Susannah Streeter, Chief Investment Strategist, Wealth Club: ‘’As the war with Iran appears even more entrenched, energy prices are on the rise again, creating a mood of caution. As inflationary risks stay elevated the FTSE 100 has fallen back as traders keep a close eye on Brent Crude, the benchmark which has scurried back above $97 a barrel. The moves come after attacks between the US and Iran intensified. American forces have targeted three oil tankers, after Iranian strikes on US warships. With the US trying to maintain a blockade on Iran crude exports, and the strikes from both sides turning the Strait of Hormuz into dangerous waters, supply concerns keep swirling. The energy crunch deep in a chronic phase but risks turning more acute with $100 a barrel prices back in sight.
While higher crude prices are a bonus for oil majors, it’s a big headache for other industries, as the costs of keeping the light on, customers warm, and factories whirring becomes more onerous. They raise inflationary risks too, with the prospect of companies passing on the higher overheads as higher prices. Those hoping for relief from higher borrowing costs have been left sorely disappointed, with markets pricing in multiple hikes. The Bank of England is forecast to raise rates potentially three times over the next year, while the Fed is also expected to start another hiking cycle, especially after the strong jobs numbers which landed on Friday. Even if central bankers stay more cautious, and don’t end up hiking, to this extent, the damage of predictions is already done, as market pricing of future moves influences everything from business loan rates to mortgage deals and government borrowing costs. The yield on 10-year gilts, is staying painfully elevated, ticking up higher to £5.165, it means the government has to pay more to finance its debt pile, when it wants to raise more funds.
It’s a highly awkward backdrop for John Healey, the Chancellor to make his big speech later on revitalising growth in the economy. Crushing energy bills, fractious geopolitics, tense trade relations and the high cost of borrowing mean he’s walking a precarious tightrope. He’ll want to convince bond investors that he’s going to be prudent with the finances, and not lead to another bond market strop out, but at the same time is expected to show the government is serious about funding investment.
He’s set to unveil a £150 million fund for companies with high growth potential in the North of England. He’s also expected to make a pitch about how sparking regional growth will be a key driver of the government's economic strategy, using state money to crowd in private capital, while handing city regions more power to decide where investment should go. It comes at a time when a regional growth spurt is clearly needed. Although British tech appears to have had a renaissance this year in terms of raising capital, it’s highly skewed to the London region. The British Business Bank has already invested more in the last nine months than in the previous four years. Total investment is expected to scale to over £400m this year. It’s helped open the door, to a surge of UK venture capital investment, which reached £14.4 billion in the first half of 2026, with AI companies attracting the bulk of that, but the vast majority of them are based in the capital.
So, while the British tech scene remains highly promising and a source for future jobs, the regions are still set to struggle. The timing is particularly awkward given the fresh warning from Jaguar Land Rover. The carmaker has launched a voluntary redundancy programme as it targets around £1.7bn of savings over the next two years, with up to 4,000 jobs potentially affected. JLR is being squeezed by falling sales, US tariffs, rising costs and increasingly fierce competition from cheaper Chinese manufacturers. While investment in tech firms is welcome, job creation will lag, just as Britian’s industrial base in being battered by global competition.
It’s also raising fresh questions about how a new social contract is needed to give younger workers a leg up and reduce the generous uprating terms of the state pension. The argument to scrap the triple lock is again hitting the headlines with the British Chambers of Commerce arguing for it to be abandoned to save billions of pounds.
The universal triple lock does give an especially strong protection to one age group at a time when younger generations face high rents, struggle to buy homes and have a heavier tax burden to support an ageing population.
But all this speculation is potentially harmful as people need certainty to plan for retirement. Whether you're 30, 40 or 50, you need to have some idea of what the State Pension will provide so you can work out how much you need to save privately. If the triple lock is clearly becoming unaffordable and needs reform, there is a strong argument for making those changes sooner rather than later, rather than leaving people in limbo. Constant speculation muddies the playing field and makes it harder for people to know how much they will actually need to put aside for their later years.’’
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