Healey quizzed about bank tax plans
Heather Stewart
Over at the IMF’s annual meeting in Bangkok today, chancellor John Healey is meeting with UK journalists now, including my colleague Heather Stewart.
Healey, who should be cheered by the news that the UK economy grew unexpectedly in August, was asked whether he plans to impose new taxes on the bank sector, and replies:
“I don’t want anybody to try and read in or second guess what [we may] do in two weeks’ time.
My observations on the banks are just that people too often see them as a big distant financial institutions, when they are hardwired into the economic fabric of this country and our future prospects.
That said, you know I’ve got decisions to take in the in the budget, and I will. I’ll set those out in two weeks’ time.
Healey added that his “special responsibility as Chancellor is to protect the resilience of the British economy for the future” – echoing what he told Sky News a few minutes ago.
The chancellor also welcomed the IMF’s support for the UK’s fiscal plans.
Key events
US tech stocks are expected to fall when trading begins in under two and a half hour’s time.
The futures market indicates the Nasdaq index could drop by around 1.2%, adding to yesterday’s fall of almost 1.9%.
Charu Chanana, chief investment strategist at Saxo says the markets are getting increasingly nervous, despite strong results from tech companies such as ASML and Micron, adding:
AI demand is not the problem; expectations and financing are. CoreWeave’s bond selloff highlights growing scrutiny of debt-funded AI infrastructure and the cost of capital.
The IMF warned today that the Middle East region is suffering a highly uneven economic shock this year.
Prolonged war in the Middle East and further disruptions to energy production, shipping routes or critical infrastructure pose the biggest risk to economies in the Middle East and Central Asia, the Fund pointed out.
Jihad Azour, the IMF’s director for the Middle East and Central Asia, told a news conference:
“The outlook depends critically on how quickly energy production and trade normalize, and on countries’ ability to preserve macroeconomic stability.”
Back in the financial markets, US government borrowing costs are heading for their biggest daily drop in over a year.
The sell-off in AI-linked stocks, such as chipmakers, today is driving investors into bonds instead. And the US, as well as the UK, is benefitting.
Ten-year US Treasury yields are down 11 basis points today to 5.08%, which Reuters has spotted would be the largest one-day decline since early August 2025.
Elsewhere in Bangkok today, Bank of England deputy governor Sarah Breeden has said UK firms are trying to cut custs in response to the energy price shock, rather than just lift their prices.
That trend should make it easier for the central bank to contain inflation, and limit pressure to raise interest rates.
Speaking to CNBC TV on the sidelines of the IMF’s annual meeting, Breedon said:
“What’s really different now, relative to when we had the last energy shock in 2022, is that people aren’t looking to push costs through.
“There’s a desire to absorb the shock rather than just pass it on, which makes our job as monetary policymakers a bit easier in these uncertain times.”
Healey: Banks are part of ‘jewel in the crown’ of UK economy
Intriguingly, Chancellor of the Exchequer John Healey has told Bloomberg that banks are a part of the “jewel” in the UK’s economic crown.
That, alongside his comments to UK journalists in Bangkok that banks are “hardwired into the economic fabric of this country and our future prospects” could, perhaps, dampen speculation that the budget might contain a bank tax.
Healey told Bloomberg:
“They’re a big contributor to the economy…
“They [the banks] are a part of the jewel, if you like, in the British economic crown.”
Important to note that Healey was very keen to avoid pre-budget speculation this morning, pointing out how economically damaging it could be.
Last week, the Trades Union Congress (TUC) calculated that tax cuts for big banks have deprived the UK government of £6bn in revenues.
The TUC argues that the government should reverse the cut to the bank surcharge made in 2023 by Tory chancellor Jeremy Hunt.
Bank bosses have been lobbying intensively against bank tax rises, after narrowly escaping higher levies during last year’s budget. Jamie Dimon, chief executive of the largest US bank, JP Morgan, warned Burnham and Healey against further levies during a meeting last month, saying it could put investment and jobs at risk.
Healey working on more support for Ukraine
Heather Stewart
John Healey wrapped up his meeting with the UK press pack in Bangkok with a heavy hint that he is preparing to offer more support to Ukraine at the budget.
Healey, who was of course defence secretary earlier this year, said:
“Now is the time to step up pressure on Putin and step up support for Ukraine.”
Asked if that could come as soon as the budget, Healey said:
“I’m working on different ways we can step up support for Ukraine, military, diplomatic, and economic, and you know, if anybody needed any reminder of that, it’s what we see coming out of Ukraine, with Putin targeting these energy systems, leaving thousands without power, as we’ve got a harsh winter approaching.
