The latest economic news and market highlights from the UK and abroad.
This week's headlines:
US inflation rises ahead of the midterms – US inflation increased to 3.7% in the year to September, up from 3.4% in August and higher than expected. The figures are the final inflation data released before the US congressional elections.
UK growth forecast upgraded – the UK’s growth forecast was upgraded by the International Monetary Fund (IMF), with the UK economy expected to expand by 1.3% in 2026, up from 1% predicted in July.
Anthropic revenue increase ahead of debut – AI giant Anthropic was revealed to have a 45% increase in revenue to $16.8bn in the three months to the end of September. The company is looking to list on the stock market soon.
Bank of America fined $1.2bn over anti-money laundering failures – the banking giant failed to report over $5bn in suspicious transactions, including activity linked to Chinese money laundering networks. The penalty is reported to be the third largest fine the US Treasury has ever imposed.
What this means for financial advisers and clients
Midterms
Higher-than-expected inflation is likely to remain a key issue for US voters, it’s the highest ever level before a midterm election. The price of gasoline accounted for over half of the overall price increases. Prices have largely been driven by the US-Iran war. The economy has been cited as a top issue for US voters as inflation has eaten into household budgets and businesses.
For investors, the main consideration is what this means for interest rates. Persistent inflation could make the US Federal Reserve (Fed) more cautious about lowering rates, or potentially lead to tighter monetary policy than markets currently expect. Higher interest rates can increase borrowing costs for consumers, businesses and governments, while also influencing the performance of different asset classes.
Going for growth
Government borrowing costs have surged, making the Chancellor’s Budget this month a tricky balancing act if it’s to stay within the government’s own borrowing limits. And the eyes of financial markets are on him to make sure this happens.
The IMF’s upgraded forecast is welcome news. Given its previous calls for countries to manage and bring down their debt levels, the upgrade shows the growing confidence in the resilience of the UK economy.
The Budget will need to remain fully costed to avoid debt further spiralling out of control. Healey has already ruled out calls to equalise capital gains and income tax rates, but tax rises aren’t completely off the cards. He’s also said he wants to give people breathing space from the cost of living and business pressures.
Market Sentiment on AI
Anthropic’s revenue growth is being closely watched ahead of its potential stock market listing. As well as looking to list and drum up shareholder interest, its performance is increasingly being seen as an indicator of the overall success of AI.
With large capital expenditure continuing to flow into AI, companies are facing greater scrutiny over their spending. Wednesday saw drops in AI stocks in the US and Asia over comments made by Hock Tan, CEO of Broadcom over AI spending.
If Anthropic chooses to list on the stock market, it could prove an important moment for the sector, influencing the direction of AI, expenditure on it, and how people are investing in it.
Chart of the week
Source: BBC, IMF Outlook
Why’s this worth sharing?
With plenty of doom and gloom in the headlines, it’s worth noting that the UK is in a stronger position than many other G7 countries, according to the IMF. In fact, it’s expected to have the second fastest growing economy in the G7.
That said, government borrowing for all countries is way ahead of what it was in 2013. This chart highlights how much debt some countries hold as a percentage of GDP and serves as a reminder of the challenge many governments face. Bringing borrowing and debt costs under control is likely to require some difficult decisions in the years ahead.
The Markets
UK: UK markets outperformed global peers this week, with the FTSE 100 surging almost 2.5%. This was due to the UK’s low exposure to the AI sector.
US: A highly volatile week, as inflation data and AI expenditure moved investors away from technology stocks and into defensive assets.
Europe (ex UK): European markets also saw gains, supported by strong corporate earnings and their greater exposure to defensive companies including healthcare and industrials.
Japan: A punishing week for Japanese markets, with outflows from technology stocks coming under pressure as investors reduced exposure to the sector.
Asia Pacific ex Japan: Key chipmaking hubs like South Korea and Taiwan bore the brunt of the tech sell off this week. However, investors buying the dip, alongside TSMC posting strong earnings on Thursday, helped stem some of the losses.
| Name | Weekly change | YTD change |
|---|---|---|
| FTSE Actuaries UK Conventional Gilts All Stocks | 0.78% | -1.73% |
| IA Sterling Corporate Bond | 0.47% | -0.68% |
| IA Global High Yield Bond | -0.16% | 0.93% |
| FTSE All Share | 2.56% | 12.04% |
| FTSE USA | -1.16% | 15.48% |
| FTSE World Europe ex UK | 0.81% | 6.49% |
| FTSE Japan | -3.11% | 18.87% |
| FTSE Asia Pacific ex Japan | -5.61% | 16.29% |
| FTSE Emerging | -2.61% | 10.46% |
Source: FE. GBP returns as at close of business on Thursday 15th October 2026.
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