Global markets have been thrown into turmoil following the announcement of sweeping tariffs by U.S. President Donald Trump
U.S. tariffs, which include a 25% levy on imports from Canada and Mexico and a 10% increase on Chinese goods, have sparked fears of a global trade war. Retaliatory measures from Canada and China have only added to the uncertainty, sending shockwaves through financial markets worldwide.
The FTSE 100, London’s blue-chip index, fell by 1.3%, marking its steepest decline since October last year. Across the Atlantic, Wall Street saw significant losses, with the S&P 500 dropping 1.6% and the Dow Jones Industrial Average falling 1.7%. European markets were not spared, as Germany’s DAX and France’s CAC 40 plunged by 3.5% and 2.1%.
Investors are increasingly concerned about the long-term implications of these tariffs. The measures threaten to disrupt global supply chains, inflate costs, and dampen economic growth. Analysts warn that prolonged trade tensions could push the global economy closer to a recession.
The tariffs have also had a notable impact on currency markets. The U.S. dollar weakened against major currencies, with the pound rising to a six-week high of $1.27. Meanwhile, safe-haven assets like gold saw a surge in demand, with prices climbing above $2,900 per ounce.
Oil markets were not immune to the fallout, as Brent crude futures dropped to a three-month low of $70.65 per barrel. The decline reflects growing concerns over reduced demand amid escalating trade tensions.
As the world braces for further economic uncertainty, the focus now shifts to how global leaders will navigate these turbulent waters.
The stakes are high, and the path forward remains uncertain.
Trump’s tariffs have created fresh concern and new volatility in the markets forcing a stock market reversal.
The tariffs, which include a 25% duty on imports from Mexico and Canada, as well as a 10% levy on Chinese goods, have led to significant market volatility.
Investors remain cautious as they assess the long-term implications of these trade restrictions. The tariffs are expected to raise inflation in the U.S. and could potentially lead to a severe market correction.
It’s a complex situation with far-reaching consequences for global trade and the economy.
The S&P 500 retreated on Monday, extending February’s rout and turning red for the year after President Donald Trump’s confirmation of forthcoming tariffs.
The S&P 500 index fell to end at 5849, marking its worst day since December 2024 and bringing its year-to-date performance to a loss of about 0.5%.
The Dow Jones Industrial Average dropped 649 points to finish at 43191. The Nasdaq Composite slid to close at 18350, weighed down by Nvidia’s decline of more than 8%.
Stocks took a notable leg down in the afternoon following President Trump’s reiteration that 25% levies on imports from Mexico and Canada would go into effect on Tuesday 5th March 2025, dashing investors’ hopes of a last-minute deal to avert the full tariffs on the two U.S. allies.
All three indexes traded in positive territory earlier in the day, with the Dow rising nearly 200 points at session highs.
China retaliated with reciprocal tariffs of 15% on some U.S. goods due to take effect 10th. March 2025.
The UK government has announced a significant budget surplus for January 2025, marking a notable achievement in its fiscal management
The surplus, which is the difference between what the government spends and the tax it takes in, amounted to £15.4 billion. This figure represents the highest level for the month of January since records began over three decades ago.
However, despite this impressive surplus, the figure fell short of the Office for Budget Responsibility’s (OBR) forecast of £20.5 billion. The shortfall has increased pressure on Chancellor Rachel Reeves to meet her self-imposed fiscal rules.
The OBR, which monitors the government’s spending plans and performance, will release its latest outlook for the UK economy and public finances on 26 March 2025.
The surplus was driven by a surge in tax receipts, particularly from self-assessed taxes, which are typically higher in January compared to other months. However, the lower-than-expected tax receipts suggest underlying weaknesses in the UK economy.
The Office for National Statistics (ONS) reported that borrowing in the financial year to January 2025 was £118.2 billion, which is £11.6 billion more than at the same point last year.
The government now faces the challenge of balancing its fiscal rules with the need to support economic growth. Weak economic growth and higher borrowing costs have reduced the headroom available to the Chancellor, making it more difficult to meet her fiscal targets.
