UK inflation held steady at 3.8% in September, slightly below expectations and suggesting the current spike may have peaked. Economists predict a gradual decline through spring as last year’s regulated price rises drop out of the index, with inflation potentially nearing the 2% target by late next year. Although still nearly double the Bank of England’s goal, stability in food and energy prices has reduced the risk of inflationary “doom loops” where rising wages and prices fuel each other. The improved outlook has prompted renewed speculation about interest rate cuts — possibly four over the next year, bringing rates down to 3%. Market confidence has lifted, with government borrowing costs falling to their lowest levels in months. Chancellor Rachel Reeves, who recently pitched Britain as “the best place to invest,” now has slightly more room to manoeuvre ahead of a challenging Budget. However, analysts warn that new tax measures or global shocks could quickly reverse these gains.

Labour, the Conservatives, and the Liberal Democrats have all pledged not to raise value-added tax (VAT) if they win the general election. Chancellor Jeremy Hunt confirmed that the Tories would maintain the current VAT rate, challenging Labour to do the same. Shadow chancellor Rachel Reeves dismissed claims of a planned VAT hike as 'nonsense,' also ruling out increases in income tax or National Insurance. Lib Dem spokesperson Munira Wilson echoed this. Ahead of the official election campaign, Labour promised economic stability and explicitly ruled out tax hikes for working people. They plan to impose VAT on private school fees to fund state school teachers. Jeremy Hunt criticised Labour's tax stance, suggesting a potential VAT rise if they win. However, Rachel Reeves labelled this claim 'absolute nonsense’, reiterating Labour's commitment not to increase taxes on working people.