Burnham, bonds and by-elections

The UK's political landscape is heating up with a potential leadership challenge to Keir Starmer, centered on the by-election in Ashton-in-Makerfield, where Andy Burnham hopes to reclaim his parliamentary seat. This political uncertainty is amplifying financial market jitters, with 10-year gilt yields climbing to 5.2%—their highest since 2008—raising concerns about government borrowing costs and fiscal sustainability. At the same time, oil prices have surged past $111 a barrel, driven by escalating tensions with Iran, which is squeezing businesses like hauliers who now spend 25% of their costs on fuel. The ripple effects are spreading: tyre prices, AdBlue, and other oil-dependent inputs are rising, threatening to push inflation higher. Amid this turmoil, AI is emerging as both a productivity savior and a new frontier for fraud—businesses use it to streamline legal workflows and procurement, while consumers exploit AI-generated fake damage photos to fraudulently claim refunds. Experts warn that 80% of fraud attempts are now AI-driven, and platforms like eBay and Amazon are struggling to keep up. Yet, despite the chaos, there’s cautious optimism: AI could still boost UK productivity, and defence investment plans—though delayed—may soon unlock long-term growth. The episode paints a picture of a nation navigating political, economic, and technological storms, where uncertainty is the only constant.