Good morning. Here’s what you need to know.

The Chagos Islands deal is effectively on ice. Wes Streeting confirmed yesterday that the £120m-a-year payments to Mauritius are on hold and that the agreement over Diego Garcia “can’t go ahead without US support.” Trump reportedly told Burnham the deal was “terrible” during their meeting at the UN. That’s a significant climbdown from a deal the previous government spent years negotiating, and it leaves the UK’s position on the base legally and diplomatically exposed until something new is agreed.

Also at the UN, Burnham announced a new National Centre for Information Defence to counter disinformation and deepfakes from hostile states, naming Russia explicitly. The centre will bring together intelligence agencies, law enforcement, and social media companies. Separately, the UK is pushing to set itself up as a global standards-setter on AI — Burnham used the phrase “honest broker.” Neither announcement is fully costed or legislated yet, but both signal where Burnham wants to position the UK diplomatically.

The FT is reporting that global banks are warning the Chancellor that a windfall tax — apparently being considered to offset higher borrowing costs linked to the Iran conflict — would trigger a shift of business away from London. That’s a significant lobbying shot across the bow ahead of next month’s Budget. The BBC separately flagged that the OBR is warning of ballooning debt costs and slower growth, with higher energy prices from the Middle East conflict adding to the pressure. The fiscal arithmetic for the Budget is getting harder, not easier.

On the Trump-Xi summit in Washington: the FT reports Xi is arriving to find a US president who doesn’t want to jeopardise their current détente, suggesting China’s hawks in the administration have been, at least temporarily, sidelined. Al Jazeera adds that the two sides are expected to agree only limited cooperation on AI safety, falling well short of what AI researchers have been calling for. If that’s accurate, the absence of a meaningful AI safety framework between the two dominant AI powers is itself a macro-relevant fact.

On the AI model front, both Anthropic and OpenAI have released new frontier models this week that are being positioned as meaningfully cheaper for comparable or better performance. The direction of travel — more capability per dollar — is now consistent enough that it should be feeding into enterprise technology cost assumptions. Separately, Snorkel AI raised $350m at a $3.5bn valuation, tripling its previous mark, on the back of demand for AI training data infrastructure.

The Senate Republican caucus is showing visible fractures over the Iran war. Senator Jon Husted said publicly it “needs to come to an end as quickly as possible,” following similar breaks from two Senate candidates. GOP anxiety is centred on energy prices and their effect on household costs. Worth watching as a leading indicator of whether Congressional support for the conflict holds into the autumn.

Friday brings the UK’s second estimate of Q2 GDP. Given the Budget context and the OBR’s growth warnings, any downward revision will land badly.

Sources

BBC News, Guardian, Al Jazeera, The Economist, TechCrunch, FT, Politico, Ars Technica — 2026-09-23