Gold on track for biggest one-day fall since 2020; BoE governor warns over private credit risks - as it happened

4.42pm BST Closing post Time to recap…. The governor of the Bank of England, Andrew Bailey, has warned recent events in US private credit markets have worrying echoes of the sub-prime mortgage crisis that kicked off the global financial crash of 2008. Appearing before a House of Lords committee, the governor said it was important to have the “drains up” and analyse the collapse of two leveraged US firms, First Brands and Tricolor, in case they were not isolated events but “the canary in the coalmine”. Bailey warned: “Are they telling us something more fundamental about the private finance, private asset, private credit, private equity sector, or are they telling us that in any of these worlds there will be idiosyncratic cases that go wrong?” “I think that is still a very open question; it’s an open question in the US.” He added: “I don’t want to sound too foreboding, but the added reason this question is important is if you go back to before the financial crisis when we were having this debate about sub-prime mortgages in the US, people were telling us: ‘No it’s too small to be systemic; it’s idiosyncratic.’ That was the wrong call.” Related: Bank of England chief warns of ‘worrying echoes’ of 2008 financial crisis Gold prices have tumbled by more than 5% today, set for their biggest daily drop for more than five years. Analysts blamed profit-taking, and the easing of US-China trade tensions, for the sell-off. UK government borrowing was the highest for five years in September after rising debt interest costs and higher welfare payments pushed the public finances deeper into the red. Related: UK borrowing reaches five-year high for September at £20.2bn Rachel Reeves has blamed a heavier than anticipated blow from Brexit and austerity for forcing her to take action to balance the books at next month’s autumn budget. Related: Reeves says economic damage caused by Brexit forcing her to take action in budget And in other news: Related: General Motors lifts financial forecast as Trump tariff outlook improves Related: Wegovy maker Novo Nordisk’s chair and six other board members step down Related: Pizza Hut administration: the 68 restaurants that will close 4.25pm BST On gold, David Morrison, senior market analyst at Trade Nation, says: It has been a long time coming, but it looks as if gold is finally having a bit of a downside correction following its record-breaking upside run. Gold had several attempts to push above $4,400, starting last Thursday. But on each occasion, it ran into resistance around $4,380. That is pretty much what happened this morning. The big question for investors and traders alike is if this the start of a much-needed correction? But, after its recent parabolic surge, could the top be in for gold? Morrison says it’s very difficult to know, adding: Analyst speculation will centre around the shape and extent of this sell-off, as well as giving some consideration as to how long this rally has been going. If you trace it back to the lows hit this time in 2023, then the rally is relatively young. But if you go back to the lows of 2015 as your starting point, it all looks a bit different. The first major test to the downside comes in around $4,000. But it’s also quite possible that this is all we get from the dip, and that buyers come back in around $4,200. It’s really a question of having some patience to see how the situation progresses from here. Updated at 4.27pm BST 4.03pm BST Crumbs, gold’s fall is gathering pace – it’s now down 5.2% at $4,126 per ounce. There doesn’t seem to be a single trigger for the selloff, though. Nitesh Shah, commodities strategist at WisdomTree, has suggested: “Gold prices are still yet to go much higher, but the speed is being a bit aggressive and as a result of that, we will get pullbacks each time we hit those fresh highs.” By my maths, this is now the biggest one-day drop since 11 August 2020. Updated at 4.14pm BST 2.59pm BST Gold on track for biggest fall since 2020 Back in the precious metals market, gold is on track for its biggest one-day fall in over a year. Bullion has dropped by over 4% so far today to $4,175 per ounce, as a blistering rally that reached a series of fresh record highs fades. That would be its biggest one-day fall since 9 November 2020, the day when Pfizer and BioNTech announced that their Covid-19 vaccine was 90% effective in trials, triggering a surge into shares. Gold has been a traditional safe-haven away from risky assets, and has also benefited from the ‘debasement trade’ where investors move out of fiat currencies and into harder assets. Daniela Sabin Hathorn, senior market analyst at capital.com, reckons easing trade war tensions have hit gold. The upside in gold and silver seems to have run out of steam at the start of the week…. The trade had become quite overcrowded and was running a little hot considering the levels