UK economic outlook brighter as new government measures will boost growth, says OECD
The outlook for the UK economy has brightened, according to the Paris-based OECD, with inflation lower than expected while new government support measures are likely to boost growth.
The think tank has significantly cut its inflation forecast for this year, from 3.7% to 3.1%, after prices rose less dramatically than expected.
Economic growth for the UK is forecast at 1.1% for 2026, up from the 0.9% it had forecast in June and 0.7% in March, “with consumption expected to be supported by newly announced government support measures”.
In response, the chief secretary to the Treasury, Emma Reynolds, said:
double quotation markDespite unprecedented pressures and conflict in both the Middle East and in Europe, the UK economy is showing strong resilience.
We will face these challenges together and we are already giving families space to breathe. We had the fastest growth in the G7 in the first half of the year and we are starting the big, long-term changes needed to create good jobs and growth in every postcode.
Chief Secretary to the Treasury Emma Reynolds arrives for a Cabinet meeting in Downing Street, London, on 15 September. Photograph: Gareth Fuller/PA
Andy Burnham, who became the UK prime minister on 20 July, announced a cut in VAT on electricity bills as one of his first policy measures on coming to power in July, and has suggested there may be more measures to give consumers “breathing space” in next month’s budget.
Burnham and his chancellor, John Healey, have seen UK borrowing costs rise sharply amid turmoil in global bond markets as ongoing conflicts have disrupted the oil supplies, driving up inflation.
The world’s advanced economies have been warned they need to take action to reduce their borrowing and bring down debt levels, at a time of surging government borrowing costs, according to the head of the International Monetary Fund.
Kristalina Georgieva told the BBC that global economic shocks had been “pushing debt levels up like a staircase not to heaven” despite governments taking “no action to contain that service cost. [It’s] time to take that action,” Georgieva said, adding that courage was needed by politicians to take the necessary steps.
Key events
Ryanair: Air fares in Europe will rise by up to 10%-20% next summer
Gwyn Topham
Air fares in Europe will rise “dramatically” next summer, by as much as 10%-20%, Ryanair has forecast, with airlines unable to absorb continued high oil prices.
Ryanair chief executive Michael O’Leary said a lack of refinery capacity meant jet fuel was likely to stay 40% higher than crude oil, and predicted several airlines could go bust this winter.
He said Ryanair itself would trim its capacity in the coming months, sending fares upwards, to avoid the high cost of unhedged fuel, around 20% of its fuel needs.
He added:
double quotation markIf I was planning a holiday I’d be booking [flights] today. There is only one way air fares in Europe are going next summer and that is dramatically upwards.
Ryanair CEO Michael O’Leary. Photograph: Kuba Stężycki/Reuters
Speaking at a press conference in London, O’Leary repeated his calls for the sacking of Nats chief executive, Martin Rolfe, after the latest outages of air traffic control services in September.
He said Ryanair was calling for “urgent reform of failing UK Nats. What we mean by urgent reform: sack Martin Rolfe.”
The government has tasked the CAA to investigate Nats’ explanations for the major outage on 8 September, blaming a “millisecond’s software fault” for disruption to hundreds of thousands of passengers’ flights. The CAA is due to report next March.
O’Leary said:
double quotation markWe don’t need six months to learn lessons. The fundamental lesson to learn about Nats is it has an incompetent, overpaid CEO who needs to be dismissed.
He said Ryanair’s costs had run to 4-5million euros, and the airline was still seeking compensation in court for the 2023 Nats outage.
O’Leary meanwhile addressed his own recent €150m bonus deal, which was opposed by 40% of shareholders at Ryanair’s AGM this month. He said they would be consulting with shareholders to understand their concerns, but would not be changing the terms.
Asked if it was a pointless consultation, he agreed and said “Welcome to the world of ESG,” [environmental, social, and governance rules].
ShareGold and silver prices fall
The price of gold and other precious metals has fallen, under pressure from a stronger dollar and hawkish remarks from US Federal Reserve officials that reinforced expectations of near-term interest rate hikes.
Spot gold fell 1.2% to $4,303 an ounce, while silver dropped 3% to $65.05 an ounce, platinum lost 2.8% to $1,779 and palladium declined 2.1% to $1,279.
