Reeves & Trump sink the UK economy..
|
| New government business policies that have come into play this month and Trump's trade war have been blamed for the UK's economic contraction in April. A reading of 48.2 was shockingly well short of the expected 50.4 and anything below a reading of 50 is contraction territory.
March represented a 'healthy' 51.5 for the UK (especially with all things being considered at the time), but this fall in output is worryingly the largest recorded for two-and-a-half-years. Sterling is weaker across the board from the result and this headwind will very likely gain momentum in the months ahead.
A slowing economy would usually hint at interest rate cuts to help stimulate things, however, the policies introduced by Chancellor Reeves (NIC & minimum wage hikes) are seen as inflationary and so the Bank of England remain firmly in an almost impossible to get right stick or twist moment.
The Euro-Zone beat the UK for the first time in a long time with an expansion figure (just about) of 50.1 versus the 50.3 forecast. It too dropped quite heavily from the previous reading of 50.9, but economically, things look much better in the EU than they do in the UK this month. Manufacturing activity also hit a 35-month high, which was welcomed on financial markets.
Overnight, US officials signaled a softer stance on global trade and towards Fed Chair Powell which was supported in US stocks and the USD. "He could be a little more active in terms of his idea to lower interest rates" was the opposite tone Trump used last week when discussing Powell.
President Trump said he would not 'play tough' with China and that the current 145% tariff will be significantly reduced once a deal is made. Treasury Secretary Bessent said the tariff situation was 'unsustainable' and a de-escalation in the near-term is expected.
The Euro is in the green today, but the USD could make a comeback with positive PMI data being released shortly.. |
|
Twitter
Facebook
linkedin
Google