both markets were at, so a reversal is not entirely out of the blue. The catalyst for the pullback has been the perception of easing tensions between China and the US after Trump said that he expects to make a trade deal after meeting with President Xi Jinping at a Pacific Rim summit in South Korea later this month. Shares in precious metal miners have fallen sharply too, with Fresnillo slumping 14% and Endeavour Mining losing 9%. But despite today’s drop, gold is still up 60% so far this year, on track for its best year since 1979…. Updated at 3.02pm BST 2.54pm BST UK hands anti-money laundering powers to the FCA The UK is overhauling how anti-money laundering rules in the private sector are policed, handing responsibility to the City watchdog. Powers to regulate against money laundering by lawyers, accountants and company formation agents is being handed to the Financial Conduct Authority (FCA), and taken off the Solicitors Regulation Authority. Steve Goodrich, head of research and investigations at Transparency International UK, has welcomed the change, saying reforms to “the UK’s broken system for tackling illicit finance” are long overdue. Goodrich explains: “For too long, fragmented and ineffective oversight of lawyers, accountants and company formation agents have enabled kleptocrats, oligarchs and criminals to launder and stash their dirty money in there UK - contributing to Britain’s £100 billion-a-year money laundering problem. Rationalising the current patchwork of regulators into one properly resourced organisation has the potential to provide a step-change in the UK’s efforts to tackle dirty money. “For this reform to succeed, the FCA must be equipped with the funding and expertise necessary to oversee a broad range of professions. A smooth transition, with intelligence and investigative leads from existing supervisors passed on to the FCA, will also be vital.” Susan Hawley, executive director of Spotlight on Corruption, hopes the FCA can bring a stronger approach to preventing money laundering: “This bold decision to make the FCA a super-regulator for money laundering is long-awaited and really welcome. The FCA’s relatively strong capacity, expertise and appetite to take enforcement action has the potential to shake up the legal and accountancy sectors who are used to seeing their supervisors go softly on them. However, this will only work if it is sustainably funded, with reinvestment of money laundering fines back into supervisory capacity, and draws in existing sector-specific expertise. Updated at 2.54pm BST 2.09pm BST PlayTech shares plunge after "smear campaign" claims Shares in gambling technology company PlayTech have plunged by a quarter, after being accused of commissioning a report that damaged the reputation of Swedish rival Evolution. Evolution claimed this morning that one of PlayTech’s subsidiaries, Playtech Software Limited (PTS), commissioned a report alleging regulatory misconduct, as part of a “defamatory smear campaign”. The report, created by private intelligence company BlackCube, apparently claimed that Evolution’s live casino products were being accessed from countries where online gambling is restricted or banned, such as Iran, Syria and Sudan – which could be a potential breach of gaming laws and anti-money laundering rules. Last month a New Jersey court ordered BlackCube to reveal who had commissioned the report. Playtech has today rejected Evolution’s allegations, stating that the suggestion that PTS had engaged in a smear campaign was “wholly untrue and is designed to distract from serious questions about Evolution’s business practices.” Playtech told the City that it had commissioned “an independent business intelligence firm” to investigate concerns about Evolution’s activities. Shares in Playtech have tumbled 26%, making it the biggest faller on the FTSE 250 index of medium-sized companies listed in London. 1.59pm BST Over on Wall Street, Coca-Cola has beaten analyst forecasts after raising its prices. Coca-Cola reported a 6% rise in revenues, helping to lift earnings per share to 82 cents, up from 78 cents expected. Today’s results also show that Coca-Cola’s price/mix (which measures how prices changed, and whether more expensive products were sold) grew 6%, “primarily driven by pricing actions in the marketplace and favorable mix”. 