The dollar rose to its strongest level in two months, as traders priced in a 53% chance of an interest rate hike in October, according to the CME FedWatch Tool.
Richmond Fed president Tom Barkin said on Tuesday that rate hikes could temper business inflation expectations and cool price increases without slowing down economic activity.
The Fed last week lifted its benchmark rate by 25 basis points to a range of 3.75% to 4% – its first rate rise since 2023 – and signalled another increase could come before year-end.
Although gold is seen as a hedge against inflation, rising interest rates can reduce its attractiveness as investors pivot towards interest-bearing assets.
On the geopolitical front, Donald Trump warned yesterday that he could “annihilate” Iran if there is no deal to end the war, but also suggested an agreement could come soon amid a diplomatic push at the United Nations general assembly in New York.
BMI analysts said:
double quotation markIn the long term beyond 2026, we expect gold prices to ease. The main driver of easing gold prices in the long term will be greater risk-on sentiment as the global economy recovers in the later part of the decade.
ShareAI looms large over Trump-Xi meeting amid deep distrust between US and China
When Xi Jinping, China’s leader, touches down in Maryland on Wednesday, he will step out into the arms – perhaps a hug, if Donald Trump’s wishes come true – of a US president who has shown China more bonhomie than any of his recent predecessors.
The meeting between Xi and Trump this week will be the second time that the leaders of the world’s two biggest economies have talked face to face this year. At the previous summit, held in Beijing in May, there was much talk of building a “strategic stability” between the two powers. But there was little by way of concrete outcomes: the countries remain at loggerheads over trade, export controls and geopolitics.
Despite the goodwill built in May, few anticipate any major breakthroughs this week when Xi makes his first state visit to the US since 2015. “Expectations are very low,” said Bonnie Glaser, a managing director at the US thinkthank the German Marshall Fund. “Nobody is using the term ‘deliverables’.”
One area in which Trump and Xi may reach some consensus is on artificial intelligence safety. Tech executives including Jeff Bezos of Amazon, Sundar Pichai of Alphabet, Sam Altman of OpenAI, Tim Cook of Apple, Elon Musk of Tesla, Mark Zuckerberg of Meta and Jensen Huang of Nvidia will reportedly attend a state dinner at the White House on Thursday evening.
‘Whoever wins AI, wins’
In the past few weeks, the US has been beset by worries that AI is progressing too fast, but that the US must strive to defend its lead over China in the frontier technology – and Trump has pushed back hard against calls to slow its development. “We’re leading China in AI,” Trump said recently. “And frankly, I want to keep it that way, because whoever wins AI, wins.”
On Sunday, Scott Bessent, the US treasury secretary, concluded talks with the Chinese vice-premier He Lifeng by proposing an AI safety mechanism to be established between Washington and Beijing. The mechanism appears to stop short of a major safety agreement.
ShareJD sales fall with young people ‘waiting for promotions to come’
Sarah Butler
Young people are now now “waiting for promotions to come” rather than looking out for trainer brands’ latest footwear launches, the boss of JD Sports has said, as the retailer’s core customers remaiun under pressure from rising unemployment and an increase in the cost of living.
Half-year sales at the group fell 0.8%, excluding exchange rate fluctuations, to £5.9bn, led by a 4% drop at established stores in North America where food prices have soared.
Sales were down 3.3% in Europe and 1.4% in the UK as JD’s chief executive Régis Schultz said retailers around the world were having to discount sports footwear to clear stock having not recognised that the market was maturing as shoppers reined in spending and the global shift from wearing leather shoes to trainers had worked its way through.
View image in fullscreenJD Sports Fashion has blamed cost-of-living pressures for weighing on demand among its younger customers as it reported weaker sales and profits. The sportswear chain said it was operating against a “tough global consumer backdrop” which was particularly prominent among US shoppers. Photograph: Christopher Thomond/The Guardian
He said average selling prices were down in both the UK and Europe as shoppers were
double quotation markwaiting for promotions to come.
Three years ago customers were looking for a new launch, now they are looking for a new promotion and that’s having a negative impact on the industry.
