ISSUE NO. 50 · MONDAY 12 OCTOBER 2026

An £18bn war risk against an £11bn buffer, Shell’s margin at $42 a barrel, and permanent hiring at a four-year high

EY puts the Chancellor’s buffer at £11.3bn, and that figure assumes the Strait of Hormuz reopens in time for the Budget. Let the war run into the middle of next year and another £18bn comes off, more than the cushion itself.

Last week kept returning to one seam: energy prices are now setting British fiscal policy. A refiner is heading for its best quarter of the year while drivers pay record prices, and thirty-year borrowing costs hit a level last seen in the 1990s. Employers alone pointed the other way.

Below: a buffer resting on a shipping lane, a refiner on the right side of the pump, a jobs market with a pulse, eight numbers, the week ahead, one calculator, then everything else from the week.

Lead

A fifth of the world’s oil and gas moves through the Strait of Hormuz, and this Budget is now priced on it reopening.

EY’s central case puts the gap between Healey’s plans and his borrowing target at £11.3bn, assuming the Gulf chokepoint reopens around Budget time. Run the war to the middle of next year and a further £18bn comes off the forecast. Its adverse case, with inflation at 6% and activity slowing sharply, leaves a £7bn deficit on the current budget in 2029/30 — under the fiscal rules a breach, not a near miss. There is an upside too: unemployment falling could lift receipts early and take the buffer towards £40bn. Read the full story →

The Numbers

Eight numbers. Petrol is at a twelve-month high, the gilt eased back in October, and Bank Rate, pay and unemployment have not moved.

More News

Diesel passed 200p a litre for the first time last week, and the company refining it is heading for a bumper quarter.

Shell expects an indicative refining margin of $42 a barrel for the third quarter against $24 in the second, a 75% jump landing in the division that turns crude into petrol, diesel and jet fuel. G7 leaders agreed to release emergency stocks with the International Energy Agency, and Rhine disruption held refinery utilisation between 93% and 97%. The squeeze reached the bond market too, with thirty-year gilt yields past 6% for the first time this millennium. The full figures land on 29 October. Read the full story →

A score of 50.9 is no boom, but permanent hiring has not grown two months running in four years.

KPMG and REC scored permanent placements at 50.9 in September, where anything above 50 means growth — a four-year high and the second consecutive month of it. Permanent private-sector vacancies rose for the first time in more than two years, and overall demand for staff shrank by the smallest margin since August 2024. Staff availability eased to 57.2 from 60.6, with candidate numbers rising fastest in the North. Jon Holt of KPMG calls the recovery fragile and wants tax clarity from the Budget. Read the full story →

The Brief

Everything else published last week, newest first.

• Unite Students Is Cutting Rents to Keep Its Beds Full — 95.6% of beds let, the fund lost 4%.
• The Budget Could Push More Cash Into Money Market Funds — £417m in during September, the most since 2025.
• London House Prices Falling Faster Than the UK — The capital down 2.2%, the country flat.
• Healey Will Face an IMF Test on Cost of Living Support — Targeted help, says the IMF, not tax cuts.
• Tory Tax Cuts Open With a £2.3bn Youth Jobs Pledge — Employer NI cut for workers aged 21 to 24.
• Investors Shun Equities but Back Emerging Market Funds — £858m pulled out of equity funds in September.
• A Sainsbury’s Merger With Morrisons Could Clear the CMA — The watchdog blocked Asda; this may differ.
• Overpriced Deals, Not Volatility, Froze the IPO Market — The listings went quiet for a subtler reason.
• Employers Pick Pensions on Price, Not on Returns — A tenth of default funds into private markets.
• Exit Tax Talk Threatens to Widen the Wealth Exodus — £121bn of wealth has already loosened its ties.
• Bank Tax Rise Looms Over Healey’s First Budget — Taxes already take 46% of bank profits.
• Chinese Car Sales Surge as Europe’s Brands Lose Grip — Over 300,000 Chinese cars bought here this year.
• Costa Coffee Profits Make the Failed Sale Look Lucky — Coca-Cola wanted £2bn and found no takers.

The Week Ahead

• Thursday, 7.00am BST — Monthly GDP, August. The last monthly growth reading before the Budget.
• Thursday, 7.00am BST — Construction output, August. Same minute, and whether housebuilding is adding to growth.
• Thursday, 7.00am BST — UK trade, August. Also at seven, and where Gulf disruption shows up on imports.

The Toolbox

One calculator each Monday, picked for whatever last week left unresolved. Free, no sign-up, workings on the page.

Employer NI Calculator

“If the Budget leans on employer National Insurance, a hire gets dearer before anybody’s salary moves. This works out what each employee costs you now, and what a higher rate would add.”

The Close

Two of last week’s three stories are one story from opposite ends: the barrel that fills a refiner’s margin is the barrel that could cost the Chancellor his buffer. The third is the part he controls. Employers said they would hire if the Budget gave them certainty, which is cheaper to supply than money.

If something here is wrong, or there is something you want dug into, just reply. It comes straight to me.

MJB