1.43pm BST Over in Bagsværd, Denmark, there’s news of a surprise shake-up at pharmaceuticals group Novo Nordisk. Novo Nordisk’s chair Helge Lund, vice chair Henrik Poulsen, and five independent board members are all standing down, following a row over the leadership of the company. Lund explains that its board could not reach agreement with its largest shareholder, Novo Nordisk Foundation: “Following dialogue with the Novo Nordisk Foundation regarding the future composition of the Board of Directors, it has not been possible to reach a common understanding. The Board proposed a renewal focusing on addition of select, new competencies while also maintaining continuity, whereas the Board of the Foundation wanted a more extensive reconfiguration. This is Lund’s second corporate exit this year – in April, he agreed to step down as chair as BP amid shareholder opposition to its green energy plans . Updated at 2.58pm BST 1.23pm BST Bailey: I'm keen to improve private credit, not necessarily regulate it Q: If the Bank did conclude there was a systemic risk arising from private credit, would you would want the government to bring it within your regulatory remit? It would entirely depend on what the nature of the issue was, BoE governor Andrew Bailey replies, adding that the Bank would look at the existing tools at its disposal too. We have to have a system which encourages risk to be taken and investments to be made. My first reaction is – how can we improve that? I wouldn’t go to regulation as the first answer to that. He adds that the Bank can’t ‘sweep problems under the carpet’ if it finds them during its stress test of the sector. Q: You’re obviously ahead of other countries and central banks in the actions you’re taking [looking at private finance]… “Well, we’ll see”, Bailey jokes. Q: ….to what extent must this be dealt with on an international scale? Bailey says the issue could be taken up to the FSB (which he chairs) for international collaboration. Updated at 1.24pm BST 1.07pm BST The current governor of the Bank of England then reveals he disagrees with his predecessor-but-one over financial regulation. Mervyn, now Lord, King recently criticised the use of risk weights when assessing various kinds of lending. He told the House of Lords Financial Services Regulation Committee in September that “I am not a fan of risk weights,” saying they make the regulatory system so complicated that borrowers move outside the formal banking sector for certain kinds of lending (ie, into the private credit market). Lord King also argued that regulators can’t assess the riskiness of different kinds of lending, as they don’t know what kind of crisis they will face. Today, Andrew Bailey tells the same committee that “I honestly don’t agree with him on this”, for two reasons. First, it is “a very dangerous slope to go down” not to look at risk in the system. Second, the alternative of a “risk free leverage ratio” would mean banks would have to hold a lot of capital in reserve, which would prompt a “very fierce” response from the industry, Bailey predicts. 12.54pm BST BoE's Bailey on impact of Brexit Q: To what extent is Brexit culpible for the sluggish performance of the economy? BoE governor Andrew Bailey says he doesn’t take a position on Brexit, a public official. But, he suggests, there have been some negative economic consequences, telling the House of Lords Financial Services Regulation Committee: In so far as Brexit has made the economy less open to trade, that will have a negative effect for a period. Over time, trade adjusts…. but in the initial phase that would have an effect on productivity by reducing the openness of the economy, the ability to exploit the division of labour…. Bailey also points out that uncertainty delays investment decisions. He’s then challenged by former Conservative MP Lord Lilley, who points to growth in services exports to the EU since Brexit. Bailey replies that policymakers have managed to “offset” many of the more pessimistic predictions after the 2016 referendum about the impact on financial services. 12.34pm BST Q: Is there a risk of a liquidity crunch, if a private equity firm finds themselves with a lot of hard-to-sell assets?… BoE deputy governor Sarah Breeden says an important aspect about private equity is that its funding is long-term – it doesn’t hold “runable liabilities” like banks. 12.34pm BST Deputy bank governor Sarah Breeden, appearing alongside Bailey, said the Bank would be carrying out a war game exercise in these markets, to test the linkages between private credit and other sectors. It will “shine a light on what is opaque”, she explains. The voluntary exercise will involve banks, insurers, private equity companies, and pension fund investors. Andrew Bailey says the Bank will act as the ‘hub’, and tell participants to work out how they would react to a particular stress, then the Bank can identify stress points in the system. Updated at 12.42pm BST 12.22pm BST Q: When you were in Washington last week, did other countries share the same anxieties about private finance? Yes, BoE governor Andrew Bailey replies. Q: Was there any output from that meeting? Bailey jokes that he has enough work to do already, before reminding the Lords that he now chairs the Global Financial Stability Board – private finance will now be an “even more important part” of their workplan. 