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Last Week
- The Treasury has urged cabinet ministers to identify significant public spending cuts as the Government faces growing scrutiny over its economic strategy. Chief Secretary Darren Jones highlighted the need for “ruthless prioritisation” in an internal letter dated December 12, ahead of the Spending Review set to conclude in June. Jones stressed that difficult budget decisions are necessary to meet fiscal challenges while protecting key priorities such as NHS waiting lists, education, and policing. Departments are expected to achieve 5% efficiency savings, with unprotected areas like local councils and welfare support facing potential reductions. Market volatility and rising government bond yields have increased pressure on fiscal rules. The review aims to scrutinise all spending to ensure value for money, aligning with the government’s goal of improving public services without raising taxes on working people. Growth remains the administration’s central objective to address economic challenges.
- Donald Trump’s proposed tariffs could cost British industries an estimated $3bn (£2.5bn) annually, analysts warn. Key sectors, including automotive, aerospace, pharmaceuticals, and machinery, face significant challenges from a potential 20% tax on goods imported into the US, according to Boston Consulting Group (BCG). While increased service exports, such as banking, may offset some impacts, the tariffs pose a serious risk to UK trade. The Centre for Economics and Business Research (CEBR) has estimated that trade barriers could reduce UK GDP by 0.9% by the end of the Trump administration. British manufacturers are already under pressure from high energy costs, exacerbated by the transition to greener energy sources, according to Make UK. Rising employment costs, including National Insurance and minimum wage increases, add further strain. BCG also predicts a 2.3% annual decline in trade with China, reflecting global supply chain shifts, while trade with Canada and Japan is expected to stagnate.
- The United Nations forecasts global economic growth at a subdued 2.8% for 2025, reflecting resilience despite challenges from conflicts and inflation. The “World Economic Situation and Prospects 2025” report attributes this outlook to robust, albeit slowing, growth in major economies like China and the United States, alongside strong performances anticipated from India and Indonesia. Modest recoveries are expected in the European Union, Japan, and the United Kingdom. The U.S. economy exceeded expectations in 2024 due to strong consumer and public-sector spending but is projected to slow from 2.8% to 1.9% in 2025. Similarly, China’s growth is forecast to dip slightly from 4.9% in 2024 to 4.8% in 2025, driven by weaker consumption and property-sector challenges. These trends have prompted Chinese policymakers to implement measures to boost demand and address local government debt. India is set to lead South Asia’s economic outlook with 6.6% growth in 2025, supported by private consumption and investment. Regional growth is projected at 5.7% in 2025 and 6% in 2026. Global growth remains below pre-pandemic levels of 3%, highlighting the lingering economic impacts of COVID-19. The report underscores the pivotal role of economic performance in poverty reduction, particularly in Asia, where structural transformations have driven unprecedented progress.
Market Pulse
Coming Up
- UK CPI Data, Wednesday 15th January 2025 at 7:00am
- US CPI Data, Wednesday 15th January 2025 at 1:30pm
- UK GDP Data, Thursday 16th January 2025 at 7:00am
Notice:
For professional advisers only, Copia does not provide financial advice, and the contents of this document should not be taken as such. The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated, but is not an indicator of potential maximum loss for other periods or in the future.Open document settingsOpen publish panel
