2 Oct 2025

The Q2 outperformance of the FTSE 250 was rebuffed in Q3. The FTSE 100 rose by 500 basis points more than the 250, suggesting a greater appetite for international shares than for those mainly exposed to the UK economy. This outcome speaks for itself as the government has given itself as long as possible (26 November) to make difficult decisions in the autumn (winter) budget. The bond markets are threatening to charge ever more for UK borrowing. Some say that “the bond market” is trying to force Rachel Reeves to raise taxes but the truth seems to be that yields would be yet higher if it were thought that she lacks the resolve to do so.  It should be remembered that “the bond market” is simply a collection of potential lenders who need to decide how much faith they have in the UK economy. It’s not politics or personal; it’s business.  Gilt yields in the quarter went nowhere, especially not down. (4.67% to 4.71%).German Bund yields also edged higher, though the US saw a decline in borrowing costs, perhaps as a result of President Trump’s strength of will, or his apparent subduing of the labour market.   Many of the economically damaging shibboleths of recent years appear to be being abandoned. These notably include ESG (sunk without trace?), DEI and the myopic faith in renewable energy. Although the official policy for UK wind farms is to build more there are two widely recognised negatives. First the £1billion and rising costs of paying wind farms to switch off when they are over-producing power that cannot be used. Secondly, the assertion that the companies that run wind farms are not provisioning sufficiently for decommissioning costs – as ever, the taxpayer will be in line to repair the damage long after the dividends have left the building.   We await the winter budget with high...