12.17pm BST Andrew Bailey then argues that the Bank of England must use the collapse of First Brands and Tricolour as “another reason to have more drains up, frankly”. He tells the Lords Financial Services Regulation Committee we need inspection of how the private credit market is structured, and what the connections to the banking world are. Bailey then reveals he met with “people from the private equity and private credit world” some months ago, who told him that everything was fine in their world apart from the role of the ratings agencies He adds: “I said, we’re not playing that movie again, are we?” Good movie, though…. 12.11pm BST Bank of England governor Andrew Bailey then warns that we are beginning to see the “slicing and dicing and tranching of loan structures” in the financial markets. “Alarm bells start going off at that point” if you were involved in regulating the sector before the 2008 financial crisis, he points out. 11.58am BST Bank of England warns collapse of First Brands and Tricolor may show systemic problems Top Bank of England policymakers have warned that the collapse of two US firms, First Brands and Tricolor, last month has highlighted the risks in the private credit market. Governor Andrew Bailey compared the failures of sub-prime auto lender Tricolor and the car parts supplier First Brands, which have left US banks nursing losses, to the sub-prime mortgage crisis that predated the financial crisis of 2008. Testifying to the House of Lords Financial Services Regulation Committee this morning, Bailey explains that the big, and open, question today is whether the two failures are idiosyncratic or “the canary in the coalmine”. Bailey explains: Are they telling us something more fundamental about the private finance, private asset, private credit, private equity sector, or are they telling us that in any of these worlds there will be idiosyncratic cases that go wrong? I think that is still a very open question, it’s an open question in the US. [Reminder: Last week, the boss of JP Morgan, Jamie Dimon, has warned over further losses linked to the private credit sector, saying more “cockroaches” could emerge’…] Related: JP Morgan boss says more ‘cockroaches’ will emerge after private credit sector failures Bailey then explains that the Bank has to take this question very seriously, and incorporate it into its existing work on private finance. He then warns: I don’t want to sound too foreboding, but the added reason this question is important is if you go back to before the financial crisis when we were having this debate about sub-prime mortgages in the US, people were telling us, no it’s too small to be systemic, it’s idiosyncratic in that sense. That was the wrong call. I’m not saying the call should be the same this time, but it underlines why the question is aposite. There’s a lot we dont know about First Brands and Tricolor at this time. BoE deputy governor Sarah Breeden weight in too, saying the First Brands and Tricolor collapses illustrate some of the risks the Bank has been talking about in this market for some time. Breeden says: It’s about high leverage, it’s about opacity, it’s about complexity and it’s about weak underwriting standards. Those are things that we were talking about in the abstract as a source of vulnerability in this bit of the financial system, and those appear to have been at play in the context of these two defaults. Updated at 1.33pm BST 11.30am BST Bank of England top brass appear at private markets inquiry Over in parliament, Bank of England governor Andrew Bailey, and deputy governor Sarah Breeden, are appearing before the House of Lords Financial Services Regulation Committee. They’re being questioned for an inquity into the growth of private markets in the UK following reforms introduced after the 2008 financial crisis. You can watch it here. It’s a timely issue, given concerns about the growth of non-bank lending, and concerns about potential systemic risks, regulatory gaps, and the risks to market stability. The committee explains: In particular, the inquiry will examine whether the regulatory capital and liquidity reforms introduced after 2008 have reduced banks’ ability or willingness to lend, pushing risk away from the banking sector and towards private markets. It will also look into how much visibility the Bank of England has on the size of these private markets, their interconnections with the banking sector, and any potential spillover risks. Updated at 11.34am BST 10.58am BST Back in the markets, gold and silver prices are sliding back from their recent record highs. SPOT GOLD EXTENDS DECLINES, LAST DOWN NEARLY 2% TO $4,267.79/OZ— First Squawk (@FirstSquawk) October 21, 2025 SPOT SILVER EXTENDS DECLINES, LAST DOWN OVER 5% TO $49.62/OZ— First Squawk (@FirstSquawk) October 21, 2025 Kathleen Brooks, research director at XTB, says: After a stunning rally, the gold price is unwinding on Tuesday. The yellow metal is down nearly $90 per ounce, and silver is also faltering, it was down more than 5% at some stage. The reversal has been abrupt, there was no single event that has caused today’s sell off, instead it is most likely caused by a confluence of factors including stretched valuations and signs that US CPI [inflation], which will be released at the end of this week, could come in softer than expected. 