The Financial Policy Committee (FPC) met on 25 September 2026 to evaluate emerging threats to UK financial stability, including escalating geopolitical tensions, energy price volatility, surging sovereign debt yields, and vulnerabilities linked to artificial intelligence. The committee highlighted the interconnected nature of these risks, urging policymakers and market participants to strengthen resilience in financial systems and infrastructure.
Global energy markets remain under pressure, with Brent crude oil prices surpassing $100 per barrel and UK gas prices climbing above 175 pence per therm. Meanwhile, gilt and US Treasury yields have reached levels not seen since 2008, reflecting heightened investor concerns over inflation and debt sustainability. Japanese government bond yields also hit near three-decade highs, underscoring broad-based market stress.
AI-related financial risks dominated discussions, with Morgan Stanley estimating global AI-related debt issuance at $450 billion as of early September 2026. Analysts at JP Morgan projected AI-driven capital expenditure, largely financed through debt, could reach $4.1 trillion over the coming years, though the timeframe for this estimate remains unclear. The FPC noted potential spillovers from AI market corrections and emphasised the need for safeguards against cyber and operational risks posed by advanced models.
The National Cyber Security Centre has issued guidance on mitigating AI-related cyber threats, while industry groups such as the Frontier AI Information Sharing Forum and AI Consortium are working to address systemic vulnerabilities. The FPC stressed the importance of cross-sector collaboration to manage risks arising from rapid technological advances and geopolitical instability.
Uncertainties persist, including the likelihood of prolonged energy price increases due to the Middle East conflict and the sustainability of AI earnings growth. The committee warned that weaknesses in AI safeguards could amplify operational risks, potentially disrupting financial markets and broader economic activity.
Written by Oliver Grant
Markets Desk
