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The Bank for International Settlements (BIS) has raised concerns about a growing disconnect between soaring global stock prices and increasing worries over government debt levels in bond markets. BIS officials noted that the rising premiums investors demand for long-term government debt reflect "mounting concerns about the fiscal outlook," particularly as countries like the US and France face credit rating downgrades. The BIS cautioned that the current high valuations of risky assets could leave markets vulnerable to stress, especially as the real economy shows signs of cooling.

 

Reuters

The International Energy Agency (IEA) has reported that the natural decline rates of oil and gas production are accelerating, primarily due to increased reliance on shale and deep offshore resources. IEA Executive Director Fatih Birol highlighted that nearly 90% of upstream investment is currently aimed at offsetting supply losses rather than meeting rising demand, warning that a lack of investment could lead to a significant reduction in global oil supply. The report indicates that as of 2024, approximately 80% of global oil production and 90% of natural gas production is sourced from fields that have already peaked.

 

Reuters

Fund managers are pulling out of UK stocks at the fastest pace since 2004. Analysis by Bank of America shows that average equity allocations to the UK dropped from a net 2% underweight in August to a net 20% underweight in September. With allocations into UK stocks at their lowest in 18 months, Bank of America analysis suggests investors have been deterred by Britain’s sluggish growth and the prospect of tax hikes in the upcoming Budget. Elyas Galou, an investment strategist at Bank of America, said UK assets "are the most unloved assets right now," adding that investors are "now almost considering the UK as if it were an emerging economy." Shadow Business Secretary Andrew Griffith said it is "incredibly serious" that investors are "selling out of Britain at the same time as wealth creators are leaving," while Hugh Sergeant, a fund manager at River Global Investors, said investors are "terrified of this government, and particularly the next Budget."

 

City AM

The Times

The Office for Budget Responsibility (OBR) has reportedly told the Chancellor that it will downgrade productivity forecasts for the UK economy. A Treasury source said: "We don’t know precisely what they are going to say on productivity, but we have been given indications there will be a downgrade." The source pointed to the Conservative government’s poor record on productivity, arguing that Labour "are the ones picking up the bill." A downgrade to growth forecasts would hit the Chancellor’s fiscal buffer. The National Institute of Economic and Social Research says Rachel Reeves will have to find up to £50bn in extra taxes or savings to rebuild her headroom. While Capital Economics has suggested that the Chancellor faces a shortfall of around £30bn, analysts at Deutsche Bank and JPMorgan believe it may be lower.

 

Financial Times

The Daily Telegraph

The Times

Jaguar Land Rover (JLR) has announced an extension of its production freeze until at least 24 September due to a cyber attack. The company is conducting a forensic investigation into the incident, which has affected "some data." JLR said: "We are very sorry for the continued disruption this incident is causing." The attack has halted operations at its Midlands and Merseyside factories, impacting suppliers and retailers. The Unite union has warned that thousands of workers in the supply chain face job losses and has urged government intervention to support them.

 

The Guardian

The Independent

Energy regulator Ofgem has announced an international audit of Drax Group’s suppliers and third parties as it looks at the sourcing of the biomass used in its power plant. Ofgem said that Drax agreed to the process as part of a £25m settlement over inaccuracies in some of the data it reported. Neil Lawrence, Ofgem’s director of delivery and schemes, said the watchdog "will not hesitate to take appropriate action if it reveals any compliance issues." The regulator said the "onus is on Drax" to show that it complies with its legal obligations.  Forvis Mazars will conduct the audit which will focus on 2023/24 and include most of Drax’s global supply chain.

 

Bloomberg

France has indicated it may block crypto firms licensed in other EU countries from operating domestically as part of a push for centralised oversight by the European Securities and Markets Authority (ESMA). The head of France's financial watchdog, Marie-Anne Barbat-Layani, expressed concerns that companies are exploiting lenient licensing standards in certain jurisdictions, leading to inconsistent regulatory practices across the EU. In a joint position paper, France, Italy, and Austria have called for stronger EU-level supervision to better protect investors and ensure consistent application of the new MiCA regulations.

 

Reuters

Swiss lawmakers have rejected a proposed delay to bank capital reforms, allowing the government to raise UBS's capital requirements by $3bn as part of a package of "too big to fail" rules.

 

Financial Times

Portugal's minority centre-right government has launched a significant overhaul of labour laws aimed at enhancing competitiveness by making dismissals easier and increasing flexibility in working hours, a move that has drawn criticism from unions for undermining workers' rights. The proposed reforms, which involve amending over 100 articles of the labour code, are intended to address structural weaknesses in the economy and improve productivity, although they face opposition from major labour unions who threaten a general strike if the government proceeds. The bill is expected to pass in parliament with support from the far-right Chega party, despite opposition from the Socialists.

 

Reuters

Britain is experiencing a significant decline in graduate job opportunities, with vacancies on Reed's website dropping from 180,000 to 55,000 since 2021/22, according to James Reed, CEO of the recruitment firm. Research by High Fliers shows that there was a 14.6% decrease in graduate hiring among the top 100 employers last year, the steepest drop since 2009. Mr Reed, who noted that AI is automating many white-collar roles, is urging families to encourage young people to consider manual labour as a viable career path. He said: "There are all sorts of good jobs that don't involve big lawyers or accountants. And I think probably there's a big cohort of middle-class people who need to think again about that."

 

The Times

A deal that would remove tariffs on UK steel exports to the US has reportedly been put on hold indefinitely. The UK and US signed a trade deal in June that reduced tariffs on car and aerospace imports to the US. However, no terms were agreed for British steel, leaving tariffs at 25%. Industry sources say that while failure to secure a 0% tariff deal was disappointing, the UK retains an advantage as other countries face tariffs of 50%. Gareth Stace from UK Steel said it is "even more imperative now" that the government "beefs up its own trade defences to ensure UK steelmakers have a sustainable share of their own market."

 

BBC News

Sir Jim Ratclife's Ineos has suffered a credit rating downgrade from Fitch, and is now at BB- due to rising debt and a weak chemicals market. Mr Ratclife's business empire, which includes a stake in Manchester United, is under pressure as Ineos seeks to reduce debt through asset sales and site closures. The company's debt increased by €4bn and Fitch's outlook remains negative.

 

The Daily Telegraph

Former EY partner Joe Howie alleges that the firm failed to implement promised fraud prevention measures. He claims he was dismissed after he refused to sign off on flawed quality control systems.

 

Financial Times

The president of the UK's Law Society has warned that legislation which will see tax advisers required to register with HMRC and meet certain minimum standards "risks undue burden on professionals." Richard Atkinson said the proposed definitions of ‘tax adviser’ and ‘interaction with HMRC’ appear to be too broad and argues that the proposals are "unfair and unwieldy." Mr Atkinson also suggested that the current framework is "cast too widely and risks imposing significant new burdens and uncertainty on advisers," warning that this is "particularly true for sole practitioners and small firms." He added: "Most importantly. it also does not deliver better outcomes for taxpayers." The proposed legislation will be introduced within the Finance Bill, with mandatory registration commencing on April 1, 2026 - alongside a minimum three-month transition period.

 

City AM