10.46am BST Rathbones: taxes will need to rise by £25bn or more Wealth manager Rathbones also predicts, like Berenberg, that Rachel Reeves is likely to need to raise £25bn or more in taxes in next month’s budget. John Wyn-Evans, head of market analysis at Rathbones, says: “The latest public sector borrowing figures continue to show strain on the country’s finances. Even allowing for some positive revisions to August’s dreadful borrowing, the government’s deficit so far this tax year amounts to £99.8bn, some £7bn higher than the projections of the Office of Budget Responsibility. When we factor in the probable downgrade to long-term growth estimates from the OBR which will inform the Chancellor Rachel Reeves’s Budget decision-making, it looks as though taxes will need to rise somewhere in the order of £25bn or more. Much as many would like that number to be lowered by spending cuts, the mood within the Labour Party does not appear to support much hope on that front. 10.37am BST Andrew Wishart, senior UK economist at Berenberg, predicts Rachel Reeves may need to announce at least £25bn of tax rises and spending cuts in the November budget to address the “leaky finances”. Having analysed today’s public finances, Wishart explains: The government borrowed £13bn more than official forecasts predicted to fund day-to-day spending in the first six months of the fiscal year which began in April. The government’s economic forecaster, the Office for Budget Responsibility (OBR), will almost certainly have to assume that much of that overshoot gets repeated in future years. Higher spending and borrowing than anticipated this year will add to several other factors pushing up the OBR’s borrowing forecast for 2029-30, the fiscal year by which the government has pledged to fund current spending (i.e. excluding investment) entirely with tax revenue. Getting back on track to meet this target will likely require about £25bn of tax hikes and/or spending cuts in the 26th November Autumn Budget with another £10bn necessary to build a reserve for unexpected shortfalls, similar to the £10bn margin that was included in the March 2025 budget. Recent briefings suggest that, if anything, the Chancellor may even go further. Related: Rachel Reeves looks for extra headroom in budget to insulate UK economy against bond market 10.22am BST In the utilities world, Thames Water’s appeal to be allowed to raise bills by more than the regulator allows has been delayed again. The referral to the Competition and Markets Authority (CMA) has already been deferred twice, while Thames Water tries to hammer out a rescue deal with its creditors. And today, the company and Ofwat have agreed a third delay, while discussions continue between creditors, regulators and the company. This means a longer delay before the CMA can ponder Ofwat’s decision to allow only (!) a 35% bill increase over five years. Thames Water Utilities Limited (TWUL) explains: This deferral is not a withdrawal of the request for the Reference and TWUL remains of the view that the Final Determination does not serve the interests of Thames Water’s customers, communities and the environment. TWUL remains focused on delivering a recapitalisation transaction which delivers for its customers and the environment as soon as practicable. Earlier this month the CMA allowed five water suppliers to increase bills by more than Ofwat had allowed, but still by not as much as they wanted: Related: Millions in England face higher water bills after regulator backs more price rises Updated at 10.22am BST 9.53am BST Interactive 9.37am BST OBR: Latest tax receipts data reduces UK's borrowing overshoot The UK’s fiscal watchdog, the Office for Budget Responsibility, has issued its verdict on today’s public finances. They confirm that borrowing so far this financial year (£99.8bn) is £7.2bn over their March forecast, as this chart highlights: But in better news for the chancellor, the OBR point out that newly revised estimates of tax receipts for the year-to-date have reduced the estimated borrowing overshoot compared to last month. The OBR explains: Central government accrued receipts and spending are now both close to the forecast profile for the year-to-date. Borrowing remains higher than in our March profile because of higher estimated borrowing by local authorities and public corporations. The watchdog also predicts borrowing will be lower in the second half of this financial year (October-March), due to “a sharp rise in capital gains tax expected around the end-January due date, lower debt interest payments in the second half of the year, and lower growth in central government net social benefits which were unusually backloaded last year.” 9.20am BST The Crown Estate has bought a chunk of farmland next to a major science hub in Oxfordshire where it plans to build labs, offices and up to 400 homes. This