He said UK sales had been better than elsewhere as young people were buying more performance sportswear as “running clubs are the new nightclubs” and he said JD was rapidly adapting by adding more clothing in the US, including own-label, and bringing in new brands such as On and Salomon in footwear as the bigger brands such as Nike face new competition.
Schultz called on the UK government to cut the cost of employing young people and to maintain flexibility on short-hours contracts as he said former chancellor Rachel Reeves’ increase on National Insurance contributions for employers and increase in the minimum wage for under 21s had been “really a wrong movement” and only pushed retailers to use more technology and hire fewer young people.
While he said JD did not use self checkouts, he added:
double quotation markThe more the cost of labour increases and the less flexibility [on working hours] the more retailers are inclined to invest in technology.
Updated at 08.37 EDT
London buses in decline? Why public transport in global cities is slowing to a crawl
Have a look at our visualisation of London buses, which have become slower and fewer in recent years. This is, unfortunately a global trend.
As experts fear for future of UK capital’s bus network, some commuters are giving up entirely. London is not alone – with worrying implications for the poorest in society.
ShareAirtel Money to float on London stock exchange
A payments business that operates across Africa and is ultimately controlled by an Indian billionaire has announced its intention to float on the struggling London Stock Exchange.
Airtel Money, the mobile money arm of Airtel Africa, is planning one of the biggest UK listings in years, in a boost for the shrinking London market that has faced a string of recent departures.
The company is understood to be looking to raise about $800m (£601m) from the IPO and is targeting a valuation of $8bn to 9bn, which would make it one of London’s largest listings in recent years.
Airtel Money has 53 million monthly active users across 13 countries in sub-Saharan Africa, including Uganda, Zambia and the Democratic Republic of Congo.
It operates through a network of branches and kiosks, which enable customers to load money on to their phones, withdraw cash and access other money services, and the company generated revenues of just under $1.4bn in the last financial year.
A Chadian woman walks past a closed kiosk of Airtel Africa, the telecommunications and mobile money services provider in the capital city of N’Djamena, Chad, last November. Photograph: Amr Abdallah Dalsh/Reuters
Airtel Money’s parent company is Airtel Africa, a telecoms provider that is part of the Indian conglomerate Bharti Enterprises, which is ultimately controlled by the billionaire Sunil Bharti Mittal. Airtel Africa is already listed on the FTSE 100 but said it wanted Airtel Money to be listed separately.
Airtel Money’s chief executive, Ian Ferrao, said:
double quotation markFrom a company perspective, [the listing] gives us flexibility for the future.
We evaluated multiple [stock] exchanges, including the Middle East because we’ve got a headquarters in Dubai, along with European and North American exchanges. Ultimately, shareholders felt that London was the right choice. We still believe there is deep capital available … all the global institutional investors are here.
Ferrao added:
double quotation markMost importantly there’s a deep understanding of emerging markets in the London market and Africa specifically.
ShareL&G confirms will cut 1,000 jobs
Legal & General has confirmed that it is cutting 1,000 jobs, with a voluntary-first approach in the UK, and excluding asset management.
António Simões, the chief executive, said in an email to employees as he announced the voluntary redundancy programme:
double quotation markOver the past two and a half years, we have made significant progress executing our strategy, simplifying L&G, establishing three core businesses, and creating a more focused business.
However, over the last decade, different structures, processes and ways of working have developed across L&G, making us more complex than we need to be. To deliver our strategy successfully, we now need to make sure the way we work reflects the business we are becoming. Across L&G, we need to change how we work today and, through this, become a leaner organisation. By the middle of next year, we expect to reduce the size of our organisation by around 1,000 roles.
An L&G spokesperson said:
double quotation markSince 2024, L&G has become a simpler, more focused business. These changes represent the next stage of that transformation, ensuring that our organisation and ways of working reflect the business we are now building and the rapidly changing environment in which we operate.
They will also help us focus our resources and investment on the areas where we see the strongest opportunities for long-term growth. We recognise and take seriously the impact on colleagues and are committed to supporting our people throughout the process and consulting with our unions.
The British insurance and pensions firm Legal & General reportedly wants to cut 1,000 jobs by the middle of next year, amounting to a tenth of of its workforce.
António Simões, the chief executive, is wielding the axe as he tries to simplify the company’s operations.
