Michael Brunger

Monday 12 October 2026

Daily brief

Written automatically each morning by Claude from 10 news feeds, and published without editing.

The IFS has warned that the Iran war poses significant risks to Rachel Reeves’s successor’s spending plans, with Healey’s Budget now exposed to the energy and growth fallout. That lands alongside reports that ministers are looking to cut the boiler upgrade scheme, the heat pump subsidy, to find more than £2bn from the energy budget for higher defence spending. The money is being found by raiding other priorities, not by raising new revenue. The City is feeling the nerves too: Morgan McKinley says London finance vacancies fell 30% over the third quarter to 1,200, down from 1,719 in July, with Budget uncertainty cited as a factor.

The PM is also making his European case to the Commons. Burnham is expected to say that rejecting closer EU ties would be a dereliction of duty, arguing a new deal could help tackle illegal immigration and lift growth. He has also said it is clear Russia interfered with the Brexit vote.

On markets, the FTSE 100 is set for a firmer open, extending Friday’s rally. Brent has slipped below $104 a barrel after Trump announced plans to import Russian diesel, part of an effort to contain fuel costs ahead of the US election. The price is still high, which is why the Budget risks above matter.

In AI, creditors are starting to look hard at hyperscaler balance sheets, particularly lease commitments on data centres, even as equity investors stay focused on the upside. It is a reminder that the capex boom is increasingly financed with obligations that don’t show up in headline debt.

The diesel deal has grown into a wider Ukraine story. Trump declared an “energy ceasefire” between Russia and Ukraine, effective immediately, saying both sides had agreed. Zelensky called it “news to me” and had earlier rejected a US call to stop hitting Russian refineries until Moscow ends attacks on Ukrainian energy infrastructure. He now says he will back a truce if Russia does, and Moscow has said nothing. Washington is also reportedly threatening to block arms for Ukraine over the refinery strikes, and is lobbying European capitals and Kyiv. Lawmakers from both parties say the diesel agreement would finance Putin’s war effort and breach US law. The ceasefire’s shelf life is uncertain, and so is the oil price relief that comes with it.

In the Gulf, Houthi forces struck Riyadh airport for the second time in two days. One person was killed and 11 injured. Saudi Arabia is under growing pressure from the Yemeni group, with few obvious ways to stop the attacks, which adds to the Iran war risk premium already in energy markets.

Sources

City AM, BBC News, Guardian, FT, The Economist — 2026-10-12