The manufacturing sector in Britain began the last quarter of 2026 with the strongest growth in production in more than two years, according to a survey whose results were published on Monday, in an indicator that reflects the improvement in the sector’s performance, although the rapid increase in production costs may raise concerns from the Bank of England, which is expected to raise interest rates this week.
The Standard & Poor's Global Purchasing Managers' Index for the manufacturing sector rose to 52.8 points in October, recording its highest level in 5 months, compared to 51.9 points in September, and in line with initial estimates.
The production sub-index, which is sometimes a more accurate measure of actual conditions in the sector, also rose to 53.6 points from 51.5 points, reaching its highest level since September 2024, according to Reuters.
Rob Dobson, director at Standard & Poor's Global Market Intelligence, said that the pace of growth in production and new orders accelerated during October, with companies responding to indicators of improved demand in domestic and foreign markets, including receiving new orders from mainland China, the European Union, and the United States.
In terms of costs, the prices of industrial companies’ production inputs rose at the fastest pace since June, and at one of the fastest rates recorded since the sharp inflation wave that Britain witnessed in 2022. On the other hand, companies’ expectations for production during the coming period showed the largest improvement since November 2025, while the growth of new orders recorded its strongest level since July.
But the improvement in activity was not reflected in the labor market; Employment growth in the sector stopped after 6 months of expansion, although it was limited in some periods. Businesses, particularly small manufacturers, attributed the decline to rising labor costs and pressures from increasing input prices.
The latest official data shows that manufacturing production rose by 3 percent during the 12 months ending in August, recording the largest increase since March 2024.
The survey data was collected between October 12 and 27, that is, before the announcement of Finance Minister John Healey's first budget, which largely spared businesses tax increases, but included a 3.9 percent increase in the minimum wage starting next year.
The Financial Action Task Force (FATF) kept Lebanon on its gray list of countries subject to enhanced monitoring, despite its acknowledgment of the steps taken by the Lebanese authorities since October 2024 to improve the anti-money laundering and terrorist financing system. The group called on Beirut to continue implementing the agreed-upon action plan, and identified ten areas in which progress must be made to address strategic shortcomings.
The group's position comes after its general assembly meeting in Paris in late October, which discussed efforts to combat money laundering and terrorist financing, and at a time when the Governor of the Banque du Liban, Karim Saied, participated in international meetings in Paris that dealt with combating money laundering and terrorist financing and the reintegration of countries affected by the control of terrorist organizations into the global financial system. He also held discussions with the Governor of the French Central Bank and officials in the US Treasury Department concerned with these files.
The FATF said, in a statement issued after its meetings, that Lebanon made a high-level political commitment in October 2024 to work with the group and the Middle East and North Africa Financial Action Task Force (MENAFATF) to enhance the effectiveness of its system to combat money laundering and terrorist financing, despite the social, economic and security challenges facing the country.
She indicated that Lebanon has since taken steps to improve its system, which included issuing instructions regarding the immediate implementation of targeted financial sanctions, in addition to organizing awareness and training programs directed at financial institutions and specified non-financial activities and professions, whose level of understanding of their obligations in this area remains low.
But the group called on Lebanon to continue implementing the action plan, and identified ten key areas in which it must make progress. These areas include conducting assessments of specific risks related to money laundering and terrorist financing, developing the necessary policies and measures to mitigate them, and strengthening mechanisms for implementing requests for mutual legal assistance, extradition, and asset recovery in a timely and effective manner.
The plan also calls for raising the level of understanding of non-financial risk-specific activities and professions, applying effective, proportionate and deterrent penalties to violating parties, ensuring that data on the beneficial owners of companies and legal entities is updated, and enhancing the competent authorities’ benefit from the information and products provided by the Financial Information Unit.
On the judicial side, the FATF stressed the need to demonstrate a sustainable increase in investigations, prosecutions and rulings related to money laundering crimes in proportion to the nature of the risks, improve asset recovery mechanisms, and monitor and control illicit cross-border movements of currencies, metals and precious stones.
Regarding terrorist financing, the group called for continuing investigations and exchanging information regarding them with foreign partners, and enhancing the immediate application of targeted financial sanctions, especially for non-financial activities and professions and some non-banking financial institutions. It also called for high-risk non-profit organizations to be subjected to targeted oversight based on risk assessment, without disrupting or discouraging their legitimate activities.