Economists have suggested that Reeves may need to consider raising taxes or cutting public spending to stay within her fiscal rules.
As the UK economy continues to navigate these challenges, the government’s ability to manage its finances effectively will be crucial in maintaining credibility with financial markets and ensuring long-term economic stability.
The upcoming Spring Forecast will be a critical moment for the UK Chancellor to outline her plans and address the fiscal challenges ahead
The U.K. economy grew by just 0.1% in the fourth quarter according to a preliminary estimate from the U.K.’s Office for National Statistics (ONS) released Thursday 13th February 2025.
Economists had expected the country’s GDP to contract by 0.1% over the period.
The services and construction sectors contributed to the better-than-expected performance in the economy, up 0.2% and 0.5% respectively, but production fell by 0.8%, according to the ONS.
Sluggish growth
The UK economy recorded zero growth in the third quarter, accompanied by lacklustre monthly GDP. There was a 0.1% contraction in October 2024 followed by a 0.1% expansion in November 2024.
On Thursday 13th February 2025, the ONS that growth had picked up in December, with an estimated 0.4% month-on-month expansion attributed to growth in and production.
Sluggish and a recent decline in inflation prompted the Bank of England to implement its interest rate cut of the year last week, reducing the benchmark rate to 4.5%.
The central bank indicated that additional rate cuts are anticipated as inflationary pressures diminish. However, it noted that higher energy costs and regulated price changes are projected to increase headline inflation to 3.7% in the third quarter of 2025.
Pressure
The expectation is that UK underlying inflationary pressures will continue to decline. The Bank of England expects the inflation rate to return to its 2% target by 2027.
The bank also halved the U.K.’s economic growth forecast from 1.5% to 0.75% this year.
Poor economic performance will add additional pressure on U.K. Chancellor Rachel Reeves, whose fiscal plans have been criticised for increasing the tax burden on businesses.
Critics say the plans, which increase the amount that employers pay out in National Insurance (NI) contributions as well as a hike to the national minimum wage, could harm investment, jobs and growth. This appears to be coming to fruition.
Chancellor Reeves defended her ‘dire’ Autumn Budget reportedly saying the £40 billion of tax rises were needed to fund public spending and that she is prioritising economic growth.
A poor start – 0.1% is an anaemic growth percentage!
Bank of England cuts interest rates to 4.5% amid economic slowdown
The Bank of England announced a reduction in its benchmark interest rate from 4.75% to 4.5%, marking the third cut since August 2024.
This decision comes as a response to the ongoing economic challenges facing the UK, including sluggish growth and concerns about the potential effect of Trump’s tariffs.
The primary reason behind this rate cut is the Bank’s effort to stimulate economic activity by making borrowing cheaper.
With the cost of borrowing now at its lowest level since June 2023, homeowners with variable rate or tracker mortgages will see immediate relief, with monthly repayments expected to decrease by approximately £29 per month on an average mortgage.
Small businesses, which have been struggling under heavy borrowing burdens, are also expected to benefit from this move.
Growth concerns linger
The Bank’s decision follows a series of disappointing economic indicators. The latest GDP figures showed that the economy only grew by 0.1% in November 2024, falling short of economists’ forecasts.
This sluggish growth, coupled with two months of falling output, has led the Bank to revise its growth forecast for 2025 downward.
The Bank now anticipates no growth during the fourth quarter of the year, and some economists are predicting as many as six rate cuts this year, potentially bringing the rate down to 3.25%.
While the rate cut is expected to provide some relief to borrowers, it also raises concerns about the long-term impact on savings and investment. With interest rates at historic lows, savers may find it challenging to earn meaningful returns on their deposits.
Additionally, the low-interest rate environment could encourage excessive borrowing and lead to asset bubbles, posing risks to financial stability. Has inflation finished?
The Bank of England’s decision to cut interest rates to 4.50% is a strategic move aimed at boosting economic activity and providing relief to businesses and homeowners.
The latest UK borrowing figures, reveal a significant increase in public sector net borrowing. In December 2024, the UK government borrowed £17.8 billion, which is the highest figure for the month for four years.