The London-headquartered firm has kicked off a plan to eliminate about 1,000 roles by mid-2027, according to an email sent to employees on Wednesday seen by Bloomberg News.
The programme will initially be voluntary redundancies in the UK but L&G will consider mandatory cuts depending on take-up, Bloomberg said, citing a source. The investment management division, which oversees £1.2 trillion in assets, is excluded as it already has its own restructuring plan underway.
Updated at 06.31 EDT
Co-op calls on government to create environment to support ‘lifeline stores’Sarah Butler
The Co-op has called on Andy Burnham’s government to “create an environment where we have confidence and certainty to invest” which it needs to support “lifeline stores” in urban and rural communities across the UK.
Kate Allum, the interim chief executive of the mutual who stepped in after the unexpected departure of Shirine Khoury-Haq last year, said:
double quotation markWe have no intention of closing any lifeline stores.
We have a big estate and we want to continue to invest but what we need is confidence. We don’t want unintended consequences of decisions.
The Co-op’s losses widened by £13m to £45m in the six months to 4 July, but the grocery retailer, funerals and insurance business said the step up was largely due to an accounting change.
A Co-op store on the Strand. Photograph: Chris J Ratcliffe/Reuters
It said losses had not improved after last year’s cyber attack as it had been forced to invest in lowering prices and offering promotions to tempt back shoppers it lost when shelves lay empty for several weeks after the hack.
Sales for the group rose 2.4% to £5.6bn led by growth in funeralcare and financial services while grocery sales increased 2.4%, behind the pace of inflation.
Allum said the Co-op was optimistic about the second half of the year as the group had now regained sales momentum and won new members but she said
double quotation markconsumer confidence is pretty uncertain. We talk to our members all the time and the cost of living has been their number one concern for a significant period of time.
Updated at 07.47 EDT
The pound has dipped below $1.33 this morning, as the dollar has strengthened against a number of currencies, on the back of expectations of interest rate hikes in the US.
Matthew Ryan, head of market strategy at the global financial services firm Ebury, said:
double quotation markThe pound has sunk below 1.33 against the US dollar this morning, as investors prioritise hawkish Fed rhetoric and the upward repricing in US rates over any tailwinds to the UK economy from this week’s drop in global oil prices.
The Bank of England has, of course, also placed outsized importance on the energy crisis for the path of its policy rate – suggesting that any hikes would be effectively contingent on a continuation of the conflict – so the recent pullback in oil prices should undercut the case for hikes just as much as it offers relief to UK growth.
Today’s business activity PMI figures were a bit of a disappointment, as while the manufacturing index ticked upwards modestly (52.0 from 51.7), growth in the far more important services sector sector (51.7 from 52.5) slowed more than anticipated.
Growth in Britain’s economy has been remarkably resilient so far this year, though we think that a slowdown is almost inevitable during the remainder of the year – energy costs have risen, borrowing costs are up, the jobs market continues to weaken and political uncertainty looks set to rear its ugly head again as we approach budget day next month.
We expect this to keep sterling under pressure in the near-term, though we do contend that GBP/USD appears a bit oversold at current levels.
ShareUK private sector growth eases in September, inflationary pressures pick up – PMI
Meanwhile, the latest PMI survey shows business activity in the UK eased this month, while inflationary pressures picked up.
The flash UK composite output index fell to 51.7 in September from 52.5 in August, a three-month low. There was a loss of momentum in both the services and manufacturing sectors.
The rate of input price inflation accelerated for the second month running to its highest since June. Companies pointed to increased energy, fuel and raw material costs.
Service providers noted that subdued domestic economic conditions and ongoing geopolitical uncertainty were factors that held back business activity growth in September, although some firms again cited a boost in demand for technology services.
AI investment and greater defence spending were highlighted as factors supporting manufacturing production, while weak consumer demand acted as a constraint.
Total new work across the private sector fell slightly in September, which contrasted with marginal growth during July and August. This mostly reflected a renewed downturn in new business volumes at service sector companies. They talked of weak business and consumer confidence, in part due to pressures on discretionary spending amid the ongoing cost of living crisis.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said:
double quotation markSeptember is seeing a worrying combination of disappointingly sluggish economic growth and intensifying inflationary pressures, with subdued business confidence and high costs meanwhile continuing to discourage hiring.
