ISSUE NO. 23 · THURSDAY 3 SEPTEMBER 2026

A ten-year gilt at levels last seen in 2008, business investment set to shrink, and a startup survival rate eight points below the European average

Governments set out their plans in the Commons. The pricing happens elsewhere. UK gilt yields moved this week to levels not seen in a generation — the ten-year at its highest since 2008, the thirty-year back at a mark last touched in 1998 — and Britain is now paying more than £130bn a year in debt interest alone.

That number is the ceiling on everything else in today’s issue. Business investment is forecast to shrink 0.2 per cent this year, so firms are spending less on themselves than they did last year. And of the companies Britain does start, only 38 per cent are still trading five years later, against 46 per cent across the EU and 51 per cent in the United States. Three different channels for funding growth, all of them narrowing at once.

Below in full: why the bond market outranks the Chancellor, what a forecast contraction in investment says about the second half of the year, and where the money for British startups actually comes from. After those, the numbers, today’s diary, and one calculator worth five minutes.

Lead

The ten-year gilt yield is at its highest since 2008. The thirty-year is at a level not seen since 1998.

Britain pays more than £130bn a year on debt interest alone, against a national debt approaching £3tn — and every basis point of yield adds to that before a single policy is chosen. Andy Burnham has arrived as Prime Minister with a growth plan, but the bond market sets the limits of what John Healey can actually fund, and it has been tightening those limits all week. That is the part worth being clear about: a Prime Minister can pick his growth theory, he cannot pick the price of borrowing. With the ten-year where it is, the thirty-year back at 1998 levels and £130bn a year going out in interest, the room for a generous Budget has already gone. What remains to be settled is who finds that out first, and how loudly. Read the full story →

The Numbers

Bank Rate is 3.75% into the 17 September decision and CPI is still July’s 2.9%, though the forecast in today’s investment story has inflation peaking at 3.6% and unemployment ending the year at five per cent, against 4.9% now. The debt interest card is the one to sit with: it is roughly what the state spends before it decides anything.

More News

Both forecasts moved the right way, and neither is good news.

Britain’s economy is now expected to expand one per cent in 2026, and the expected fall in business investment has been softened from 2.2 per cent to 0.2 per cent. A smaller contraction is still a contraction: firms are set to spend less on themselves this year than last. The shape underneath the annual figure is what matters. Growth of 0.6 per cent and 0.4 per cent in the first two quarters gives way to a forecast contraction in the third, so the better headline number was built almost entirely in the first half and has already run out. Unemployment is expected to end 2026 at five per cent and inflation to peak at 3.6 per cent. Until firms are confident enough to spend on themselves again, the Budget becomes an argument about dividing a smaller economy next year rather than growing a bigger one. Read the full story →

Britain incorporated over 800,000 companies in 2025. Five years on, only 38 per cent of UK companies are still going.

The EU average is 46 per cent and the US is 51 per cent, so the gap is eight points on one side and thirteen on the other. The shortfall is not ambition, it is access to capital — and the domestic share of that capital is shrinking. Venture funding coming from UK investors fell from 33 per cent in late 2015 to 25 per cent in late 2025, which means three-quarters of the money backing British companies now comes from somewhere else. Venture capital trusts are one of the few routes already built to ease this: they have directed up to £1bn a year into UK companies, supporting around 1,100 firms and over 100,000 jobs. Britain builds companies faster than it backs them, and capital access is not the hardest structural problem to fix, because the vehicle already exists and already works. The open question is whether the tax treatment that makes it possible survives the next Budget. Read the full story →

On the Diary

• Today, 9.30am BST — Business insights and impact on the UK economy. The fortnightly survey of what firms are reporting themselves, which is the closest read available on whether the investment forecast above is already being felt.
• Tomorrow, 9.30am BST — Economic activity and social change in the UK, real-time indicators. The fastest series the ONS publishes, and the nearest thing to a live look at spending.
• Tomorrow, 9.30am BST — Improving our travel and tourism statistics, September update. Methodology rather than data, but it decides what gets counted from here.

The Toolbox

One tool from the site each issue, picked to fit what has just happened. Free, no sign-up, and it shows its workings.

Bank of England rate impact calculator

“If the bond market is setting the price of government borrowing, it is worth knowing what a move in rates does to yours — two weeks before the next Bank Rate decision.”

The Close

Three stories, three ways of funding growth, all narrowing at the same time. The state cannot borrow more cheaply, because the bond market has repriced what lending to Britain is worth. Firms will not invest more, because they are forecast to spend less on themselves this year than last. And new companies cannot raise enough to survive, because the domestic share of venture funding has fallen to a quarter. None of those is a Budget decision, which is rather the point — a Budget can move money between pockets, and every one of these is about whether there is money in the first place. The Chancellor gets a speech in October. The bond market has already given its answer.

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

MJB