FTSE 100 Hesitates as Oil Prices and Bank Warning Offset Stronger UK Growth

The FTSE 100 index struggled to hold onto its early gains on Wednesday as investors weighed stronger UK economic growth against growing financial risks.

Oil prices remained a major concern, with Brent crude moving higher after another volatile session. The conflict in the Middle East has kept energy markets volatile, and investors worry that expensive oil could keep inflation higher and make life harder for central banks.

The Bank of England's Financial Policy Committee warned that several weaknesses in the financial system could become problems at the same time, including higher government bond yields and artificial intelligence-related debt issuance. The committee noted that global AI related debt issuance had reached around $450 billion by early September, more than double the amount issued during the whole of 2025.

UK GDP growth beat expectations, with a 0.5% increase in the second quarter of 2026, but stronger growth creates an awkward situation for interest rates. The Bank of England is already dealing with inflation risks created by higher energy prices, and if economic growth also remains firm, policymakers may have less room to reduce borrowing costs.