Output growth across the manufacturing and services PMI surveys has slowed to a pace consistent with the economy growing at a mere 0.1% quarterly rate.
Growth, business confidence and employment are all being hamstrung by high energy prices, elevated business costs, geopolitical worries, higher market borrowing costs and uncertainty over government policy at home in the run up to the autumn Budget.
While the upturn in the survey’s price gauges suggest the Bank of England looks likely to keep a hawkish bias, the worryingly lacklustre pace of business growth underscores the risk to the economy from higher borrowing costs.
ShareUK economic outlook brighter as new government measures will boost growth, says OECD
The outlook for the UK economy has brightened, according to the Paris-based OECD, with inflation lower than expected while new government support measures are likely to boost growth.
The think tank has significantly cut its inflation forecast for this year, from 3.7% to 3.1%, after prices rose less dramatically than expected.
Economic growth for the UK is forecast at 1.1% for 2026, up from the 0.9% it had forecast in June and 0.7% in March, “with consumption expected to be supported by newly announced government support measures”.
In response, the chief secretary to the Treasury, Emma Reynolds, said:
double quotation markDespite unprecedented pressures and conflict in both the Middle East and in Europe, the UK economy is showing strong resilience.
We will face these challenges together and we are already giving families space to breathe. We had the fastest growth in the G7 in the first half of the year and we are starting the big, long-term changes needed to create good jobs and growth in every postcode.
Chief Secretary to the Treasury Emma Reynolds arrives for a Cabinet meeting in Downing Street, London, on 15 September. Photograph: Gareth Fuller/PA
Andy Burnham, who became the UK prime minister on 20 July, announced a cut in VAT on electricity bills as one of his first policy measures on coming to power in July, and has suggested there may be more measures to give consumers “breathing space” in next month’s budget.
Burnham and his chancellor, John Healey, have seen UK borrowing costs rise sharply amid turmoil in global bond markets as ongoing conflicts have disrupted the oil supplies, driving up inflation.
The world’s advanced economies have been warned they need to take action to reduce their borrowing and bring down debt levels, at a time of surging government borrowing costs, according to the head of the International Monetary Fund.
Kristalina Georgieva told the BBC that global economic shocks had been “pushing debt levels up like a staircase not to heaven” despite governments taking “no action to contain that service cost. [It’s] time to take that action,” Georgieva said, adding that courage was needed by politicians to take the necessary steps.
ShareOECD: global economy has been more resilient to Iran war than expected
The global economy has withstood the strains of the Iran war better than first feared but its outlook is “heavily dependent” on a lasting resolution to the conflict, the Organisation for Economic Co-operation and Development (OECD) has warned.
In its interim economic outlook, the Paris-based body suggested global growth had been more resilient than expected when the US-Israeli war on Iran began in late February.
The OECD on Wednesday pointed to the release of global oil stockpiles, a sharp decline in energy imports by China and the switch to other fuels including coal as factors helping to cushion the economic impact of limited Gulf oil supplies.
However, it warned that the recent resurgence in oil and gas prices posed risks for the coming months.
double quotation markGlobal economic prospects remain heavily dependent on whether a durable resolution to the Middle East conflict is achieved.
In its quarterly forecast update, the OECD said it expects global economic growth to be 2.9% this year – a modest 0.1 percentage point upgrade from the 2.8% it forecast in June. At the same time it has trimmed the outlook for next year slightly, from 3.1%, to 3%.
Oil prices fell back below $100 a barrel on Tuesday amid hopes of a potential agreement between the US and Iran, but the continued standoff between the two sides has sent energy costs soaring in recent weeks.
The OECD warned that while more oil supplies were expected to resume as hostilities eased, “renewed or more persistent disruptions could result in both higher inflation and weaker growth”.
The Paris-based organisation also identified the record-breaking El Niño weather system – expected to be the strongest in 1,000 years – as a “significant downside risk” to the global economy, warning that it could hit agricultural production and push up food prices.
Other such risks include a further increase in the yields, or interest rates, on government bonds, which have risen in response to fears of higher inflation, and a loss of market confidence in the value of AI companies.
