ISSUE NO. 46 · TUESDAY 6 OCTOBER 2026

An £11bn buffer with £18bn at risk, Chinese brands at nearly a quarter of the car market, and Costa back in profit

Healey goes into this Budget with about £11bn of room, and whether he keeps it depends on a strait two thousand miles away. EY’s forecast assumes the Gulf reopens; if it does not, the buffer is gone.

The other two stories are about businesses adjusting faster than the people forecasting them. Chinese carmakers have taken nearly a quarter of British sales while European badges slide down the charts. Costa, which nobody would buy at the asking price, has just swung back into profit.

Below: a buffer that depends on a shipping lane, a forecourt changing hands, Costa’s rebound, four numbers, the diary and one calculator.

Lead

A fifth of the world’s oil and gas passes through the chokepoint the Chancellor’s cushion now rests on.

EY puts the fiscal headroom at £11.3bn, the cushion between the Chancellor’s spending plans and his borrowing target, and that figure assumes the Strait of Hormuz reopens around Budget time. If the war in Iran runs into the middle of next year, a further £18bn comes off the forecast and the cushion disappears. The spread runs the other way too: a fall in unemployment could lift receipts early and take the room to about £40bn. Economists expect the OBR to be gloomier than EY. No tax change made in Westminster reopens a blocked shipping lane. Read the full story →

The Numbers

Four numbers, and the close is Friday’s — Monday’s session was still open when this was written. The Bank Rate and the CPI print are both unchanged.

More News

More than 300,000 Chinese cars have been sold here this year, and five of the 25 best-selling brands are now Chinese.

SMMT figures put Chinese brands at more than 300,000 UK registrations in the first nine months of 2026, a record and nearly a quarter of the market. MG leads on just under 80,000, with BYD on 68,000 and Jaecoo on 59,000. The market itself is recovering — September registrations passed 350,000, the best September since 2017 — but the gains are landing on Chinese badges rather than European ones. Battery electric registrations rose 36.3% in September to just under 100,000, taking 28.3% of the market, and dear fuel keeps pushing drivers towards the plug-in models these brands already sell. Read the full story →

Coca-Cola wanted about £2bn for Costa, could not get it, and now owns a chain back in profit.

Costa swung to a £20m operating profit in 2025 from a £13.5m loss the year before, with revenue up 5% to £1.3bn. Coca-Cola paid Whitbread £3.9bn in 2018 and called the sale off in January when bids — reportedly from TDR Capital, Bain and Apollo — fell short of the roughly £2bn it wanted. Having to back the turnaround itself may prove the better outcome. The catch is Greggs, which already has more outlets, 2,737 against Costa’s 2,707. Costa plans another 40 to 50 sites over the next year. Read the full story →

On the Diary

• Tomorrow, 7.00am BST — Lloyds House Price Index, September. The second reading on a housing market that has just started falling.
• Thursday, 9.30am BST — Business insights and impact on the UK economy. What firms say about trading and costs, three weeks before the Budget.
• Thursday 15 October, 7.00am BST — Monthly GDP, August. The last hard growth figure the OBR sees before it reports.

The Toolbox

One calculator from the site each issue, chosen for whatever the day has made urgent. Free, no sign-up, and it shows its workings.

Car tax calculator

“If the forecourt has changed under you, the running cost has changed too. This works out the road tax on whatever you are thinking of buying, petrol or electric.”

The Close

Two of today’s stories are about things decided somewhere else. A Chancellor’s room to move now depends on whether a strait stays shut, and the badges on British driveways are being chosen in factories he has no say over. The Budget will be written as though all of it is a domestic argument. Watch how much of it is really a forecast about somewhere else.

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

MJB