Pulse Fromtheheart of thebusiness worl d SOUTHEAst
OCT-NOV2026
Business owners: your mental healthmatters too 1
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Inside this edition Click a headline to jump to an art icle
Feature Business owners: your mental health matters too
20
News Your Event Solutions moves forward as ALTOUR Freeze from the Bank of England as UK economy risks feeling the chill
10 34
Focus The autonomy paradox: how more work freedom can leave you feeling powerless
14
Why government debt is growing: public spending explained
38
Regional The British Bank invests £210m to unlock growth in SE England
6
Research: companies identify serious supply chain risks but few can manage them
29
Pulse
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Regional
Feat ure
Regional
New £210m invest ment fund launches to
access to finance for small and
unlock growt h in t he Sout h East of England
medium-sized businesses, offering loans from £25,000 to £2 million and equity
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-
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The British Business Bank launches £210m investment fund to unlock growth in the South East of England
£210m South East Investment Fund
investments of up to £5 million to help
launched to support small and
businesses start, scale and grow.
medium sized businesses
The Fund has already made its first
The Fund will offer a range of
investment with a £250,000 loan to
commercial finance options with
Basingstoke technology company Process
loans from £25,000 to £2m and equity
Vision, demonstrating early impact in the
investments of up to £5m
region. The funding is backing the company?s
Launch of the South East Investment
next phase of commercial growth and
Fund and forthcoming East of England
international expansion.
Investment Fund means the British
The South East of England is home to 17% of
Business Bank is now delivering
the UK?s university spinout businesses,
targeted finance across every UK
behind only London[1],while the region
Nation and region outside of London.
received 5% of the UK?s total equity
A new £210m Fund designed to support the
investment by value last year[2]. The launch
growth of small and medium sized
of the fund will help to ensure the bridge
businesses in the South East of England
between academic innovation and market
has been launched today by the British
deployment is adequately supported in
Business Bank.
the region.
Launch of the South East Investment Fund
David Hourican, Incoming Interim Chief
and forthcoming East of England Investment
Execut ive Officer of t he Brit ish Business
Fund later this month means the British
Bank, said, ?Today?s launch of The South East
Business Bank is now delivering targeted
England Investment Fund will help to
finance across every UK Nation and region
stimulate economic growththroughout the
outside of London.
region. The South East of England is home to
This supports the Government?s plan for
some of the UK?s most innovative
growth in every postcode by helping
technological and scientific businesses and
businesses access finance close to home. By
this fund will ensure that business have local
backing ambitious smaller businesses, the
access to the finance they need to grow, scale
fund aims to support innovation, create jobs
and expand.?
and stimulate sustained economic growth in
Business Secretary Jonat han Reynolds said:
the region.
?Small businesses are the bedrock of our
Covering Buckinghamshire, Oxfordshire,
economy and a vital part of any high street,
Berkshire, Hampshire and the Isle of Wight,
whether it?s a tech startup in Surrey or a
Sussex, Surrey and Kent, the South East
creative agency in Margate. Making sure that
Investment Fund will provide much-needed
smaller businesses have the backing they
News Regional
need to thrive is a crucial part of creating
leading me to consider all aspects of my
good growth in every postcode.
business from marketing strategy to sales
?We are determined not to let access to
prognoses and target audience. I was
investment be a barrier to success for
supported and clearly guided through all
businesses in the South East. The launch of
stages of the application process, and I
this fund will help to ensure that small
genuinely felt that all of the people I dealt
businesses across the South East can grow to
with were there to help me succeed.?
match their ambitions, whether that is
The South East Investment Fund will be
bringing in new staff, moving into a new base
managed by a team of fund managers
or scaling into an international company.?
appointed by the British Business Bank
Isis du Jour, Founder of Yoga Yurt , said: ?I am
including The FSE Group and Maven Capital
incredibly grateful for the support of British
Partners. The FSE Group will manage the
Business Bank which made it possible for me
debt finance part of the fund while Maven
to start my dream business. The whole
Capital Partners will manage equity
process was very detailed and informative,
investment through the fund.
Expert Quantity Surveying for Smarter Building Decisions Professional Quantity Surveying Services ? Cost Planning, Proj ect Management, Procurement & Contract Administration.