is part of the organisation’s pledge to invest up to £1.5bn in science and technology over the next 15 years. The site, called Harwell East, could deliver up to 4.5m square feet of laboratory and advanced manufacturing space, offices and new homes. It sits next to the Harwell science campus, where US biotech Moderna has just opened a major new vaccine research and manufacturing centre. More than 200 organisations are now on the site, which forms part of the “golden triangle” of Oxford, Cambridge and London. The Crown Estate oversees the royal family’s ancient portfolio of land and property across England and Wales that includes the seabed around its coasts and £15bn of property, including in London’s West End. A slice of its profits are used to fund the work of the monarchy. Dan Labbad, chief executive of The Crown Estate, said: “The UK’s science, innovation and technology community is pushing the boundaries of progress in areas from AI to advanced manufacturing. But they need the specialised lab facilities and housing to realise potential. “The ambition of Harwell East is to create the space for great science to flourish, and to fuel growth and success not just in the region but for the benefit of the whole country.” This comes after the Crown Estate came under mounting criticism. Last week, Greenpeace threatened to sue King Charles’s property management company, accusing it of exploiting its monopoly ownership of the seabed and driving up the cost of offshore wind. 9.07am BST Allianz Trade: bankruptcies could surge if AI boom bursts There could be a surge of company insolvencies if the artificial intelligence boom bursts, a new report today warns. Allianz Trade, the trade credit insurer, has calculated that thousands of firms could be at risk across Europe and the US, if the enthusiasm about AI were to unravel. In their latest Global Insolvency Outlook, Allianz Trade predict: If the current AI-induced boom were to burst in a shock similar to the dotcom bubble of 2001-2002, we expect a surge of bankruptcies by +4,500 companies in the US, +4,000 in Germany, +1,000 in France and +1,100 in the UK. Over the last few years, business creation has accelerated, particularly in Europe where new registrations were 9% higher in 2021-2024 compared to 2016-2019, and in the US, where business applications are 36% higher. Allianz Trade is concerned that the recent proliferation of new businesses, particularly in the tech sector, significantly heightens insolvency risks, through “multiple interrelated mechanisms”. Firstly, startups and younger firms intrinsically face higher financial vulnerability and insolvency risk compared to established businesses that possess greater resources to weather economic downturns. Secondly, these new market entrants often intensify competition through aggressive pricing strategies or innovative offerings designed to capture market share, creating pressure across entire sectors. Third, a higher number of firms often leads to more fragile firms when the economic and financial cycle is weakening. Allianz Trade also forecast that global business insolvencies will rise by +6% in 2025, and again by +5% in 2026, before a modest decline by –1% in 2027. But in the UK, business insolvencies are forecast to dip slightly this year, to 26,750, and then ease again to 25,900 in 2026. 8.44am BST Nikkei hits record high as Takaichi Japan’s stock market has risen to a new record high today, on relief that pro-stimulus politician Sanae Takaichi will become the nation’s first woman prime minister. The Nikkei 225 index rose 0.3% to close at 49,316 points, a new peak, after Takaichi won a parliamentary vote to become PM. Shares were lifted by expectations that Takaichi will push for looser fiscal policy, echoing Shinzo Abe, her former predecessor who was killed in 2022. Ipek Ozkardeskaya, senior analyst at Swissquote, explains: She will push for looser monetary policy and larger fiscal stimulus — if – of course - markets will let her. Because note that long-term Japanese yields are already near multi-decade highs, which suggests she and Abe (to whom she’s compared) do not share the same margin to manoeuvre. 8.04am BST The pound has dipped slightly on the back of the jump in UK borrowing. Sterling is a little lower against the US dollar this morning, at $1.3395. Kathleen Brooks, research director at XTB, says: Overall, today’s public finance figures in the UK suggest that 1) there are deep set financial problems in the UK, and 2) the November budget is now virtually assured to be painful for all, without public sector spending consolidation. Updated at 8.05am BST 7.56am BST Chief Secretary to the Treasury James Murray has responded to today’s borrowing figures, saying: “This Government will never play fast and loose with the public finances. “We know that when you lose control of the public purse it’s working people who pay the price. “That’s why we plan to bring down borrowing and, according to IMF (International Monetary Fund) data, are set to deliver the largest primary deficit reduction in both the G7 and G20 over the next five years. “We are cutting waste, improving efficiency and transforming our public services for the future so that we can be rid of costly debt interest, instead putting that money into our NHS, schools and police. 