ISSUE NO. 48 · THURSDAY 8 OCTOBER 2026

Inflation at 3.1% with food heading above 6%, a £2.3bn Tory pledge, and £858m more out of equity funds

The IMF has told governments how to handle a price shock: help the poorest households, pay it as income support, and stop when the shock does. Broad tax cuts and price caps are the expensive way to look generous. Healey’s Budget is three weeks away.

The other two stories are what happens while that argument runs. In Birmingham the Conservatives opened with a £2.3bn promise on employers’ national insurance for the youngest adult workers, with inheritance tax tipped to follow. And British savers, who are being promised things by both sides, took another £858m out of equity funds in September.

Below: the IMF’s rulebook, a conference promise with a price on it, where the money went instead, four numbers, the diary and one calculator.

Lead

The fund’s new rulebook for price shocks arrives three weeks before a Budget with very little room in it.

The IMF’s World Economic Outlook chapter argues that help with a price shock should be targeted at low-income households, paid as income support through schemes a government already runs, and withdrawn when the shock passes — not spread across everyone as tax cuts, price caps or subsidies. The timing is awkward. UK inflation rose from 2.9% to 3.1% in August, industry forecasts put food inflation above 6% by next summer, and EY reckons the war in Iran has left Healey about £11bn of headroom. The fund also warns that a temporary shock can do lasting damage to the poorest households, long after the headlines have moved on. Read the full story →

The Numbers

Four numbers, and the close is Tuesday’s because Wednesday’s session was still trading. Bank Rate and the CPI print are unchanged; the fourth is the price on a conference promise.

More News

Employers would pay half the national insurance rate on 21 to 24-year-olds under the opening Conservative offer.

The rate would fall from 15% to 7.5% on staff aged 21 to 24, with earnings above £50,270 still charged in full. There is a design argument behind it: employers pay almost nothing on under-21s, so the cost of a worker jumps on their 21st birthday. Kemi Badenoch has called inheritance tax a middle-class problem, arguing that the wealthiest use trusts to step around it, and a cut is expected in her conference speech. She insists nothing will be announced that savings cannot cover. A party out of power can promise; the sums are what an election tests. Read the full story →

Savers took money out of shares for the fifteenth month in sixteen, and sent a slice of it somewhere unfamiliar.

Calastone’s index shows £858m leaving equity funds in September, with UK funds down £708m, North America down £124m and Asia down £371m in its second-worst month on record. Emerging market funds took £133m in, which Edward Glyn of Calastone reads as a hunt for something that is not another bet on America. Global funds took £410m. Bond funds absorbed £655m, £421m of it into high yield despite a rough month for bonds. Since January £5.4bn has gone out of equity funds altogether. Markets have held up; confidence has not. Read the full story →

The Brief

• A Sainsbury’s Merger With Morrisons Could Clear the CMA — Tesco is still bigger, and the watchdog now counts Aldi and Lidl.

On the Diary

• Today, 9.30am BST — Business insights and impact on the UK economy. What firms are saying about costs and trading, three weeks out from the Budget.
• Today, 9.30am BST — Economic activity and social change, real-time indicators. Card spending, job adverts and traffic — the quickest read on whether households are pulling back.
• Thursday 15 October, 7.00am BST — Monthly GDP, August. The growth figure the OBR will be working from when it writes up the Budget.

The Toolbox

One tool from the site each issue, chosen to fit the day. Free, no sign-up, and it shows every step of the sum.

Inflation purchasing power calculator

“The IMF’s argument is about who feels a price rise most. This shows what your money buys now against any earlier year, which is the same question asked from your side of it.”

The Close

Both sides spent today talking about money that has not been raised yet. The IMF says help the people a price shock actually reaches; the opposition says cut the tax on hiring, and perhaps on inheritance. Meanwhile the savers being promised all this were quietly moving their money abroad and into bonds. Watch which of the two arguments the Budget answers, and whether the money comes back.

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

MJB