A 30-year UK government bond now pays 6%. That’s the highest since 1998, and it’s the number to remember this week, even with dearer energy, stalling house prices and a record Series A for a British quantum company all competing for attention.
Ofgem’s price cap rose 4% on 1 October, taking the typical annual bill to £1,723, which is £60 more than over the summer. The rise would have been larger without the temporary removal of VAT on domestic electricity, worth around £45 a year to a typical household until 31 March. Gas stays subject to 5% VAT.
The headline figure deserves a second look. In July Ofgem updated the consumption assumptions behind the cap, so the “typical” household is now assumed to use less energy than before. On the old basis the October cap would have been £1,935, so a household using what the previous benchmark assumed could still be looking at a bill much closer to that number.
January is the bigger concern. Cornwall Insight forecasts the cap rising by around 16% to £1,999 on 1 January, and its principal consultant Craig Lowrey called it “the biggest price cap rise we’ve seen in four years.” Other forecasts run higher: Uswitch put the average of the big suppliers’ forecasts at about £2,117 in late September. Ofgem won’t confirm the figure until late November.
Behind the forecasts sits oil. Brent crude climbed back above $100 a barrel on Wednesday as Iran stepped up attacks on shipping in the Strait of Hormuz. The Bank of England noted in September that UK wholesale gas had risen 78% since its July report, and that kind of move takes a few months to reach bills. Around 11 million accounts, roughly 35% of the total, are on fixed tariffs and protected for now.
The first-round effect is a squeeze on household budgets. The second-round effect matters more for investors: a January jump lands in early-2027 inflation readings, which is where the Bank of England’s rate decisions get made. Early-stage companies with physical operations, such as manufacturing or hardware, may also feel higher energy costs in their margins before most software businesses do.
The 30-year gilt yield briefly reached 6.029% on 1 October, according to LSEG data, the highest since 1998. It went higher again on Wednesday at 6.034%, while the 10-year touched 5.509%, a level last seen in July 2007. A pause in the sell-off on Tuesday lasted barely a day.
Two things sit behind it. On rates, the Bank of England held Bank Rate at 3.75% in September by six votes to three, with the three dissenters preferring a rise to 4.00%. It now expects CPI to reach around 3.75% in the fourth quarter and slightly above 4% in early 2027, up from the 3.2% it projected in July. On supply, the Bank is running down its gilt holdings by an average of £46 billion a year, while the government plans to sell £252.1 billion of gilts this financial year. That is a lot of new debt arriving just as the official buyer steps back.
Into this lands John Healey’s first Budget on 28 October, with limited room to manoeuvre. He is committed to the fiscal rules and to Labour’s pledge not to raise the rates of income tax, VAT or National Insurance, which pushes attention onto other levers. Reports that capital gains tax rates could move closer to income tax rates have been the most prominent, though nothing is confirmed until the day.
Behaviour is already changing. AJ Bell’s Dan Coatsworth said the speculation may encourage some investors to bring forward sales of investments held outside ISAs and pensions, and an Aberdeen Adviser survey of 449 advisers found 92% had received client calls about early pension access.
Aberdeen’s Luke Hickmore sees the 10-year yield in a range of 5% to 5.5% over the next six months, with 6% a credible outside risk. Cheaper oil or a tight Budget could pull yields back quickly. Comparisons with 2022, when leveraged pension strategies amplified a gilt sell-off, are being made, but a record yield doesn’t by itself guarantee a repeat.
Nationwide reported that annual house price growth halved to 0.8% in September from 1.6% in August, the weakest reading since December 2025, with prices down 0.2% on the month to an average of £274,251. Lloyds’ index showed prices unchanged on the month at an average of £298,441, with annual growth of 0.0%. Two lenders, two methodologies, and the same direction of travel.
Mortgage approvals for house purchase fell to 54,900 in August, the lowest since December 2023, and the fourth month running below 60,000. The effective rate on newly drawn mortgages rose to 4.60% from 4.45%. Lenders have repriced repeatedly, and the Bank of England has reported two-year fixed rates roughly 95 basis points above their pre-conflict levels. EY Item Club’s Matt Swannell expects mortgage rates to stay close to 5% for the rest of this year and into next.
Naturally, forecasters are adjusting. Savills now expects a 2% fall in prices this year, while Zoopla still expects a 1% rise. HMRC’s provisional figures put August transactions at 95,220, down from 97,040 a year earlier, which suggests a market that is stuck rather than collapsing.
The second-order effect runs through refinancing. UK Finance had forecast that 1.8 million fixed-rate mortgages would end during 2026, so many households will meet higher rates by staying put rather than moving. That tends to show up in spending on everything else, and in businesses that depend on housing transactions, from conveyancing to home improvement to proptech.
Universal Quantum, a University of Sussex spinout headquartered in Haywards Heath, raised a $100m Series A on 8 October, which it says is the largest Series A raised by a UK-headquartered quantum company. The round was co-led by DCVC and Firgun Ventures, with Singapore’s EDBI and Japan’s Integral GlobalTech among the participants. The company has raised more than $125m in total, and the money is earmarked for expansion in the US, Japan and Germany.
The investor list is the more interesting part. A UK deep-tech company has closed a record-sized Series A, yet the leads are American, and Singaporean and Japanese capital sits behind them. That fits the Dealroom evidence pack prepared for the Department for Science, Innovation and Technology, which found that UK startups rely heavily on overseas capital.
In May the Telegraph reported that US special purpose acquisition companies had approached Universal Quantum about a New York listing, and the company declined to comment. Nscale, the London-headquartered AI infrastructure company, filed to list on the NYSE on 18 September, reportedly seeking a valuation of up to $35bn.
London did get a counterpoint this week. Airtel Money priced its IPO at £1.96 a share, valuing the business at about £5.3bn, with admission due on 14 October. Reports differ on exactly how it ranks, but it is among the largest London IPOs in recent years. The structure matters as much as the size: only existing shares are being sold, so the company raises no new capital and the proceeds go to selling shareholders. That makes it a liquidity event rather than a growth raise. London is currently winning exits more readily than it is winning the listings of the companies it helped create.
The week’s four stories share one question: what does capital cost, and who is paying for it? Energy has made it dearer, the gilt market has put a number on it, and households are living with it through their mortgages. Meanwhile the largest private cheques keep going to a handful of businesses at the frontier.
Three dates matter between now and the new year: