion of bonuses that need to be deferred, going further than at consultation. Previously, 60% of the full amount of any bonuses above the £660,000 threshold needed to be deferred. Now only 60% of amounts above that threshold will need to be deferred.
New rules to give firms more flexibility to allow a greater share of the cash element of bonuses to be received up front. More of the component comprised of shares and other instruments can now be deferred, which helps promote responsible risk-taking. Previously, both the upfront and deferred components of bonuses had to be 50% cash and 50% instruments.
UK bankers to get bonuses faster under new plans
UK bankers will get their hands on their bonuses more quickly, under changes just announced by the Bank of England.
The BoE’s Prudential Regulation Authority, and City watchdog the Financial Conduct Authority have confirmed they will allow more “flexibility around senior banker pay”.
The changes mean that the amount of time that senior bankers must now wait before receiving their full amount of bonus will be cut from eight to four years.
Previously, they had suggested cutting bonus deferrals to five years for senior bankers, and four for less senior staff.
The regulators will also allow part-payment of bonuses for the most senior bankers from year one, rather than year three as it was previously.
The new rules will come into force tomorrow, in time for 2025 pay awards and any other awards made but not yet fully paid.
The PRA and FCA say these changes will create better links between bonus awards and responsible risk-taking, and follow the removal of the banker bonus cap in 2023 (which itself was brought in after the 2008 financial crisis, to deter dangerous risktaking…)
Updated
Saxo UK investor strategist Neil Wilson writes…
Rachel Reeves, the Chancellor, is pitching Britain as a paragon of stability and growth at the IMF today. Good luck with that. There is the small matter of one of the most consequential budgets in a generation to get through first. It would be interesting to hear what most business leaders felt about it. Shore Capital pull no punches: The Treasury does “not understand the damage they are causing to this country’s consumer economy.”
Reeves is also reportedly looking again at slashing the allowance for cash ISAs to boost investment in UK equities. It will take a lot more than tweaking around with allowances for retail investors to do this. And I’m not sure about the second order effects – do you move up the risk curve or just plump for less tax efficient cash rates? This has been discussed a lot already but suffice to say a stick is maybe not as good as a carrot.
UK bond yields fall after chancellor's tax comments
UK government borrowing costs have dropped today, after chancellor Rachel Reeves indicated she could raise taxes in the budget.
The yield, or interest rate, on 10-year UK gilts has dropped by 4 basis points to 4.54%, down from 4.58% last night. That’s the lowest level since mid-August:
Longer-dated borrowing costs are also lower, with the yield on 30-year gilts dropping by 3 basis points to 5.35%.
Yields, which measure the rate of return on a bond, fall when bond prices rise in the markets.
Bond traders will have noted Reeves’s comments to Sky News that “Of course, we’re looking at tax and spending as well,” when explaining her approach to closing UK’s fiscal black hole in her November budget.
Those comments could reassure the City that the government really is committed to sticking to its fiscal rules, rather than allowing borrowing to rise even higher than planned…
Updated
Chip giant ASML warns of China slowdown
Semiconductor firm ASML is continuing to benefit from the AI boom, but also expects a significant fall in demand from China next year.
ASML, which makes machines which make chips, has reported a small slowdown in sales in the last quarter this morning. It posted total net sales of €7.5bn in the third quarter of this year, down from nearly €7.7bn in Q2.
ASML told shareholders:
“On the market side, we have seen continued positive momentum around investments in AI, and have also seen this extending to more customers, both in leading-edge Logic and advanced DRAM. On the other hand, we expect China customer demand, and therefore our China total net sales in 2026, to decline significantly compared to our very strong business there in 2024 and 2025.
Overall, ASML expects total sales in 2026 to at least match 2025.
Shares in European luxury goods makers are rallying this morning, after LVMH Moët Hennessy Louis Vuitton reported a rise in sales thanks to improved demand in China.
LVMH reported a 1% rise in sales in the third quarter of this year, “despite a disrupted geopolitical and economic environment”.
The French luxury house reported “solid local demand” in Europe and the US, a drop in sales in Japan, and a “noticeable improvement in trends” in the rest of Asia.
Kathleen Brooks, research director at XTB, says:
This suggests that the slump in the demand for luxury is starting to level off. There was also growth in sales to China, which had been hit by a slump in recent years. Analysts now expect the leather goods sector, especially Luis Vuitton and Christian Dior, could fuel growth for this sector into next year.
Sharesi in LVMH have jumped by 12% in early trading. In London, Burberry are up 6.8%.
Trump threatens China with cooking oil embargo over soybeans
Cooking oil has become the latest front in the US-China trade war.
Last night, President Donald Trump suggested his administration is considering terminating cooking oil purchases from China, in retaliation for Beijing refusing to buy U.S. soybeans.
Posting on his Truth Social site, Trump said:
I believe that China purposefully not buying our Soybeans, and causing difficulty for our Soybean Farmers, is an Economically Hostile Act. We are considering terminating business with China having to do with Cooking Oil, and other elements of Trade, as retribution. As an example, we can easily produce Cooking Oil ourselves, we don’t need to purchase it from China.
US soya bean farmers have warned that China – usually a major customer – has halted orders amid the trade war with Washington.
Another fine! Outsourcing giant Capita has been fined £14m by the Information Commissioner’s Office (ICO) for failing to protect personal data after hackers stole 6.6 million people’s information during a cyber attack in 2023.
The data watchdog said the breach in March 2023 saw the hackers access information including pension details and staff records, as well as details of customers of organisations Capita supports.
In some cases this included sensitive information such as details of criminal records, financial data or so-called special category data, which can include race, religion and sexual orientation.
The ICO fined Capita £8m and a further £6m for Capita Pension Solutions, which processes personal information on behalf of more than 600 groups providing pension schemes, with 325 of these organisations also impacted by the data breach.
John Edwards, UK information commissioner, said:
“Capita failed in its duty to protect the data entrusted to it by millions of people.
“The scale of this breach and its impact could have been prevented had sufficient security measures been in place.”
Update: Adolfo Hernandez, chief executive officer at Capita, has said the company has been taking steps to strengthen itself against cyber attacks (a rising threat for businesses):
“As an organisation delivering essential public services as well as key services for private sector clients, Capita was among the first in the recent wave of highly significant cyber-attacks on large UK companies.”
“When I joined as CEO the year after the attack I accelerated our cyber security transformation, with new digital and technology leadership and significant investment. As a result, we have hugely strengthened our cybersecurity posture, built in advanced protections and embedded a culture of continuous vigilance.”
“Following an extended period of dialogue with the ICO over the last two years, we are pleased to have concluded this matter and reach today’s settlement. The Capita team continues to focus tirelessly on our Group transformation journey for the benefit of our customers, our people and wider society.”
Updated
Royal Mail fined (again) for missing delivery targets
Royal Mail has been fined £21m for missing its delivery targets in the 2024/25 financial year.
The postal operator was penalised by regulator Ofcom for only delivering 77% of First Class mail and 92.5% of Second Class mail on time, well short of its 93% and 98.5% targets.
This is the third year running in which Royal Mail has been fined for delivery target failures – it was billed £5.6m in November 2023 and £10.5m in December 2024.
Announcing today’s fine, an exasperated-sounding Ofcom says Royal Mail must urgently publish – and deliver – a credible improvement plan, or fines are likely to continue.
Ian Strawhorne, director of enforcement at Ofcom, says:
“Millions of important letters are arriving late, and people aren’t getting what they pay for when they buy a stamp. These persistent failures are unacceptable, and customers expect and deserve better.
“Royal Mail must rebuild consumers’ confidence as a matter of urgency. And that means making actual significant improvements, not more empty promises. We’ve told the company to publicly set out how it’s going to deliver this change, and we expect to start seeing meaningful progress soon. If this doesn’t happen, fines are likely to continue.”
Vets could be made to publish prices after UK watchdog investigation
Vets in the UK could be forced to publish their prices and whether they are part of a larger group after an investigation by the markets watchdog into claims chain-owned surgeries have left pet owners with dwindling choice and higher bills.
The Competition and Markets Authority (CMA) found pet owners pay 16.6% more on average at large vet groups than at independent vets and called for a market that is “not fit” for purpose to be modernised.
Publishing its findings on Wednesday of an investigation into how veterinary services operate in Britain, the regulator found that owners were often unaware of the prices of commonly used services and whether their local practices are part of large national chains.
FT: Rachel Reeves revives plans to overhaul cash Isas
The Financial Times are reporting that Reeves is considering reviving plans for a major overhaul of tax-free Isas.