Paris meetings
In the context of these files, the Governor of the Bank of Lebanon, Karim Saied, participated in a high-level meeting hosted by the Central Bank of France in Paris, and focused on ways to reintegrate countries affected by the control of terrorist organizations into the international financial system, enhance the integrity of financial systems, and combat money laundering and terrorist financing.
The meeting included officials and rulers from countries including Saudi Arabia, Egypt, Syria, Palestine, Nigeria and South Africa, in addition to representatives of the FATF and the treasury ministries of the United States, France and Britain, the European Central Bank and the European Union, as well as representatives of the private financial sector.
The discussions addressed the institutional, regulatory and financial challenges facing the affected countries, and ways to enhance control over financial flows, restore confidence in banking institutions, and rebuild relations with correspondent banks in a way that facilitates the return of the concerned countries to dealing with the global financial system.
Saeed also held separate discussions with the Governor of the French Central Bank and officials in the US Treasury Department who handle anti-money laundering and terrorist financing files. During the same period, Paris witnessed the meetings of the FATF General Assembly between October 28 and 30, with the participation of representatives from more than 200 countries and international entities.
The meetings witnessed Syrian participation for the first time in more than 15 years, as the Governor of the Central Bank of Syria, Safwat Raslan, attended the group’s meetings and held banking meetings that dealt with rebuilding relations with correspondent banks and enhancing the transparency of transactions and financial governance.
Gray listing does not mean cutting off transactions
In a clarification of importance for Lebanon, the FATF confirmed that including countries on the enhanced follow-up list, known as the “gray list,” means their commitment to addressing strategic shortcomings within agreed upon time frames, and their subjection to additional follow-up by the group.
But it stressed that it does not call for imposing enhanced audit measures on these countries, nor does its standards encourage cutting off dealings with entire categories of clients or withdrawing from entire markets, but rather calls for adopting an approach based on risk assessment.
The group called on member states and stakeholders to take country-specific information into account when assessing transaction risks, while ensuring that flows of funds allocated for humanitarian aid, activities of legitimate non-profit organizations, and remittances are not disrupted.
Thus, the continued inclusion of Lebanon on the gray list does not mean calling on foreign banks to sever their relations with it, but it leaves the Lebanese authorities with specific obligations to prove the effectiveness of their measures in combating financial crimes and financing of terrorism, which are requirements linked to restoring confidence in the banking sector and strengthening its relations with international financial institutions.
Peter Casimir, Governor of the Slovak Central Bank, said that the European Central Bank will have to raise interest rates again to prevent high inflation from taking hold, warning that markets may underestimate the amount of monetary tightening needed to contain price pressures.
The European Central Bank kept interest rates unchanged last week, but a number of monetary policy makers have since called for a resumption of raising them sooner, in light of the sharp rise in energy costs, which they believe may ultimately lead to the emergence of inflationary effects from the second round, according to “Reuters.”
“For me, the question is increasingly less about whether more action is needed,” Casimir, one of the most hawkish voices on the bank’s 27-member board of governors, said Monday. Rather, it is about the size of the required increase.”
He added: “Markets may still be underestimating the scale of measures needed.” The issue is not related to one meeting or one step; Rather, it is the path required to return inflation to the target level and maintain it at that level.
Financial markets currently expect that the European Central Bank will raise interest rates two to three times over the next year, before starting to gradually reduce them, in light of inflation indicators derived from the markets indicating the possibility that price growth will remain much higher than the bank’s target of 2 percent for years to come.
The European Central Bank had left interest rates unchanged last Thursday, based on the fact that the inflationary effects of the second round had not yet appeared, and that wage growth was still limited, in addition to the possibility that economic growth would be negatively affected by the sharp rise in borrowing costs in the long term.
But Casimir saw that these factors do not necessarily provide the same amount of reassurance as some believe.
He explained that cost pressures may build before companies pass on increases to consumers, and inflation expectations may change before broader price pressures appear in economic data.
He said: “Waiting for certainty does not necessarily constitute a sound approach to policy-making.”
He added that slowing economic growth does not necessarily mean a decline in inflation, given that cost pressures have been building for months. He also pointed out that growth is still relatively stable, thanks to the role played by government budgets in supporting the economy, warning that the absence of financial discipline may in turn contribute to continued price pressures.
Casimir concluded by saying: “The pause witnessed last week was not the finish line. We must act before high inflation becomes normal in everyone’s eyes.”