7.51am BST Capital Economics: Dismal backdrop for the Autumn Budget September’s public finances, showing borrowing at a five-year high, highlight the poor performance of the public finances even though the economy hasn’t been terribly weak, says Ruth Gregory, deputy chief UK economist at Capital Economics. They suspect Rachel Reeves will need to raise about £27bn in the Budget on 26 November, mostly through higher taxes. Gregory explains: The government borrowed £20.2bn on the main public sector net borrowing measure in September and £13.4bn (OBR forecast £12.2bn) on the current borrowing measure (which is what matters for the Chancellor’s fiscal mandate). This means that after six months of the financial year, public sector net borrowing is already £7.2bn higher than the OBR forecast at the Spring Statement in March. The overshoot in the Chancellor’s chosen fiscal mandate of the current budget is even greater, at £13.0bn. It would now take a big turnaround over the remainder of the year to put borrowing in 2025/26 back on track to meet the OBR’s forecast Updated at 9.52am BST 7.46am BST There is one piece of good news for the UK government in today’s public finances – the ONS has revised down its estimate of borrowing in the first five months of the financial year by £4.2bn. 7.38am BST PwC: Reeves's fiscal headroom is “all but exhausted”. Nabil Taleb, economist at PwC UK, fears that Rachel Reeves’s fiscal headroom is “all but exhausted”. That would leave the chancellor with an unpalatable list of options – either raise taxes (potentially breaking a manifesto pledge), cut spending (and possible face a rebellion from her colleagues), or allow borrowing to rise even higher than planned (thus breaching her fiscal rules). Following this morning’s news that the UK has borrowed almost £100bn since April, £7bn more than Britain’s fiscal watchdog, the OBR, had forecast, Taleb explains: “Public sector net borrowing totalled £20.2bn in September 2025, 8.6% more than in the same month last year and the second-highest September figure since records began, surpassed only by the deficit in September 2020 during the peak of the Covid pandemic. “Debt interest payments reached £9.7bn in September, £3.9bn more than a year ago. The interest payable on central government debt was higher than any previous September on record. Higher debt servicing costs as a share of total revenues will leave the public finances more exposed to future economic shocks. “The Chancellor faces an increasingly difficult balancing act ahead of the Autumn Budget, with her fiscal headroom all but exhausted by a mix of weaker growth prospects, higher borrowing costs and rising spending pressures. An expected downgrade to the OBR’s long-term growth forecasts will only add to the squeeze. Despite ruling out another £40bn tax grab, fresh tax rises and spending cuts now look unavoidable as she tries to rebuild her £10bn buffer. The IFS estimates she’ll need to find around £22 billion to do so. Related: Rachel Reeves looks for extra headroom in budget to insulate UK economy against bond market Updated at 7.40am BST 7.36am BST Tax take rose in September Tax receipts rose last month, partly thanks to Rachel Reeves’s decision to raise taxes on businesses, but it wasn’t enough to bring the deficit down. Today’s public finances report shows that central government’s current receipts rose by £6.8bn in September to £86.2bn. That was partly due to a £3.2bn increase in compulsory social contributions, to £16.9bn, following the increase in employers’ national insurance contributions in April. There were also increases of £1.3bn in Income Tax, £1.0bn in Value Added Tax and £700m in Corporation Tax receipts. Updated at 7.36am BST 7.27am BST UK borrowed £20.2bn in September In September alone, UK borrowing rose to £20.2bn, as the public sector spent more than it received in taxes and other income last month. That’s £1.6bn more than in September 2024 and the highest September borrowing since 2020. Nearly half of that deficit was due to the cost of servicing the existing national debt, after a rise in inflation pushed up the interest bill. The ONS explains: central government debt interest payable increased by £3.8bn to £9.7bn, with movements in the Retail Prices Index (RPI) adding volatility to the monthly debt interest costs. Today’s public finances also show: central government departmental spending on goods and services increased by £2.6bn to £38.3bn, as pay rises and inflation increased running costs net social benefits paid by central government increased by £2.0bn to £27.5bn, largely caused by inflation-linked increases in many benefits and