Back in July, the chancellor shelved plans to cut the amount savers can put into tax-efficient cash Isas from £20,000 per year to £5,000, after lobbying from banks, building societies and consumer groups.
According to the FT, the Treasury is now considering halving the annual cash limit, to £10,000 per year, in an attempt to divert tens of billions of pounds of savings from cash into domestic stocks.
Updated
Sky: Chancellor admits tax rises and spending cuts considered for budget
Rachel Reeves has told Sky News she is looking at both tax rises and spending cuts in the budget.
When asked how she would deal with the country’s economic challenges in her 26 November statement, the chancellor replied:
“Of course, we’re looking at tax and spending as well.”
Spending cuts could be politically challenging for the government, though, following the revolt over welfare cuts last summer, which is why many economists expect tax rises in the budget.
With forecasts swirling of a black hole of perhaps £20bn in the budget calculations, Reeves also insisted she would stick to her fiscal rules, saying:
“The numbers will always add up with me as chancellor because we saw just three years ago what happens when a government, where the Conservatives, lost control of the public finances: inflation and interest rates went through the roof.”
And asked if she could promise she won’t allow the economy to get stuck in a doom loop cycle, Reeves replied: “Nobody wants that cycle to end more than I do.”
Chancellor Rachel Reeves exclusively tells @SamCoatesSky, 'of course, we're looking at tax and spending as well'.
— Sky News (@SkyNews) October 15, 2025
The Chancellor said she is looking at both tax rises and spending cuts in the budget in her first interview since being briefed on the scale of the black hole. pic.twitter.com/CjxYpFqkfi
Updated
Reeves pushed to show 'credibility' on fiscal consolidation
Rachel Reeves may also face pressure to show a credible tax and spending plan in November’s budget, and measures to improve productivity, during her visit to Washington.
Yesterday, at a press conference about the outlook for global financial stability, IMF expert Antansios Vamvakidis warned:
“clearly markets are concerned about the UK economy, and we have seen more volatility in the UK compared to other advanced economies.”
Pointing to above-target inflation and weak productivity, he said:
“the market is asking for more details on the fiscal plans in the UK: so yields, as a result, are higher in the UK compared to other advanced economies.”
With Rachel Reeves currently drawing up her budget for 26 November, Vamvakidis added that the IMF recommends the government show, “credibility on the fiscal consolidation plan, and reforms to increase productivity.”
Introduction: Reeves to pitch UK as ‘beacon of stability and growth’ at IMF
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Rachel Reeves is jetting across the Atlantic to pitch the UK as a “beacon of stability” in unstable times.
The UK chancellor is due to meet with senior figures from other G7 countries, and aim to solicit foreign investment from top global firms, as she attends the Annual Meetings of the International Monetary Fund and the World Bank in Washington DC. She’ll also attend a Ukraine roundtable.
Speaking before her arrival, Reeves says:
“Our Plan for Change is delivering national renewal built on the rock of economic stability – the foundation for more security, more respect and more opportunity for every part of the UK.
“In Washington I will showcase Britain’s commitment to fiscal responsibility – while creating the conditions to boost productivity, attract investment and secure our place as a strong and credible partner in a stable global economy.”
Reeves is expected to pitch her fiscal rules as “the bedrock for growth and investment”, and also point to the government’s plans for a National Wealth Fund, and capital spending plans for infrastructure, energy, digital transformation and research.
Yesterday, the IMF raised its forecast for global growth this year, concluding that tariff shocks and financial conditions have proven more benign than expected.
It also released new forecast showing that the UK is likely to suffer the highest inflation in the G7 group of leading economies this year and next, unpalatable news for Reeves and UK consumers alike.
The IMF modestly increased its forecast for economic growth in the UK for this year, from 1.2% to 1.3%, and slightly downgraded it for 2026, also to 1.3%, amid concerns over the labour market.
Bank of England governor Andrew Bailey smeared a little grease on the ‘beacon of stability’ last night, though. He’s also attending the Annual Meetings, and raised concerns about the UK economy running “under potential” and a softening jobs market.
Bailey told an event organised by the Institute of International Finance:
“We’re seeing some softening of the labor market,”
…adding that “that broadly is the story that I pick up” as he travels around the UK.
The agenda
10am BST: Bank of England to issue response to the banker bonus deferral consultation
1.45pm BST: IMF to release its Fiscal monitor
2:15pm Treasury Committee hearing on AI in financial services