The OECD said AI investment has helped to offset wider economic weakness, especially in the US economy.
double quotation markIn the United States, countervailing forces are at work, with strong underlying momentum and further expansion of AI investment, but consumer spending that is increasingly constrained by declining purchasing power, softer labour force growth and depleted household savings.
ShareEurozone private sector growth hits 3 1/2 year high, helped by AI and defence spending
In the eurozone as a whole, private sector output growth hit a three-and-a-half year high in September, helped by the ramp-up in AI and defence spending, according to the latest PMI survey.
The flash reading from S&P Global showed output rose at the fastest pace since April 2023 amid solid expansions in both the series and manufacturing sectors, reflecting high new orders.
The composite output index rose to 53.1 in September from 52 in August, indicating faster growth. Any reading above 50 points to expansion. The services index jumped to 53 from 51.6, marking a 10-month high, while the manufacturing index edged up to 53.4 from 53.3, a four-and-a-half-year high.
However, the rate of job creation remained muted as confidence in the year-ahead outlook eased to a three-month low. Rates of input cost and output price inflation were the strongest since May.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said:
double quotation markIt’s no surprise to see inflationary pressures on the rise again in September, given the increase in energy prices emanating from the ongoing conflict in the Middle East, but more encouraging is the resilience of economic growth being reported. Accelerating business growth means the flash PMI survey is indicative of GDP rising at a quarterly rate of 0.4%, with order book growth picking up further momentum across both manufacturing and services in September to hint at sustained momentum heading into the fourth quarter.
Manufacturing, spearheaded by Germany, is enjoying its best growth spell for over four years, spurred by rising AI and defence spending, but service sector growth is also perking up to signal a broad-based improvement in the economic growth story.
The rate of job creation remains subdued as business confidence continues to be dampened by caution over geopolitics, notably the ongoing impact on energy prices and the cost of living. However, employment has edged higher again in September, up for a second month, to suggest more companies are returning to the jobs market.
The resilience of economic growth amid the headwinds of geopolitical issues and rising prices will likely embolden the European Central Bank to hike interest rates again before the end of the year, adding to the case for rates to rise sooner rather than later to put an October hike very much on the table.
ShareGerman businesses record ‘solid and accelerated increase’ in output of goods and services – PMI
The picture also brightened in Germany, Europe’s largest economy.
Businesses in Germany recorded a “solid and accelerated increase” in output of goods and services at the end of the third quarter, according to the latest PMI survey from S&P Global.
This was despite firms reporting increased inflationary pressures, which they linked in large part to the rising price of fuel.
The flash composite output index for September rose 53.8 from 51.8 in August, an 11-month high.
The services business activity index increased to 52.9 from 49.7, a seven-month high and above the 50 mark that separates expansion from contraction.
The manufacturing output index eased to 55.9 from 56.6, a two-month low, but stayed well above the 50 mark.
Visitors stand in front of a Flixtrain train at the InnoTrans International Trade Fair for Transport Technology on 22 September in Berlin. Photograph: John MacDougall/AFP/Getty Images
Phil Smith, economics associate director at S&P Global Market Intelligence, said:
double quotation markGerman businesses reported further signs of resilience in September, with output growth picking up speed, expectations towards the outlook holding steady and employment rising for a second month running, all despite renewed pressure on the inflation front.
The flash data pointed to the strongest rise in business activity for almost a year, with the service sector finally rejoining manufacturing in growth territory after a quieter period that followed the outbreak of the Middle East war.
Rising inflows of new work were starting to put pressure on business capacity, however, as underlined by the accumulation of backlogged orders, which in turn helped strengthen labour market conditions. So far, recent job creation has been confined to the service sector, but factory employment continued to show signs of stabilising as goods producers reported rising levels of work-in-hand and greater optimism towards future output.
Updated at 03.44 EDT
French private sector activity rebounds in September
In France, private sector activity bounced back in September, and rose at the fastest pace in more than two years.
The first of the flash purchasing managers’ index (PMI) reports from S&P Global for September showed a strengthening of the eurozone’s second-biggest economy at the end of the third quarter as activity growth returned.