The future of Ukraine is the future of European security, and that’s that’s why it’s so crucial that Putin doesn’t prevail.”
Healey pledges to stick to fiscal rules
The press pack are now pressing John Healey on whether he will stick to the UK’s fiscal rules (which were a big part of his predecessor Rachel Reeves).
Healey pledges to meet those rules (that day-to-day public spending must be covered by tax revenues, and that debt is falling as a share of GDP by the 2029/30 financial year).
Healey tells reporters in Bangkok:
“The test year is now just three years ahead, so this is a tighter set of fiscal rules than we had before. It’s not five years out, four years out – it’s in three years, 2029-2030, with borrowing set to fall and current spending covered by what we raise.
We will meet those fiscal rules, and I think one of the hallmarks of the IMF’s backing of our fiscal plans is recognition that there isn’t just a forecast for the future, but there’s some evidence of performance already.”
Healey: Closer UK-EU links are important
Heather Stewart
Asked about the potential economic benefits for the UK of potentially rejoining the European Union, John Healey said:
“Those sort of matters may become part of a wider conversation that the prime minister’s keen to keen to encourage, because his basic starting point is one that very few people would dispute – that Brexit has not been good for for Britain.
But my task now, whatever happens in the future, is to make sure that we do our best to open up access to the markets where we can. That’s what the European Summit is designed to do in specific areas. You know, we’ve got a big argument with Europe over the way that they frame their Made in Europe plans, just as we have over access to some of their defence.
And that big argument is, at this time of all times, when you have a strengthening US, a more resurgent China, actually, the strength of Europe beyond the European Union is enhanced in the economy and the national security side. If other European nations like us, like Norway, have contributions to make, we can do so with them.”
Reminder: earlier this week, Andy Burnham said the existing UK-EU relationship is “not good enough”.
The UK is also lobbying hard to be included in the EU’s flagship industrial “Made in Europe” legislation, amid fears of the damage if British manufacturers are locked out.
Healey: won’t engage in ‘deeply damaging’ pre-budget speculation
Heather Stewart
UK journalists then quizzed John Healey about specific tax options – including capital gains tax.
The chancellor responded that speculation ahead of previous budgets had been economically damaging.
Speaking on the sidelines of the IMF’s annual meeting in Bangkok today, the chancellor says:
“Just in general terms, if you think back to the run-up to previous budgets, the speculation about what was set to be in those budgets was actually deeply damaging.
It led to people cashing in their pensions early when they didn’t need to. It led to people holding back or not investing in their businesses when they didn’t need to. So I’m just not going to get drawn into any speculation, especially as chancellor, especially this close to the budget.”
Healey then talks about “signs of encouragement” on the economic picture, as underpinned this week by the upgrade in the IMF’s growth forecast.
“The task of the budget is to reinforce those elements of potential rapid growth in Britain for the future.”
Healey: Budget will give Britain a bit of breathing space
Heather Stewart
Asked about energy prices, John Healey then cited the government’s VAT cut on electricity bills, saying:
“It doesn’t remove the cost pressure. It recognises those pressures and says, look, where we can, we’re a government that will act to try and give people a bit of breathing space. I’ve been very clear. Also, the prime minister’s talked about recognising the cost of business, not just the cost of living.
And then he tells journalists in Bangkok that the budget will give Britain “a bit of breathing space”:
And so, I want the budget to be a budget that gives Britain a bit of breathing space, but also reinforces the the strength of our fiscal plans and the strength of our resilience and our economy for the future.”
Healey quizzed about bank tax plans
Heather Stewart
Over at the IMF’s annual meeting in Bangkok today, chancellor John Healey is meeting with UK journalists now, including my colleague Heather Stewart.
Healey, who should be cheered by the news that the UK economy grew unexpectedly in August, was asked whether he plans to impose new taxes on the bank sector, and replies:
“I don’t want anybody to try and read in or second guess what [we may] do in two weeks’ time.
My observations on the banks are just that people too often see them as a big distant financial institutions, when they are hardwired into the economic fabric of this country and our future prospects.
That said, you know I’ve got decisions to take in the in the budget, and I will. I’ll set those out in two weeks’ time.
Healey added that his “special responsibility as Chancellor is to protect the resilience of the British economy for the future” – echoing what he told Sky News a few minutes ago.
The chancellor also welcomed the IMF’s support for the UK’s fiscal plans.
Healey: I will protect the resilience of the economy
UK chancellor John Healey has pledged to protect the ‘resilience of the UK economy’ when he presents his budget on 28 October.
Speaking to Sky News at the IMF’s annual meeting in Bangkok, Healey said the IMF had backed Britain’s plans this week, and upgraded its growth forecast for this year.
