Healey Doubles Bank Surcharge Ahead of BoE Decision

Week of 2 November 2026

Chancellor John Healey doubled the bank surcharge in a Budget that kept the gilt market calm, while the Fed, ECB and Bank of Japan all held rates. Alphabet suffered its worst day since listing on Thursday, and Christine Lagarde said she will step down as ECB president in February.

The Bank of England is expected to raise rates to 4% on Thursday, two days after the US midterm elections, with US payrolls on Friday. Apple, AMD and Palantir report in the US, while BT, Diageo, M&S, Next and IAG update in the UK.

Week in Review

Healey doubled the bank surcharge.

The bank surcharge rises from 3% to 6% for 15 months to help fund support for households facing higher energy bills, below the 8% that had been reported. Healey kept around £15 billion of headroom against his fiscal rules, and borrowing of £112 billion for this year matched forecasts. Quilter's Kit Rees said the statement "has done its job to placate markets."

Gilts held steady.

The 10-year gilt yield held around 5.35% on Budget day, around 20 basis points below its October peak, and slipped below 5.3% on Friday. GBP/USD edged up to around 1.34 and EUR/GBP hit a 19-month low near 0.833.

UK bank results disappointed.

Banks rallied on the smaller-than-feared surcharge, but results dragged them lower over the week. HSBC fell more than 5% on Tuesday as revenue missed forecasts despite a 32% jump in pre-tax profit, Lloyds lost around 5% on Thursday after holding its targets, and NatWest slid on Friday as impairments almost doubled. AstraZeneca rallied after reaffirming guidance, and BT jumped on reports that Virgin Media O2 is close to a deal to use its broadband network. Shell gained after almost doubling profit to $10.8 billion and lifting its buyback to $5 billion, and BP posted its highest quarterly profit in 18 years. The FTSE 100 was on track to end the week little changed, around 10,730 at the time of writing.

The Fed held, with two votes for a hike.

The Fed kept rates at 3.75% to 4% by a 10-2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack backing a quarter-point hike. Chair Kevin Warsh said politics played "no role" in the decision. Traders put the chance of a December hike at around 84%. US GDP grew at a 3.4% annualised pace in the third quarter, above forecasts, while core PCE inflation was 3.1%, in line with forecasts.

Lagarde will step down.

The ECB left its deposit rate at 2.5%, but the bigger news was Lagarde's resignation. She leaves on 7 February, almost nine months before her term ends, with Klaas Knot and Pablo Hernández de Cos seen as frontrunners to succeed her. EUR/USD dipped towards 1.11. The Bank of Japan held at 1.25% on Friday by an 8-1 vote.

Alphabet suffered a record fall.

Alphabet fell 12.6% on Thursday, its worst day since its 2004 listing, after search revenue missed forecasts and free cash flow turned negative as quarterly capital spending more than doubled to $51 billion. ServiceNow also posted a record drop, falling 27%. Amazon fell almost 7% in premarket trading on Friday after missing profit forecasts, even as AWS growth hit 39%. The Nasdaq 100 fell 1.4% on Thursday, trimming its weekly gain to around 1.5%.

Oil eased from its highs.

Brent crude dropped back to around $110 a barrel early in the week as US Vice President JD Vance moved to restart peace talks with Iran, before climbing back above $113 on Friday after a tanker was hit in the Strait of Hormuz. It was heading for a weekly loss of around 3%, while Gold slipped back below $4,000 an ounce.

Biggest Market Movers

• UKOIL – headed for a weekly loss of around 3%

• XAUUSD – slipped back below $4,000

• EURUSD – dipped towards 1.11

• Alphabet (GOOGL) – fell 12.6% on Thursday, a record one-day drop

• Amazon (AMZN) – fell almost 7% in premarket trading

• NatWest (NWG) – slid as impairments almost doubled

• HSBC (HSBA) – fell more than 5% on Tuesday

• BT Group (BT.A) – jumped on Virgin Media O2 deal reports

• AstraZeneca (AZN) – rallied after reaffirming guidance

Top Events in the Week Ahead

The Bank of England is set to raise rates on Thursday, two days after Americans vote in the midterms, with the US jobs report closing the week.

Bank of England

A hike to 4% would be the Bank's first in more than three years.

Markets put the chance of a quarter-point rise at around 95%, after three members voted for a hike in September. Hawks Megan Greene and Catherine Mann have both warned that policy is not tight enough, while Governor Andrew Bailey hinted at a move last time. The focus is on the vote split, whether anyone backs a hold, and whether new forecasts show inflation topping 4% early next year. Markets expect several more hikes, so any pushback from Bailey on further tightening would be a dovish signal.

US Midterm Elections

Americans vote on Tuesday, with control of Congress at stake.

Republicans hold both the House and the Senate, and all 435 House seats and 35 Senate seats are up for election. Losing either chamber would make it harder for the White House to pass legislation in the last two years of Donald Trump's term.

US Payrolls

October's jobs report lands on Friday after the economy added just 29,000 jobs in September.

Unemployment stood at 4.2%. With a December hike largely priced in, a strong report would back the case for tightening.

Other Events and Earnings

Elsewhere, China's manufacturing PMI is out on Monday and the Reserve Bank of Australia sets rates on Tuesday. Eurozone inflation is expected to rise to 3.9% on Wednesday, and Canada's jobs report follows on Friday.

On earnings, Associated British Foods reports full-year results on Tuesday, and M&S posts half-year results on Wednesday alongside a Smith & Nephew trading update, with Arm reporting after the US close. BT, National Grid, Diageo, Next and Asos follow on Thursday, and IAG closes the week on Friday. In the US, Apple and Palantir report on Monday, AMD and Pfizer on Tuesday, Uber and Qualcomm on Wednesday, and Airbnb on Thursday.