News Regional
Regional News
Your Event Solutions moves forward as ALTOUR After 25 years building one of the most
Together, these strengths enable ALTOUR to
By bringing strategy, sourcing, creative
incredibly proud of what we have built and
trusted specialist businesses in meetings
address a broader range of needs with
development, delivery and reconciliation
excited to see it grow further within ALTOUR,
and events, Your Event Solutions (YES) is
greater consistency, visibility and control.
into one framework, ALTOUR helps clients
opening up new possibilities for our clients
becoming ALTOUR. The transition brings
"YES earned its reputation over 25 years by
reduce fragmentation, strengthen
without losing the personal touch that has
together the expertise, creativity and
combining extraordinary creativity with deep
governance and improve visibility while
always defined YES."
relationships that have defined YES with
care for its clients. This is how we honor that
preserving local flexibility.
As YES celebrates its 25thanniversary, this
ALTOUR's award-winning business travel
legacy: not by replacing what YES has built,
Powering this model is ALTOUR iQ, ALTOUR's
next step honors the expertise, culture and
management services under one global
but by giving the same talented team a
connected intelligence and data analytics
client relationships the business has built
brand.
larger platform," said Gabe Rizzi, President of
platform, which brings event intake,
Hewitt / Shutterstock.com since its founding.John TheBHalifax office will
Effective today, YES will move forward as
ALTOUR.
approved budgets, delivery, reconciliation
remain a key part of ALTOUR's operations
ALTOUR, expanding the support available to
"ALTOUR is already trusted to manage
and experience analytics into one real-time
and the home of the people, culture and
clients, from managing complex corporate
complex global business travel programs.
view. This gives clients greater financial
expertise at the heart of YES's Yorkshire
travel programs to delivering every stage of
Bringing YES' fully under our brand broadens
oversight, a complete audit trail and a
heritage. Under ALTOUR, that legacy will
an event, including strategy, sourcing,
that partnership, giving clients one
clearer understanding of event impact.
continue as part of an expanded global
creative development, technology and
accountable global partner for how their
"When I founded YES 25 years ago, it was
offering that connects leading business
reconciliation. The name is evolving, but the
people travel, meet and connect ? with the
with a belief that extraordinary events begin
travel management with end-to-end
expertise, relationships and care behind it
scale, intelligence and creativity to turn
with understanding people ? their
meetings and events expertise. This broader
remain.
every interaction into measurable value.
ambitions, their brands and the moments
scope allows ALTOUR to support more of the
Clients will continue to benefit from the
Together, we can be as big as our clients
that matter to them," said Sue Gill, founder
needs surrounding every business
creativity and personal service associated
need us to be and as small and focused as
of YES. "That belief, and the care and
interaction ? from moving people around the
with YES, now backed by ALTOUR's global
they want us to be."
creativity our people bring to every client,
world to bringing them together with
remain at the heart of the business. I am
purpose.
reach, buying power and technology.
Guilherme Klein Martins Lecturer in Economics, University of Leeds
Groundworks Earthworks Basements Site setting up and enabling Civil Engineering
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Clive Roland Boddy Deputy Head, School of Management, Anglia Ruskin University
Words: Craig Sergeant ofAdvance Copy
Focus News
The autonomy paradox: how more freedom at work can leave you feeling powerless
You may know the feeling. You?re supposed
Research shows that workers with a high
to have finished work for the day, but later,
degree of autonomy struggle to leave work
during your evening meal, you start mentally
behind at the end of the day. When you have
preparing for tomorrow?s meeting. Or just
control over your job, it can stay on your
having a quick check of your emails while
mind as you run through decisions and
you half watch TV.
ponder unresolved problems. Switching off
You might not mean to, or even want to. It?s
becomes difficult.
just something that you end up doing as part
But the capacity to stop thinking about work
of the price of enjoying some autonomy at
during personal time, what?s known as
work.
?psychological detachment?, is a form of
For a while now, research has claimed that
emotional and cognitive recovery. Without it,
professional autonomy was a good thing.
resources are never fully replenished. The
Being able to decide how, where and when
person who cannot switch off does not just
you worked was considered a major plus in
feel tired ? they go back to work the next day
terms of motivation, job satisfaction and
already running on empty.
overall health.