Speaking after the latest UK GDP report showed the economy kept growing, by 0.1%, in August, Healey say:
They [the IMF] say stay the path, and my budget will. It’s my job, my responsibility as chancellor to make sure that I can protect that resilience in the British economy, and I will do that in the budget in two week’s time.
UK bond yields fall amid semiconductor sell-off
The slump in tech stocks is helping to push down Britain’s borrowing costs.
The yield, or interest rate, on UK debt has dropped today as investors buy up these gilts.
This has pushed the yield on UK 10-year bonds down by 10 basis points (0.1 of a percentage point) to 5.33% today.
Thirty-year gilt yields are down 10bps too, to 5.8%.
Neil Wilson, investor strategist at Saxo UK, explains what’s occuring:
The sell-off across semiconductor stocks has sent bond yields lower, which if it sticks could ultimately support risk sentiment and support valuations.
This is two-fold; one a flight to relative safety with the risk-free rate generating 5%, and two, because a breakdown in the AI capex narrative and pullback in spend will shrink the supply of debt, the huge increase of which has been a powerful driver of bond yields moving out to multi-year highs.
Chip sell-off drags South Korea’s Kospi index to six-month low
Oof! South Korea’s benchmark Kospi share index has closed at a six-month low, as inflation fears and worries about the IT boom triggered a sell-off.
The Kospi ended the day down 7.5% at its lowest closing level since April, after a day of wild trading that briefly caused circuit breakers to be triggered. At its worst point, the Kospi was down over 9%.
Chipmakers drove the selloff – Samsung Electronics fell 9.5% and SK Hynix plunged by 11.1%.
It’s been a staggering year for South Korean traders. In the first half of 2026 the Kospi roughly doubled in value, as investors flocked to buy shares in chipmakers whose products were in hot demand with AI companies.
But that boom began to fade as we entered July. And now, the Kospi is ‘only’ up 30% for 2026.
The South Korean stock market boom was driven by a surge of interest from retail investors, many of whom bought shares on margin (with borrowed money), and could have lost their stakes as the market turned sour.
As covered earlier, today’s tech rout is partly due to worries over US inflation, which may trigger interest rate rises.
There’s also concern about the high amount of borrowing which AI firms are taking on as they roll out data centres and train new AI models.
Lee Hardman of Japanese bank MUFG told clients this morning:
Bloomberg has reported that investor confidence in AI-related confidence has been undermined in part funding concerns.
CoreWeave, the world’s biggest and most established neocloud, a relatively new term for companies that rent out computing power to AI model developers and teach leaders, saw its shares plunge in value by as much as 17% yesterday, and its debt due in 2032 traded at less than 78 cents on the dollar.
According to Bloomberg, credit default swaps on the company are pricing in more than a 50% chance of default within the next five years.
European stock markets pulled down by tech slump
Although Britain’s FTSE 100 share index is holding up well this morning, other European markets are in the red in early trading.
Germany’s DAX index dropped by 0.5% at the start of trading, a few minutes ago, while France’s CAC is down 0.2% and Spain’s IBEX lost 0.17%,
Mining shares slide in London
The London stock market is open, and shares in mining companies are dropping sharply.
Copper produder Antofagasta (-6.5%) is leading the fallers on the FTSE 100 share index, with Rio Tinto (-4.2%) and Anglo American (-4%) close behind. That may reflect concerns that a rise in US interest rates to fight inflation will dampen growth, and demand for commodities.
However, the wider FTSE 100 index is only down 0.1%. As it doesn’t include many tech shares, it is insulated from the rout in chip stocks today. Instead, ‘defensive shares’ such as tobacco firms, consumer goods maker Haleon (+2.6%) and hotel chain Whitbread (+2.4%) are in demand.
Update: Antofagasta also released its latest production report this morning – this showed a 7% rise in third-quarter copper production, with the company maintaining its annual guidance.
Deutsche Bank: The UK’s resilience story continues
The UK economy “surprised yet again” by growing by 0.1% in August, says Sanjay Raja, chief UK economist at Deutsche Bank:
Raja explains that the UK’s resilience story continues:
Undoubtedly, there may be some hiccups to come in the run up to year end, especially as energy prices continue to bite household incomes, and higher rates continue to drag on spending and investment.
The good news? The UK’s resilience story continues. It’s hard to overstate how strong the UK performance has been all year. The UK economy remains the fastest growing G7 economy.
What’s more impressive? If you believe the HMRC jobs data, UK GDP growth has hit 1.8% this year in the first eight months of the year, with 95k FEWER jobs. Who said productivity growth was dead in the UK?”