earnings-linked increases to State Pension payments payments to support the day-to-day running of local government decreased by £1.1bn to £10.0bn; these intra-government transfers are both central government spending and a local government receipt, so they have no effect on overall public sector borrowing Updated at 7.59am BST 7.20am BST UK borrowing this financial year is highest since 2020 Newsflash: UK government borrowing has hit its highest level since the Covid-19 pandemic in the first half of this tax year, eating into chancellor Rachel Reeves’s headroom. The Office for National Statistics has reported that the government has borrowed £99.8bn so far this finanical year – which is £11.5bn more than in April-September 2024. That’s the second-highest April to September borrowing since monthly records began in 1993, after that of 2020. The problem for Reeves is that this is £7.2bn more than the £92.6bn forecast by the Office for Budget Responsibility back in March. That shortfall creates pressure on the chancellor to raise taxes or cut spending to keep within her fiscal rules (to have debt falling in five years time). Martin Beck, chief economist at WPI Strategy, says there is little relief for the Chancellor as borrowing remains stubbornly high. adding: “As things stand, total borrowing in 2025–26 could overshoot the OBR’s full-year forecast by around £10bn, pushing the deficit to close to 5% of GDP. That’s uncomfortably large for an economy operating near full employment and long past the shocks of the pandemic and energy crisis. Still, the public sector’s sizeable deficit is partly a mirror image of the large financial surplus being run by households, and therefore not wholly within the government’s control. Updated at 7.38am BST 7.20am BST AWS outage offers some a brief glimpse of a tech-free existence Workers were sent home, exams were delayed, coffee machines had to be turned on manually and language app users feared their hard-won progress was lost as a result of the global outage of Amazon Web Services on Monday, as some made light of their briefly tech-free existence. A glitch in the AWS cloud computing service brought down apps and websites for millions of users around the world affecting more than 2,000 companies, including Snapchat, Roblox, Signal and language app Duolingo as well as a host of Amazon-owned operations. But amid the chaos affecting vital services around the world, some more unexpected consequences arose. Amazon workers posted videos of themselves on TikTok relishing a slower work day, with some dancing in quiet warehouses, while others told CNN they had been sent home. James from Texas told the network: “Working for Amazon Flex we’ve been sent home due to their systems not being able to check us in or release us with pay. Because of this outage there’s no telling if the 80 of us here are going to be paid.” Related: ‘I’m having a great day’: AWS outage offers some a brief glimpse of a tech-free existence 7.19am BST Amazon says AWS cloud service is back to normal Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy. The worst disruption to hit the internet in over a year appears to be over. Amazon has declared that its cloud service has returned to normal operations, ending an outage that brought down thousands of sites annd many popular apps, including Snapchat, Duolingo, Fortnite and Reddit. At around midnight UK time, Amazon Web Services declared that its services were fully recovered, after its operations in the North Virginia region were hit by increased error rates and latencies, with a knock-on impact on other regions. Amazon did caution that some services still had a backlog of messages that they will finish processing, and promised to share a “detailed AWS post-event summary.” The outage – the largest since CrowdStrike’s glitch in 2024 – has highlighted the vulnerability of the world’s interconnected technologies, and the perils of relying on relatively few massive tech companies. Dr Corinne Cath-Speth, the head of digital at human rights organisation Article 19, said: “We urgently need diversification in cloud computing. The infrastructure underpinning democratic discourse, independent journalism and secure communications cannot be dependent on a handful of companies.” Cori Crider, the executive director of the Future of Technology Institute, a thinktank that supports a sovereign technology framework for Europe, said: “The UK can’t keep leaving its critical infrastructure at the mercy of US tech giants. With Amazon Web Services down, we’ve seen the lights go out across the modern economy – from banking to communications.” Related: Amazon Web Services outage shows internet users ‘at mercy’ of too few providers, experts say The agenda 7am BST: UK public finances for September 9.55am BST: Chancellor Rachel Reeves to speak at a regional investment summit in Birmingham 11.30am BST: Bank of England’s Andrew Bailey and Sarah Breeden testify to Lords Financial Services Regulation Committee