Office for National Statistics (ONS) data shows that UK inflation rose to 3.1% in the year to August, up from 2.9% in July. Grant Fitzner, chief economist at the ONS, said the rise was driven by “sharp” increases in petrol and diesel prices. Services inflation remained at 3.4%, while core inflation remained at 2.6% and food inflation stayed relatively low at 1.3%. Economists have warned that inflation could peak around 4.5% if the conflict in the Middle East continues to disrupt supplies and keep oil prices elevated. Paul Dales, chief UK economist at Capital Economics, said: “Everyone knows that bigger rises in inflation are on their way,” while Thomas Pugh, chief economist at RSM UK, warned: “The rise in inflation in August is just the start of a new upward trend.” Meanwhile, Yael Selfin, chief economist at KPMG, said rising energy prices were likely to test the Bank of England’s “wait-and-see approach” on interest rates.

Conservative leader Kemi Badenoch has voiced concern over Labour’s economic policies, warning that the upcoming Budget could bring significant tax rises. Writing in the Express, Ms Badenoch warns: “Old-fashioned tax-and-spend socialism risks becoming an old-fashioned Labour Winter of Discontent.”

Andy Burnham is under pressure to secure more British investment for local firms after Tech Nation revealed that the Future Fifty 2026 cohort raised £3.4bn. This amount is more than double the £1.4bn raised by last year’s cohort. The Government is preparing a £1bn UK Scale-up Fund to channel investments from major pension schemes into growing sectors. Mr Burnham said the initiative aims to “re-industrialise Britain and create the jobs of the future.” However, many companies in the cohort are already backed by foreign investors.

The Government is considering stricter regulations on university spinouts that relocate or float abroad, according to Sir Ian Chapman, CEO of UK Research and Innovation. Potential measures may include prioritising London listings or reclaiming grants if firms accept foreign bids.

The Government is considering hiking capital gains tax (CGT) in the Budget, according to sources. This comes with Prime Minister Andy Burnham and Chancellor John Healey facing pressure to increase taxes or cut spending due to reduced fiscal headroom. CGT currently stands at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. While the Institute for Public Policy Research estimates a potential £14bn annual revenue boost from a CGT increase, some economists warn it could discourage asset sales. John Bull from Blick Rothenberg notes that there were record CGT receipts in 2024/25, with data showing an 89% increase to £24.2bn. He commented: “The political momentum over capital gains tax is undeniable.” A Labour MP told the I that while there was “obviously political interest from the Parliamentary Labour Party” in increasing CGT, any change would have to be carefully considered to avoid damaging the economy.

Andy Haldane, a former Bank of England chief economist who advised Prime Minister Andy Burnham, has warned that the Government’s reluctance to cut public spending could keep borrowing costs high, with “hard choices” looming ahead of next month’s Budget. He told LBC that markets now suspect “this is a traditional tax-and-spend socialist government with better Tiktok videos.” Mr Burnham defended his record and said difficult decisions, including tax measures, would be needed to protect the economy amid rising inflation.

Shadow Chancellor Andrew Griffith will urge the Government to avoid new business taxes in the Budget. He also plans to call for a simplification of the tax system and a pause on the expansion of Making Tax Digital. Mr Griffith is also set to announce a review that will assess the tax burden on small businesses, led by Lord Mackinlay and Robert Colvile, outgoing director at the Centre for Policy Studies.

Unison is urging major employers to conduct mandatory evaluations of their pay structures every three years to ensure equal treatment for female employees. The union’s research indicates that the current equal pay framework is outdated and relies too heavily on lengthy legal battles.

Heavy borrowing by technology companies to fund AI infrastructure is contributing to higher global borrowing costs and mortgage rates, economists say. Morgan Stanley estimates around $2.9trn will be spent building AI data centres by 2028, with companies increasingly turning to bond markets for financing. The resulting surge in corporate debt competes with government borrowing for investors’ capital, helping push bond yields higher. Capital Economics economist Joe Maher said AI hyperscaler debt issuance was one factor behind rising UK yields and mortgage rates.