This amount was reportedly £10.1 billion higher than the same month last year and exceeded the £14.1 billion forecast by most economists.
The reported rise in borrowing was driven by several factors, including increased spending on public services, benefits, debt interest, and capital transfers. The interest payable on central government debt alone was £8.3 billion, nearly £4 billion higher than the previous year.
Additionally, a reduction in National Insurance contributions following rate cuts earlier in 2024 partially offset the increase in tax receipts.
Chancellor Rachel Reeves faces a challenging fiscal environment, with borrowing costs rising due to lower economic growth, higher public sector wages, and increased benefits payments. The unexpected jump in December 2024’s borrowing highlights the difficulties in balancing the budget and maintaining economic stability. The Chancellor’s budget was one of growth, but employer NI hikes have unravelled her ‘growth’ plan.
Despite the rise in borrowing, government bond prices remained relatively stable, suggesting that traders were not overly concerned by the surge. However, the overall fiscal position remains precarious, with public sector net debt estimated at 97.2% of GDP, the highest level since the early 1960s.
The government has pledged to take a hard line on unnecessary spending and to ensure that every penny of taxpayer money is spent productively.
As the fiscal year progresses, the Chancellor will need to navigate these financial challenges carefully to maintain economic stability and growth.
However, it is anticipated next month, following the January tax income boost, figures will appear favourable for the government, albeit temporarily.
The FTSE 100, the UK’s premier stock market index, has recently reached unprecedented new highs, marking a significant milestone in the UK financial world.
On 20th January 2025, the FTSE 100 closed at a record high of 8,548, surpassing the 8,500 barrier for the first time.
This achievement is a testament to the resilience and strength of the UK’s largest companies, even amid global economic uncertainties.
Several factors have contributed to this remarkable performance. Firstly, the anticipation of potential interest rate cuts by the Bank of England has fueled investor optimism. Lower interest rates typically reduce borrowing costs for companies, encouraging investment and expansion, which in turn boosts stock prices.
Additionally, the recent rise in oil prices has significantly benefited major oil companies like BP and Shell, which are key components of the FTSE 100.
FTSE 100 reaching new highs – one month chart as of 22nd January 2025 (08:21)
The banking sector has also played a crucial role in driving the index higher. With full-year earnings reports expected soon strong performance from banks could further propel the FTSE 100.
Furthermore, the index’s composition, which includes a substantial number of companies with global operations, has allowed it to benefit from the weaker pound. A weaker pound makes UK exports more competitive and increases the value of overseas earnings when converted back to sterling.
Market analysts are now speculating whether the FTSE 100 could reach the 9,000 mark in the coming months. While this would represent a significant rise from current levels, it is not entirely out of reach given the current momentum and favorable economic conditions.
However, some caution that the index’s rapid ascent may be followed by periods of volatility, especially as global economic conditions evolve.
In conclusion, the FTSE 100’s recent surge to new highs is a reflection of the robust performance of its constituent companies and the broader economic environment.
As investors continue to navigate the complexities of the global market, the FTSE 100 remains a key barometer of the health and vitality of the UK economy.
The UK economy grew for the first time in three months – but only just.
The tiny growth was driven in part by an increase in trade for pubs, restaurants, and the construction industry.
Official figures showed an expansion of 0.1% after the economy contracted in each of the two months.
The return to growth will be a welcome sign for the government after recent turbulence in financial markets sent borrowing costs to their highest level in several years and caused the value of the pound to fall.
However, the figure was lower than economists had expected, with declines in manufacturing and business rentals and leasing.
Chancellor Rachel Reeves reiterated her pledge to go ‘further and faster’ to improve economic growth in order to boost living standards, declaring it was the ” number one priority” for the government.
‘That means generating investment, driving reform, and a relentless commitment to rooting out waste in public spending,’ she reportedly said. She also repeated her accusation of blame at the Tories for the low growth. The chancellor surely cannot expect to continue escaping accountability with the blame game tactic for much longer.
