Global stock markets are tumbling today, marking huge uncertainty about US President Donald Trump’s so-called ‘Liberation Day’ on Wednesday, 2^nd April, when new 25% tariffs on all automotive imports into the US kick in. This latest salvo in Trump’s trade war has sparked fears of stagflation within the US at best, and a global recession at worst. Trump told NBC News on Sunday that he “couldn’t care less” if car prices rise as a result of his tariffs. The FTSE 100 is down 0.77% at the time of writing, while the FTSE 250 is down 1.29%. The pan-European Stoxx 600 is down 1.1%, and both the German DAX and the French Cac 40 are down 0.91% and 1.09% respectively. Overnight the Japanese Nikkei 225 plummeted more than 4%, four per cent overnight; Hong Kong’s Hang Seng dipped 1%; South Korea’s Kospi sank 2.6%; and the Australian ASX 200 declined 1.6%. cent to 7,856.80. The US Dow Jones index closed 1.69% down on Friday. The price of oil has also risen after Trump threatened specific levies on all imports from countries that buy Russian oil – notably India and China - saying he was “very angry” with Russian President Vladimir Putin for stalling a Ukraine/Russia ceasefire by demanding Volodymyr Zelensky be removed as Ukraine’s President before peace talks go ahead. Brent crude rose 0.6% to more than $74 a barrel and the price of US-produced West Texas Intermediate went up 0.5% towards $70 a barrel. On Sunday, Trump slapped 25% tariffs on imports from countries buying Venezuelan oil and gas and revoked several transnational oil and gas companies’ licences to operate in the South American country, which had been granted despite Washington’s sanctions against it. Gold prices also rose again as investors retreated to the ‘safe haven,’ surging past $3,100 an ounce to another record high.

Meanwhile, the global turmoil has contributed to Chancellor Rachel Reeves seeing £5bn wiped off the new-found fiscal headroom she announced in her Spring Statement, according to calculations by Bloomberg Economics. The benchmark 10-year gilt yield rose by as much as eight basis points to 4.81% on Thursday, driving up Government borrowing costs to their highest level since mid-January. The Office for Budget Responsibility (OBR) and left-leaning think-tank the Institute for Fiscal Studies (IFS) have suggested her headroom risks being wiped out completely by the time she delivers her Budget in the Autumn, but the fact “half the headroom has already been wiped out shows that there’s an awful lot more work to do to shore up the public finances,” said Dan Hanson, chief UK economist at Bloomberg Economics.

The IFS has also released research this morning showing Britain has seen the fastest rise in working-age people claiming health and disability benefits in the developed world. The number of people aged between 16 and 64 claiming welfare because of sickness or disability has risen by 39% since 2019, to the point where 40% of all working-age welfare is now spent on health-related benefits, up from 22% in 2010 and 31% just before the first Covid lockdown. Of particular significance is the number of younger people claiming health-related benefits; the number of new awards made to under-40s has grown by at least 150% since 2019-20; then, 4,500 people a month claimed, but by 2023-24, 11,500 a month were in receipt of in health and disability benefits. “The rapid growth in health-related benefits seems to be largely a UK phenomenon,” the IFS research paper said. “The number of claimants of similar benefits in most similar countries with available data (Australia, Austria, Canada, Germany, Ireland, the Netherlands, Sweden and the US) has in fact slightly fallen over the same period. There have been small percentage increases in claims in France and Norway. Denmark was the only other country with available data that saw a significant increase and, at 13%, even that was considerably smaller than the increase in health-related benefit claimants in the UK”. The IFS noted that the growth in claims has also been fastest in areas that already had a large number of claimants, such as Merthyr Tydfil and Blackpool, where around 15% of 16- to 64-year-olds were in receipt of a health-related benefit before the pandemic, but now 19% claim. The full report is here: https://ifs.org.uk/publications/health-related-benefit-claims-post-pandemic-uk-trends-and-global-context