Autonomy can make this detachment harder
And although those benefits still exist, we
precisely because of the sense of ownership
now know that more autonomy can often
it brings. Responsibility does not respect
also mean more work and less downtime.
working hours, and the person who controls their own job carries it home in a way that
By Andreana Drencheva Senior Lecturer in Entrepreneurship, King's College London
Focus
Focus News Regional
Rhyl?s biggest conversation starts now And £20m is on the table the person purely following instructions
but she could not stop. For her, the work and
Being seen less in the workplace can mean
And that problem cannot really be solved
does not.
the self had become the same thing ? the
having more to prove. In these situations,
with legislation. Things like the
Research my colleague and I conducted with
result of a working life in which she alone
some workers end up showing their
?right-to-disconnect? or flexible working
40 entrepreneurs ? people whose working
was responsible for every outcome. No
commitment by replying quickly, being
policies tend to address intrusions from
lives are especially autonomous ? reveals
changes to her evening routine could help
online late or taking on extra projects.
outside ? the manager who emails at 9pm, or
another problem arrives when your work and
her separate the two.
The shift to working from home and the
the meeting which clashes with the school
identity are entwined. When work becomes
Another told us that she felt guilty if she
technology which allows it, has brought a big
run.
bound up in who you are, detachment
separated her business from the rest of
change in what it means to stop working for
Laws can do nothing about the work
becomes virtually impossible.
her life.
the day.
pressures inside employees?own minds.
One woman in her 20s told us that she would
Working from everywhere
When work requires being in a specific place,
Because in many cases, organisations have
regularly lie awake at night, unable to stop
Separate research confirms that workers who
the end of the day has a physical logic to it.
not simply given workers more freedom, they
thinking about her work. She explained: ?I
have a high degree of autonomy over their
You leave that place
have also given the job of managing that
feel the pressure. I am still struggling with
schedules and tasks end up working more,
But for many that shift has gone and been
work onto the worker themselves.
[what it means] to be an entrepreneur.?
not less. When people have autonomy, they
replaced with constant availability.
While autonomy is still worth having, it often
?Sometimes, I feel I am not giving enough to
repay the trust with extra effort.
Being reachable shows commitment. Not
comes at a personal cost.
the company. Like [at] 11pm, should I just
This is especially the case in situations
being reachable requires explanation
It can mean less power and more work ?
work an extra hour and a half ??
where autonomy removes visibility, such as
and justification.
which is unacknowledged and unpaid.
She understood thatLecturer this was unsustainable, when Guilherme Klein Martins in Economics, University of Leedspeople work from home.
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Feat Feat ure ure
Business owners: your mental health matters too By Advance Copy
Feat ure News When we hear about mental health in the
Because everything is on you. Sure, it?s what
workplace, it?s usually about ways to support
you sign up for in this game, but even the
staff. Like how you need to take it seriously,
most driven person has to admit: it?s a lot,
to follow proper policies and procedures,
isn?t it?
and to help your people through their issues
All that pressure. Long days. Short sleeps.
as best you can.
And you can add home and family life into
But what about you, the small business
the mix, too.
owner? Who?s there for you and your mental
Whether you?re starting your business or
health? Who?s giving you support and
growing it, nothing seems to let up. It?s
advice?
always more, more, more... and then some
After all, you?re clearly not the kind of boss
more. That?s the life of an entrepreneur.
who sits out of sight of your team, twiddling
When you think about it, it?s pretty amazing
your thumbs while everyone else gets on
what you can achieve, isn?t it? But that
with the work (and if you are, please let us
doesn?t mean it?s easy. And it doesn?t mean
know how you?ve managed that). No, you
that it comes without consequences.
wear many hats. You?re the HR department. You manage the finances. You?re marketing,
Survey
research and development. You?re many
According to Simply Business in
roles and more to keep your business not
collaboration with Mental Health at Work (a
just going ? but improving. And if something
programme by the charity Mind), 56% of
goes wrong?
small business owners said they?ve had poor
You better believe that?s on you.
mental health at some point over the
Feat ure News Feat ure
Feat ure
previous year. The biggest issues they
needs time to be restored. When it doesn?t,
turning it around.
up control, taking on the bulk of the work
reported include anxiety (59%), financial
it?s not just mentally taxing, it hurts you
On the other hand, you could hit a wall and
and feeling like anything important is their
worries (41%), depression (38%) and
physically. And that?s burnout.
suddenly find yourself unable to get out of
priority. But if you only delegate the ?easy?
loneliness (22%).