The composite output index, measuring service and manufacturing activity, rose to 51.2 from 48.5 in August. Any reading above 50 points to expansion. This was driven by the services sector, where the business activity index jumped to 51.4 from 48, a 10-month high. The manufacturing PMI dipped to 50.3 from 51.1.
Demand improved, reflecting rising sales activity in the service sector, although employment continued to decline and business optimism weakened further.
The Friche de la Belle de Mai, the roof terrace open on summer weekends, in Marseille. Photograph: Hemis/Alamy
Joe Hayes, senior principal economist at S&P Global Market Intelligence, said
double quotation markThe French economy displayed surprising resilience in September, although the durability of this expansion is questionable given new orders barely rose and firms’ own expectations for activity deteriorated. There may also be some payback driving the uplift after the extreme heat seen in August disrupted some business activities, particularly in the service sector.
Nevertheless, these data reinforce the narrative that European economies are weathering the war-induced inflation shock well. The pick-up in the PMI price measures seen in September should however be watched closely, particularly as we approach the winter months, as the risk of energy price inflation spreading to other areas of the economy undoubtedly rises.
Input and output prices both rose at quicker rates for the first time since May as rising cost pressures were passed on to clients, the survey showed.
Updated at 03.43 EDT
IMF chief issues call to action to governments, with global shocks ‘pushing debt levels up like a staircase to heaven’
Joanna Partridge
The world’s advanced economies have been warned they need to “take action” to reduce their borrowing and bring down debt levels, at a time of surging government borrowing costs, according to the head of the International Monetary Fund (IMF).
Kristalina Georgieva told the BBC that global economic shocks have been “pushing debt levels up like a staircase not to heaven”, and that governments have been taking “no action to contain that service cost”.
Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva. Photograph: Pluto/Alamy
“[It’s] time to take that action,” Georgieva said, adding that “courage” was needed by politicians to take the necessary steps.
Her comments come at a time governments, including the UK and US, have seen their borrowing costs soar as ongoing global conflicts have disrupted the oil supply, driving up inflation.
Updated at 03.11 EDT
Introduction: Oil prices fall in longest losing streak in a year on hopes of progress in US-Iran talks
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Oil prices have fallen for a sixth session, dropping further below $100 a barrel on reports of increased supply from the Middle East, and amid hopes of progress in talks between the US and Iran.
Several Asian stock markets have risen for a sixth session with the exception of Chinese indices, riding high on the artificial intelligence wave.
Brent crude is down about $1 at $98.32 a barrel, after closing below $100 a barrel yesterday for the first time in more than two weeks. If the downward move is sustained over the day, the six-day declines would be the longest losing run for oil since August 2025, according to Bloomberg.
Reuters reported, citing sources, that Saudi Arabia has restarted operations at its east-west pipeline and may have already resumed exports from the Red Sea port of Yanbu.
Donald Trump talked of progress in talks with Iran in New York, but also threatened to “annihilate” the country if there was no deal.
Iranian president Masoud Pezeshkian addresses the UN general assembly later today and according to reports may meet with the US president.
Chinese president Xi Jinping arrives in Washington later today for talks with Trump, with speculation a trade truce between the US and China will be extended, and hopes that they can agree a cooperation deal over AI. Trump commented on AI in his speech at the UN yesterday, calling it “super intelligence” and rejecting any attempts to control it. He said:
double quotation markI’m not going to stifle growth of something that will be bigger than the Industrial Revolution.
The buzz around AI has lifted technology stocks and helped South Korea’s Kospi gain nearly 0.7% while the Taiwan stock market rose 0.75%. Japanese markets are closed for the silver holiday. China’s CSI 300 fell 0.5%. European and US stock futures are pointing to a higher open.
There has been strong uptake of Meta’s new personal Muse agent, which has sat at the top of US app download charts since its launch a fortnight ago.
The dollar has climbed to a two-month high on expectations of interest rate hikes soon. Sterling dipped 0.2% to $1.3316 while the euro eased to its weakest level since July, falling 0.2% to $1.1423.
The Agenda
9am BST: Eurozone S&P Global flash manufacturing PMI for September
9.30am BST: UK S&P Global flash manufacturing PMI for September
2.45pm BST: US S&P Global flash manufacturing PMI for September
Updated at 03.16 EDT