Summer bank holiday
This edition includes the 'Chart of the week' and 'What we're looking out for this week' sections. Normal service resumes next week, with a briefing summarising the major developments over the summer.
Chart of the week
The UK justice system has seen a sharp rise in employment tribunal claims. There were nearly 15,000 new claims in the first quarter of this year, roughly double the average just five years ago, and a 50% increase from the same period in 2025. Typically, a spike in tribunal claims would be accompanied by a sharp rise in unemployment but that has not been the case this time. Legal professionals think artificial intelligence has driven this surge.
AI has significantly reduced the cost of obtaining legal advice and drafting a claim. While reducing barriers to legal advice will help some lodge complaints they would otherwise struggle to, experts say the use of AI is also producing some claims that are unnecessarily long, inaccurate and cite niche legal arguments. This has led to a slowdown in the rate at which cases are resolved, which, combined with surging claims, has taken the processing backlog to a record high, roughly triple the pre-pandemic average.
Other public redress and decision-making processes also face this challenge. The Financial Ombudsman Service says it has seen more consumers use AI to draft complaints, some of which are needlessly long or contain fabricated laws, misquoted regulations and invented past decisions that can clog up the service. Planning authorities may face a similar increase in volume: a new AI service, ‘Objector’, enables people to generate objections to planning applications in minutes, lowering the effort required to submit them.
AI has the capacity to transform our economy by speeding up a range of tasks. But in some processes, where human judgement and decision making are key, it is creating and surfacing new bottlenecks.
What we're looking out for this week?
This week, we'll be assessing the euro area’s initial inflation estimates for August, out tomorrow.
Inflation has accelerated in Europe this year due to rising energy prices, driven by the conflict in the Middle East. Economists expect a further pick up to 3.3% in August, up from 2.9% in July and almost double the rate recorded at the start of the year.
This will also be the final inflation print ahead of the European Central Bank's (ECB) rate setting meeting next week. With inflation set to remain well above the ECB’s target, financial markets are pricing in a 25-basis-point hike, the second rate rise this year, taking the ECB’s main deposit rate to 2.5%.
We will be looking at whether core inflation, which strips out energy prices, is accelerating. An increase would suggest that price pressures are becoming more broad-based and likely to persist, strengthening the case for the ECB to raise interest rates further.
And finally...
Security staff working on the latest Batman film are reportedly conducting nightly sweeps of the film set in Glasgow as locals are repeatedly hiding cans of Irn-Bru among the scenery, in the hope that the popular Scottish soft drink makes an appearance in the final edit – Irn Bru-ce Wayne