The Telegraph has unearthed Treasury documents which show Government departments will be asked to fund loss-making projects that are backed by Chancellor Rachel Reeves’s National Wealth Fund, despite demanding Whitehall spending is cut and the huge pressure on the public finances. Departments will even be asked to pick up the tab for projects that are “intentionally loss-making,” the newspaper say. Reeves has earmarked £7.3bn to her wealth fund, which is supposed to help “kickstart growth” and attract private investment into projects such as clean energy, transport, tech and advanced manufacturing which might not otherwise get funding. It is understood that Ministers will have the power to veto investments if the projects rely on funding from their department, but the Chancellor sets the fund’s strategic priorities, directing where it should invest, and it appears that making a profit is not always the key objective. George Dibb at the Institute for Public Policy Research explained: “There are some things where you might be comfortable making a loss because it makes a net positive elsewhere in the economy. If we want to be good at making electric vehicles, you might want a battery factory. You could make a loss-making loan to secure a battery manufacturing facility because it secures other profitable businesses in the country.”

Energy Secretary Ed Miliband is being urged by The North Sea Transition Task Force (NSTTF) to scrap his hiked windfall tax on North Sea oil and gas producers and start issuing new drilling licences, or risk wholesale job losses that could jeopardise net zero efforts. NSTTF, which is an independent body overseen by the British Chambers of Commerce and bringing together representatives from supply chain businesses, academia, environmental groups and trade unions, says the taxes and exploration bans imposed on the industry are accelerating its decline before renewables are able to be sufficiently developed to replace it. It claims around 180 of the UK’s remaining 280 active oil and gas fields will be forced to close down by 2030 given current Government policy, sparking a much greater reliance oil and gas imports and the loss of thousands of jobs in the industry and its supply chain. “Companies are already giving up on the North Sea … confidence is at its lowest level for two decades and investment is declining at a faster rate than anticipated,” the taskforce said in a report published this morning. “Simply put, there is a risk that oil and gas production will decline faster than anticipated, while wind and other renewable projects take longer to get established. If that gap is allowed to open, there will not be a viable industry left to transition to the renewable future.” A government spokesman said: “We have already taken rapid steps in delivering a fair and orderly transition in the North Sea– with the biggest ever investment in offshore wind and up to £21.7bn in funding over the next 25 years for carbon capture and storage and hydrogen projects. This comes alongside the launch of Great British Energy, headquartered in Aberdeen, and the creation of a National Wealth Fund, both of which will unlock significant investment in clean power projects across the UK and help create thousands of skilled jobs.”

The UK arm of Peloton has reported another huge annual loss of £94.3m for the 12 months to 30^th June 2024, having also lost £115.2m in the prior year, and £173.7m in the year to June 2022. New accounts filed with Companies Housealso show the firm’s headcount reduced from 441 to 301 in this financial year.

Thames Water CFO Alastair Cochran has quit the heavily indebted utility, despite the firm being in the midst of a plan to recapitalise some £20bn of debt, including a £3bn emergency bailout from major shareholders. Thames Water is England’s largest water firm, serving around 16m households in the SE of England. Cochran, who was at Thames Water for three-and-a-half years, was “instrumental” in securing that £3bn deal, according to CEO Chris Weston, who was notified of Cochran’s departure on Friday. He will remain in post until the end of March. Stuart Thom, the current director of group finance, has been appointed CFO on an interim basis.

Primark CEO Paul Marchant has resigned with immediate effect following an investigation that ensured when a woman made a complaint about his behaviour "in a social environment", parent company Associated British Foods said earlier this morning. He is being replaced by Group finance director Eoin Tonge on an interim basis. "Paul Marchant cooperated with the investigation, acknowledged his error of judgement and accepts that his actions fell below the standards expected by ABF. He has made an apology to the individual concerned, the ABF Board and also to his Primark colleagues and others connected to the business," the company said in a statement.

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