Burnout
bed for days on end, foggy brained and
jobs or the ones you like to your team, that
It seems like the weight of responsibility as
heavy bodied, as your body shuts down and
leaves you with all the stress-causing tasks.
Burnout is difficult to describe. But if you?ve
a business owner is the major cause of those
forces you to rest and recover whether you
And if someone in your team has a problem,
had it, you know it. The way it affects people
problems, working far more hours than
have time for it or not. And there are
who?s it then on to sort that out?
is different from person to person, but it?s a
anyone else ? way above the national
a host of other possible ways burnout can
You, of course.
form of chronic stress that takes hold over
average ? yet taking fewer days?annual
extended periods. You might not even notice
affect you.
That?s a case of building a team with
leave. In fact, 73% of respondents said
you?re experiencing it. For example, as an
Which is why for business owners like you,
responsibility but with no authority. Then,
they?ve haven?t even taken 20 days off (some
entrepreneur, you may be used to pushing
it?s important to recognise stresses early and
it?s on you to coach the team to be able to
Americans reading may shrug their shoulder
forward, working hard, skipping weekends
fix the root causes now, rather than try to
do the work properly. It might feel easier to
at that one).
and holidays, but gradually, a form of
treat the serious mental and physical
either give them the solutions or think, ?I?ll
Even if you?re someone who thrives from
detachment from your work may drift in. So,
symptoms later.
just do it myself,? but doing so adds to your
being ?on the go?all the time, energy isn?t an
you?re doing the work while also being
Cont rol
endless resource. It gets depleted, and it
absent and feeling tired with no way of
mental capacity, which could be close to or Business owners often find it difficult to give
over its limit. It?s easy for staff to fall into a state of ?learned helplessness?where they
Feat ure Regional
Regional
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rely on their boss ? that is, you ? to fix
burnt out.
everything. That?s not the way it should be.
St ress
So instead, it?s guiding the team to find the solutions to problems themselves, freeing you up for a more focused, manageable workload.
It seems that the UK is a stressed workforce. For those who are well into their careers, it?s frustrating to work in an economy that has stagnated since pretty much the 2008
Of course, that?s just one example of a
financial crash. It seems like there is more
limitless number of scenarios you might
work to do than ever, but without the wages
face, and while it might sound obvious, it?s
to reflect that ? plateauing as costs rise and
always important to remember to set
rise with inflation. As Pulse covered in the
boundaries by learning to say no. Rember to
last edition, that seems likely to get worse.
delegate, delegate, and delegate some more.
Much worse.
Outsource if you need expert support. And take breaks and holidays ? your body and mind (and business) will thank you for it.
And then there are those at the start of their careers. In 2024, the BBC reported that for the first time ever, more younger people
By Advance Copy
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Remember, your work won't thrive if you're
0208 887 7007
than older people were out of work due to
Regional
Feat ure
New research finds companies are identifying serious supply chain risks but few can show that they manage them their mental health.
levels), but the UK?s stagnating wages, living
Meanwhile, the climate today for those who
standards and rising costs make things feel
are looking for a job is dismal. There is
worse than before. But humans have never
currently little demand for employers to take
had to face the levels of information and
on the least-skilled levels of staff to train
stimulation we have now through the
them up. Plus, the recent increase in
internet and social media, which are
minimum wage for 18-20s as well as
designed to keep users hooked
employer?s national insurance have both
through spiking our cortisol ? AKA the
raised the cost of hiring, especially in
stress hormone.
sectors like hospitality where younger
Add that to the challenges or running a
people normally dominate staff numbers.
business and home life, plus fewer third
You can?t get a job if there aren?t any jobs to
spaces and social interaction as the world
get. And without enough money, mental
migrates further online, it?s no wonder that
health seriously suffers.
poor mental health is so common. But with
Focus
every downturn ? whether societally or individually ? eventually, there?s an upturn.
