Noise Cancelling with Neil Woodford

The UK stock market is shrinking, and the FTSE 100 now depends on two buyers: companies buying back their own shares, and overseas bidders. Neil Woodford explains where the third buyer went, why the Financial Times has blamed the wrong thing, and what it means if you own UK shares.

UK pension funds used to hold more than half their assets in UK shares. Today it is about 4%. UK equity funds have had 10 straight years of outflows. So when the FT says share buybacks are draining British companies of investment, Neil's answer is that the buyback is a symptom. He names the cause, and the cost to the taxpayer: about £54bn a year.

The Anthropic IPO is weeks away, and its filing shows a business like no other: $17bn of sales in three months, still a loss, and $895bn signed away on computing power. Neil Woodford goes through the numbers and asks who actually keeps the profit from AI.

Answering customers' questions is cheap for Anthropic. It keeps about 85 cents of every dollar after paying for the chips and power. So why isn't it making money? Neil and Jon Adair follow the cash: to the next model, to the cloud companies renting out the chips, and to customers through price cuts that cost Anthropic about $600m in a single quarter.

Is this the dotcom bubble again? Neil takes on the comparison, and this week's argument between the analysts who say big tech's cash is running out and the investors who say the AI spending has barely started. We also look at why Revolut moved the coding work of about 2,000 engineers onto an open-weight model, and whether the best AI models can hold their price.

Then the question everyone is asking about the AI stocks coming to market: would Neil invest in Anthropic? He answers it, explains how he would judge any AI listing, and says where he thinks the profit from AI will land, including why the UK may be better placed than most.

Neil's views are his own and are not a recommendation to buy or sell any investment.

Budget 2026 raised the tax on your savings and rental income, on top of a rise already due in April, and the Chancellor barely mentioned it. Neil Woodford explains why John Healey did it, and why he thinks the official forecast that says more tax rises are coming is wrong.

From April 2027, interest on savings held outside an ISA and income from rented property will be taxed at 24%, 44% and 49%. A £100 energy payment for 20 million households is paid for by doubling the bank surcharge, and the gas standing charge is moving onto the price of each unit of gas, which could leave the biggest users paying more. Neil and Jon go through what the Budget did to people's money, and what it put off.

The bigger question is why the Budget was so small. The tax burden is heading for a post-war record, the Chancellor's margin against his fiscal rules is down to £15bn, and he has ruled out both broad tax rises and deep spending cuts. Growth is the way out, and the OBR forecast says it isn't coming. One number in that forecast is worth roughly three times the Chancellor's whole margin.

Neil explains why he thinks the OBR has that number wrong, the contradiction in its interest rate forecast that he calls economically illiterate, and what it all means for savers, the banks and UK shares.

AI stocks sold off hard last week, and the Financial Times called it a dress rehearsal for an AI reckoning. Is the AI bubble about to burst? Neil Woodford thinks the AI boom is only in the foothills, but he has a clear view on who is holding the risk if it doesn't pay for itself.

Anthropic's IPO prospectus gave the first look at the finances of a leading AI lab: an $80bn loss in the first half of 2026, and at least $518bn of computing power committed over the next decade, about 80% of which can't be cancelled. That money is revenue for Google, Amazon and Microsoft. It's a big part of why the largest spenders are expected to put around $785bn into data centres and chips this year, and more of it is now being borrowed.

Neil and Jon follow the money down the chain, from the AI labs to the cloud companies, the neoclouds and the lenders behind them. They look at why the $80bn loss matters less than the headline suggests, what Meta's latest results say about funding the build-out, and the two threats that could undermine all of it: planning refusals for data centres, and cheap open-weight AI models from China.

Then Neil's view: why he thinks AI spending carries on, why it could run slower but for longer, what the telecoms bust of 2000 does and doesn't tell us, and the one part of the AI build-out that worries him most. Finally, what it means for investors, including anyone in an index tracker who may not realise how much of the AI trade they already own.

Does the UK need £35bn of tax rises at the 2026 Budget? The IFS Green Budget says Chancellor John Healey is £35bn short ahead of his first Budget on 28 October. Neil Woodford says the number rests on an interest rate nobody actually forecasts.

The Office for Budget Responsibility builds its own forecasts for UK growth, wages and inflation. For interest rates, it takes whatever the bond market happens to be pricing. Jon Adair explains what is really inside a market interest rate, why that price is not the same thing as a forecast, and the place in the IFS report where two different interest rate paths sit side by side.

Neil then puts his own numbers on UK growth, inflation, the Bank of England base rate and 10-year gilt yields, and explains why he thinks the OBR, the Bank of England, the IMF and the OECD keep getting the UK economy wrong. Jon puts the hard cases to him: oil above $100 with the Strait of Hormuz still shut, and whether the gilt market would punish a Chancellor who didn't raise taxes.

Then what it means for investors: which parts of the UK economy and the UK stock market Neil thinks gain most if he's right, and the one number to check on Budget day before you look at any tax rise.

This video is for information only and is not investment advice.