# Roundup of the week: 26 September 2025 _Pimco joins me in forecasting lower UK inflation and rates, while Bailey signals easing ahead. Company updates highlighted Fluence, Kingfisher, Eli Lilly, Alibaba and Micron — from energy resilience and UK retail to drug pricing, AI and semiconductors._ Neil Woodford · 26 September 2025 · 6 min read ![Roundup of the week: 26 September 2025](https://cdn.sanity.io/images/v3acfbvo/production/72808b85e094c052c8a675f68d8ea87f556aa9f8-1800x1200.jpg?w=1600&fit=max&auto=format) --- If you think I have missed something you would like to discuss or would like to send in a question for next week's podcast episode, [please let me know](mailto:hello@noisecancelling.co), and I will give you my view. ## Economics ### UK Regular readers will know that my economic views do not often chime with consensus thinking. Indeed, quite the opposite. But I do not set out to be contrarian for the sake of it; it’s just that I find my analysis and, most importantly, the data often lead me to conclusions that are not widely shared in the media. Nevertheless, I am always on the lookout for other contrarians, and this week I bumped into one written up in the Financial Times. In Wednesday’s City Bulletin, Chris Johnston wrote that Pimco (considered the world’s largest bond fund manager with assets of $2.1 trillion under management) believes that lower UK inflation will allow the Bank of England to cut interest rates further than the market expects. He quotes the manager as saying there is “nothing special” about the UK’s price pressures. More precisely, Pimco suggests (this may sound familiar!) that UK inflation will fall close to the Bank’s 2% target by the end of 2026 (I think it’s somewhere close to the middle of 2026) and that this will allow policy interest rates to move down to what it describes as the “neutral rate” of 2.75% (a “neutral rate” is one that neither stimulates nor restrains the economy.) The FT writes this up as “potentially good news” for the Chancellor and is reflected in Pimco’s “overweight” position in UK five-year gilts. If this prediction is correct, especially concerning Pimco’s policy rates forecast, there should be a few red faces in the financial media in about twelve months. ### Andrew Bailey I thought I should include this Bloomberg summary of Andrew Bailey’s speech today in the Midlands. ![Roundup of the week: 26 September 2025](https://cdn.sanity.io/images/v3acfbvo/production/48e5d05c06c29b8b18e7d88f7a940c38c499b724-1590x2550.jpg?w=1600&fit=max&auto=format) Broadly, I agree with Bailey’s ‘central banker’ speak, which is inevitably cautious and caveated. Nevertheless, I think the message is clear. He recognises that current interest rates are constraining the economy and consumers’ spending and that lower rates are coming, in tandem with lower inflation. He also highlights a “weakening” labour market. I agree, and importantly, wage settlement data (currently at 3%) should be the guide to what’s really going on. ## Markets In what is a relatively quiet period for corporate news across financial markets, the last week has witnessed several interesting announcements from a broad range of companies I follow, and from some I don't. This latter group is interesting because it sheds light on some of the recent themes I have been writing about. Here are the ones that caught my eye: ### Fluence This company, whose share price tanked earlier in the year after President Trump took office, has announced a number of significant new orders for battery energy storage systems in Ukraine and Poland as a part of both countries’ plan to build more resilience into their respective energy infrastructures. After a period in which the US’s changed energy policy under Trump was seen as very negative for this business, these contracts are a reminder that energy storage infrastructure will become increasingly important in building resilience in energy grid systems worldwide. ### Kingfisher Kingfisher has been a struggling business for over two decades, grappling with excessive geographic expansion, an inability to capture scale economies and common sourcing benefits, the challenges posed by the shift to e-commerce and a succession of CEOs whose strategies failed to deliver promised improvements in performance. After trying and failing all sorts of different approaches, at last it appears as if the new CEO is beginning to get the results its long-suffering shareholders have been waiting for. The group’s interim results, which were announced this week, were the first in a long time to significantly exceed consensus expectations and resulted in a positive reaction in the stock market. Of particular note in the results was the performance of the UK businesses B&Q and Screwfix, which saw LFL growth of 4.4% and 3% respectively. Not only is this considerably better than was expected, but it may also be symptomatic of improving sentiment in the UK consumer economy. ### Alibaba On Wednesday, another one of the world’s biggest tech companies announced increased investment in AI infrastructure. This time, it was arguably China’s leading tech company, Alibaba, announcing that it would invest $53bn in developing AI models and infrastructure over the next three years. In addition, Alibaba’s CEO, Eddie Wu, predicted that worldwide investment in AI would amount to $4 trillion over the next five years (UK GDP by comparison is $3.6 trillion). These numbers are both staggering and frightening at the same time. I remain concerned that this AI gold rush will not yield the returns the global tech titans currently anticipate, but the conundrum is that none of them can afford to sit back and watch this modern-day revolution pass them by. They are all “condemned” to climb on board this incredibly expensive investment roller coaster for at least the next three to five years. Another point to note is that, as big as Alibaba’s commitment is, the investment commitments of the US tech leaders dwarf it. ### Micron Micron's odd year-end (August) is shared with only a few listed companies, and so its full-year results received a lot of attention this week. The share price has risen strongly in recent months on the back of improving sentiment towards the semiconductor industry and higher memory chip prices (DRAM and NAND), which are recovering strongly. The results were expected to be good, and they were, even exceeding some of the most bullish forecasts. I won’t go into the details of the numbers here other than to say that not only did Q4 beat consensus, but the Q1 guidance was also better than had been expected. The key driver for the performance was DRAM for data centres, and looking forward, this market remains very healthy. The NAND market has also “tightened” substantially in recent months. This quote from the CEO’s statement sums up the company’s prospects: “As the only US-based memory manufacturer, Micron is uniquely positioned to capitalise on the AI opportunity ahead”. Enough said. ### Eli Lilly In recent weeks, I have written and spoken about the UK’s drug pricing policy and its damaging consequences for patients who are denied access to some of the latest and best therapies to treat serious diseases and for the reputation of this economy as a preferred location for global pharma businesses to invest and grow. Hot on the heels of Astra Zeneca and Merck’s recent decisions to cancel investments in the UK and in Merck’s case to close its research infrastructure in London as well, this week the CEO of Eli Lilly, the world’s largest pharma business by market cap, said that “the UK was probably the worst country in Europe” for drug prices and added that it paid less for medicines than other developed nations. Some may see this as a good thing, but as I have said before, economics is about winners and losers. The NHS might be deemed to be winning by paying less than our peers for the same therapies, but the consequence, according to Lilly’s CEO, is that the UK won’t “see many new medicines or see much investment”. For an industry as important as this one is to the future of the UK economy, this is bad news. By way of background, the NHS spends about 9% of its total budget on drugs, a lower proportion than many of our European peers. For example, Spain spends 18% of its total health budget on drugs, Germany spends 17% and France spends 15%.