On Tuesday 15 September, 2026, the price of oil surged back above $107 a barrel, sparking concerns over global supplies and the potential for inflationary impacts. Threats to shipping through the Strait of Hormuz and Bab el-Mandeb have added to the volatility in financial markets, with bond markets expected to see higher rates as a result. The UK jobs market is also showing signs of slowing down, with payrolled employment down 145,000 over the year and vacancies at their lowest level since before the pandemic.
According to Susannah Streeter, Chief Investment Strategist at Wealth Club, these developments have raised fears of stagflation, as a weakening jobs market collides with stubborn inflation and a fresh energy shock. This presents a difficult balancing act for central banks, including the Bank of England, as they navigate rising energy costs and concerns over inflation.
Brent crude has climbed to above $107 a barrel, driven by supply concerns. The recent drone attacks on Saudi Arabia’s pipeline and the seizure of key islands by Houthi rebels threaten to disrupt shipments through the vital Bab el-Mandeb Strait, further adding to the uncertainty in global oil flows.
Bond markets are also reflecting concerns over rising rates, with 10-year gilt yields remaining highly elevated and the US 10-year Treasury yield pushing above the psychologically important 5% level. This could lead to higher borrowing costs for businesses and households.
In the UK, the latest jobs figures show a cooling in pay growth and a weakening job market. Payrolled employment has fallen by 145,000 over the year and vacancies have slipped to their lowest level outside of the pandemic since 2014. Average earnings growth, the measure used for calculating the state pension increase, has been boosted by strong public sector pay growth of 6.3%, more than twice the rate in the private sector.
This has reignited the debate around the triple lock, which guarantees a rise in the state pension by either inflation, average earnings growth, or 2.5%, whichever is highest. With inflation already above target and energy prices surging, the UK is facing an uncomfortable combination of a weakening job market, potential inflationary shocks, and mounting pressure on public spending.
According to Wealth Club’s Chief Investment Strategist, the spectre of stagflation still looms over the UK economy. While recent GDP growth figures have been positive, concerns remain over the impact of the energy crunch on consumer confidence and the economy’s hiring power. With the Bank of England expected to announce a pause on interest rates this week, expectations for four interest rate hikes are already being priced in, which could lead to higher borrowing costs for households.
Founded in 2016 by former Hargreaves Lansdown director Alex Davies, Wealth Club is the UK’s leading non-advised investment service for high-net-worth and sophisticated investors. The company provides access to a wide range of tax-efficient, alternative, and private market investments, including the UK’s first dedicated Private Markets SIPP. With over 70,000 members and 14,200 clients, Wealth Club has facilitated over £1.8 billion in investments and employs 43 people at its Bristol headquarters. The business has been profitable since 2017 and has received no external funding.