It?s a strange time. This is the safest and
New research finds companies are ident ifying serious supply chain risks but few can show
most affluent the West has been in history
If you focus what?s within your control ? by
t hat t hey manage t hem. Kumi Consult ing?s Responsible Sourcing Barometer 2026 finds a
(and worldwide, poverty is at its lowest ever
giving up some control ? and taking the time
growing gap bet ween corporate act ivit y and evidence of effect ive risk reduct ion as supply
to care for yourself (especially away from
chain due diligence requirement s cont inue to increase and grow in complexit y.
Regional
Companies are increasingly identifying significant human rights and environmental
Key findings
supplier capability.
to occur.
Only 14% of companies can point to
Companies know t he risks t hat exist in t heir
Act ivit y is running ahead of evidence
clear improvements resulting from
supply chains. The quest ion is whet her t heir
Over the past decade, supplier assessments,
their responsible sourcing activities.
risk management act ivit ies are act ually
audits, certifications, corrective action plans
Less than one in five (19%)
working.
and governance systems have become
actually reducing those risks.
measure outcomes for workers or
Labour and human rights issues dominate
commonplace, with data on these activities
New findings from the Kumi Responsible
the environment.
companies' stated risk priorities with around
now reaching the attention of boards as part
A quarter (25%) do not measure
half those surveyed stating this as their
of corporate risk management. However, the
programme impact at all.
biggest risk. Yet the research found
survey found that few organisations are
More than a t hird (36%) of companies
significant gaps between the recognition of
measuring whether their activities are
while responsible sourcing practices are now
identifying forced or child labour
relevant risks and the due diligence
improving outcomes for workers or the
firmly embedded within many organisations,
among their most serious risks
practices necessary to take action on
environment or meaningfully reducing
companies are focusing on activity rather
conduct no due diligence beyond
these risks.
harms. Less than one in ten companies (9%)
than effectiveness. The findings come at a
their direct suppliers, leaving
Nearly a quarter (24%) of participating
seek feedback from stakeholders such as
time when supply chain due diligence is
potential blind spots deeper in their
organisations have mapped only direct
workers when assessing the effectiveness of
increasingly subject to complex, changing
supply chains.
suppliers or have not mapped their supply
their responsible supply chain programmes.
chains at all. Among companies identifying
The result is a growing evidence gap. Many
forced or child labour as a priority risk, more
organisations can demonstrate what they are
than a third conduct (36%) no due diligence
doing. Far fewer can demonstrate whether it
beyond Tier 1, direct suppliers.
is working.
The findings indicate that organisations may
Reducing risk or t ransferring responsibilit y?
not be directing their resources to the areas
The research also highlights a tension
where the most significant risks are likely
between what companies identify as their
-
risks in their supply chains, but many still lack the evidence needed to determine whether their due diligence efforts are
Sourcing Barometer 2026, an independent
-
-
industry survey of 110 medium-to-large enterprises across 13 indust ries, reveal that
global regulatory requirements, customer
-
-
Nearly half (46%) have board-level
expectations and commercial risk.
oversight of responsible sourcing
Organisations are under growing pressure to
and 77% assign accountability to a
demonstrate not just that they have policies,
senior executive.
processes and governance structures in
-
Supplier capability is identified as the
place, but that these activities are producing
biggest barrier to progress, but only
meaningful results.
15% of companies prioritise building
News Regional biggest challenge and how they respond
confidential, cross-industry benchmarking
to it.
survey of responsible sourcing practices
Supplier capability emerged as the most
from across 110 independent responses from
frequently cited barrier to progress.
medium to large enterprises operating
However, a third of respondents (32%) said
across 13 industries. The research captures
they typically require suppliers to implement
the experiences, priorities and challenges of
corrective actions without providing
companies managing supply chain due
additional support, while only 15% said
diligence across a wide range of sectors and
building supplier capability was a priority for
geographies. Unlike many studies that rely
the year ahead.
on public reporting, the Barometer draws on
Drylining
confidential insights from companies about The report warns that unless expectations
what they are actually doing in practice.
Suspended ceilings
are matched with practical support, there is a danger that corrective action programmes
The findings provide valuable insights for
become exercises in transferring
boards, sustainability leaders, procurement
responsibility rather than addressing the
teams, compliance professionals and
underlying causes of risk.
investors seeking to understand the current
Glass Reinforced Gypsum (GRG) Taping and Jointing Perimeter Casings
state of responsible sourcing. Andrew Brit ton, CEO of Kumi Consult ing and one of t he principal aut hors of t he report ,
About Kumi Consult ing
said:
Kumi is an independent management
"The question is no longer whether
consultancy specialising in responsible
companies are doing due diligence. The
business conduct in global supply chains. We
question is whether it is delivering results.
help organisations understand and address responsible sourcing, human rights and
Our research shows that while companies have done a lot to make responsible
sustainability challenges, and put commitments into practical action.
sourcing part of their core business activities, there are crucial blind spots that
Kumi works across the world with
many companies are yet to address. There
organisations in diverse industry sectors
are now serious regulatory compliance and
including mining and metals, energy,
commercial risks related to responsible
infrastructure, agriculture, manufacturing,
sourcing, so it is vital that companies can
consumer goods and fashion. We combine
demonstrate that their programmes are not
expertise in risk assessment, management
simply producing activity but are
systems and controls, internal governance
meaningfully reducing risks and improving
and capacity building with practical, on the
outcomes for people and the environment."
ground experience across global value
Joinery
Tangible perfection Cost-effective and excellent quality construction works delivered punctually
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chains. About t he Kumi Responsible Sourcing Barometer 2026
For more informat ion visit :www.kumi.consult ing
The Responsible Sourcing Barometer is a
07979 202 695
News Regional through to hotter consumer prices. With shoppers worried about rising borrowing costs and bracing for higher bills to land, they may be less likely to spend if price tags become more expensive. However, the longer the war with Iran continues to rage and keeps crude and gas prices elevated, the greater the chances of a hike later this year and next, especially if data shows consumer price inflation continues to rise. Already three members around the table wanted to hike rates immediately to 4%, and they may well be joined by more if the chronic energy crunch continues. So, a hike on November 5th still looks like a distinct possibility if the bonfires of inflation intensify. The US is a more robust patient, with the spending might of AI hyperscalers pulsing through the veins of the economy, supporting strong job creation, which is why the Fed moved to douse
FreezefromtheBank of Engl andas UKeconomy risks feel ingthechil l -
-
down inflation by hiking rates yesterday. What will t his mean for borrowers and savers? Borrowers shouldn?t assume that today?s hold means mortgage rates will stay frozen. Fixed mortgage rates are guided by swap rates, which reflect expectations for where interest rates are heading, rather than simply where Bank Rate
The Bank of England has kept Bank
Susannah St reeter, Chief Invest ment
stands today. With markets still pricing in further
Rate on hold at 3.75%.
St rategist , Wealt h Club
rate hikes, swap rates have been pushed higher,
Policymakers voted 6-3 to make no
?Inflation is the fever central bankers want
change, with three members voting for
to bring down, but the Bank of England is
an increase by 0.25 percentage points.
holding off administering the bitter medicine
The Fed moved first, given the US
of an interest rate hike. The UK economy is
economy is growing more robustly,
fragile, and already feeling the chill of
with resilient spending, strong
sluggish growth and a cooling jobs market,
However, savers could have more time to benefit
productivity and investment, while
and for now this should offset the risks of
from higher rates on cash, particularly if the Bank
demand remains weaker across the
steamy energy costs being passed easily
is forced to keep rates elevated for longer,
UK.
and lenders have already been raising some fixed mortgage rates. So even though the policymakers have kept their hands firmly in their pockets for now, borrowers coming off fixed deals could still face higher rates when they remortgage.
although
www.gppl i mi t ed.co.uk
07552413719
Regional
News Regional the rates on offer will vary as banks adjust
eligible investors to hold semi-liquid
their pricing.?
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Why the government?s debt is growing: current public spending pressures explained David McMillan Professor in Finance, University of Stirling
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Pressure to make cuts in public spending has
have implications across the economy,
intensified in recent weeks, with increased
including for government spending and tax
calls on Prime Minister Andy Burnham to
decisions, investment by firms and mortgage
find savings urgently.
rates for households.
The need to reduce expenditure has become
Spending scrut inised
more pressing as the cost of loans used to
The question is why are yields rising,
pay for services has shot up.
especially for the UK?
With the bill on the government?s borrowing
The level of government debt is at record
rising sharply there is less room for
highs. The US has just passed £29.6 trillion,
manoeuvre in the public finances ahead of
the UK owes around £3 trillion, Japan £6
new Chancellor John Healey?s first budget on
trillion and France over £2.5 trillion.
October 28. These levels of government debt have So, why is this happening, and what is
worried the market and investors because of
causing the interest to grow so quickly?
concerns about the ability of governments to
When governments borrow money, they do
repay the loans. While debt rose through
this by issuing bonds. These are essentially
policy responses to the financial crisis in
IOUs in which the government agrees to pay
2008-09 and the Covid pandemic with little
back the borrowed sum on a certain date,
impact on long-term yields, markets
with interest paid in the meantime. These
are now scrutinising current government
bonds are then bought by a range of
spending closely.
investors, including pension and insurance
This was seen with the Liz Truss
companies, commercial and central banks,
?mini-budget? of September 2022 and when
hedge funds and private investors.
Keir Starmer reversed proposed welfare cuts.
As these bonds change in value according to
In each case, the UK bond yield rose
market fluctuations, their cost to the
noticeably. This is now an issue confronting
government varies. The amount in yields
the new Burnham government that has
paid to investors on the bonds goes up or
already committed to higher spending such
down accordingly, and when the yields rise it
as a VAT cut on energy bills, a bus fare cap, a
is more expensive to issue new bonds.
rough sleeper commitment, council house
Long-term bond yields have risen to
expansion, and an increased defence budget.
multi-decade highs. The UK is not alone in
With the autumn budget coming up, bond
seeing such expensive yields and, therefore,
markets are sending a warning shot to the
high government borrowing costs, but has
UK government to present a plan to control
seen the largest rises among major
spending. The UK has the highest long-term
economies.
bond yields of comparable countries as a
The UK is experiencing a notable switch from
result of a greater sell-off of UK bonds by
low to highest rates. These higher yields
investors worried about a new bout of
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government borrowing.
cargo traffic through the Strait of Hormuz
drives up inflation and expectations for
billion in debt.
Bond markets are reflecting concerns that
has inflated prices.
future inflation. This may also lead to
This all adds to the total amount of bond
the UK government may seek to cover some
The increase in Middle East hostilities has
increases in the Bank of England base
supply, resulting in investors requiring
seen the crude oil price rise around 30% in
interest rate, which directly affects
higher returns.
rates, which will have a dampening effect on
the last two months, from the high US$60s
mortgages. Cuts in the rate expected
future economic growth and employment.
(£44) in early July to near US$90 now. In the
at the start of the year will certainly not materialise.
Debt is not the only reason behind the
UK, the effects of higher oil and gas prices
increase in bond yields. Higher inflation and
are seen in the energy price cap, which has
There is a further factor driving up bond
given its current level of debt, its exposed
the view that it may remain elevated, largely
recently risen and is expected to do so again.
yields. While governments are issuing bonds
position to inflation and global energy prices
due to the re-escalation of the Iran conflict
The effect of the Iran conflict and
to cover spending gaps, technology firms are
plus the uncertain outlook for sustained
and associated higher energy costs,
restrictions on cargo passing through the
also issuing bonds in order to invest in AI,
economic growth.
also contributes.
Strait of Hormuz have broad effects across
because they believe that this sector will see large future growth. This year, to
The Middle East conflict and restrictions on
fuel, energy, shipping and food prices. This
of its increased spending though higher tax
This brings us back to the budget next month. The bond market is sending a clear signal that the UK needs to control spending
date, tech companies have issued US$220
This creates difficult choices for the new prime minister and chancellor.
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