However, with tax rises set to come into effect in April 2025, businesses have repeatedly warned that the extra costs faced through in National Insurance, as well as the minimum wage, could impact the economy to grow, with employers expecting to have less cash to give pay rises and create new jobs.
The UK is charting its own course when it comes to regulating artificial intelligence, signaling a potential divergence from the approaches taken by the United States and the European Union. This move is part of a broader strategy to establish the UK as a global leader in AI technology.
UK AI framework
Britain’s minister for AI and digital government, Feryal Clark, emphasised the importance of the UK developing its own regulatory framework for AI.
She highlighted the government’s strong relationships with AI companies like OpenAI and Google DeepMind, which have voluntarily opened their models for safety testing. Prime Minister Keir Starmer echoed these sentiments, stating that the UK now has the freedom to regulate AI in a way that best suits its national interests following Brexit.
Unlike the EU, which has introduced comprehensive, pan-European legislation aimed at harmonising
AI rules across the bloc, the UK has so far refrained from enacting formal laws to regulate AI.
Instead, it has deferred to individual regulatory bodies to enforce existing rules on businesses developing and using AI. This approach contrasts with the EU’s risk-based regulation and the U.S.’s patchwork of state and local frameworks.
Labour Party Plan
During the Labour Party’s election campaign, there was a commitment to introducing regulations focusing on ‘frontier’ AI models, such as large language models like OpenAI’s GPT. However, the UK government has yet to confirm the details of proposed AI safety legislation, opting instead to consult with the industry before formalising any rules.
The UK’s AI Opportunities Action Plan, endorsed by tech entrepreneur Matt Clifford, outlines a comprehensive strategy to harness AI for economic growth.
The plan includes recommendations for scaling up AI capabilities, establishing AI growth zones, and creating a National Data Library to support AI research and innovation. The government has committed to implementing these recommendations, aiming to build a robust AI infrastructure and foster a pro-innovation regulatory environment.
Despite the ambitious plans, some industry leaders have expressed concerns about the lack of clear rules. Sachin Dev Duggal, CEO of AI startup Builder.ai, reportedly warned that proceeding without clear regulations could be ‘borderline reckless’.
He reportedly highlighted the need for the UK to leverage its data to build sovereign AI capabilities and create British success stories.
The UK’s decision to ‘do its own thing’ on AI regulation reflects its desire to tailor its approach to national interests and foster innovation.
While this strategy offers flexibility, it also presents challenges in terms of providing clear guidance and ensuring regulatory certainty for businesses. As the UK continues to develop its AI regulatory framework, it will be crucial to balance innovation with safety and public trust
The pound has continued to fall after UK government borrowing costs rose and concerns grew about public finances
Sterling dropped as UK 10-year borrowing costs surged to their highest level since the 2008 financial crisis when bank borrowing virtually ground to a halt.
Economists have warned the rising costs could lead to further tax rises or cuts to spending plans as the government tries to meet its self-imposed borrowing target.
The UK government creates its own financial crisis as it messes up its ‘go for growth’ policy
The UK economy is currently grappling with a series of financial challenges that have led to a significant fall in the value of the pound, soaring treasury yields, and high borrowing costs.
These developments have been largely influenced by the recent budget announced by Chancellor Rachel Reeves, which has sparked concerns among investors and economists alike.
Downward trajectory
The pound has been on a downward trajectory, recently hitting its lowest level since November 2023. Traders are betting on further declines, with some predicting the pound could fall as low as $1.12
This decline is partly due to the rising cost of government borrowing, which has surged to levels not seen since the 2008 financial crisis. The yield on 10-year gilts has climbed to 4.8%, while the yield on 30-year gilts has reached 5.34%, the highest in 27 years.
Recent UK budget
The recent budget has played a crucial role in these developments. Announced in October 2024, the budget included significant tax hikes and increased spending, leading to a substantial rise in government borrowing.
The budget deficit is expected to reach 4.5% of GDP this fiscal year, pushing the overall government debt close to 100% of GDP. This increase in borrowing has led to a higher supply of government debt, which in turn has driven down the price of bonds and pushed up yields.
Higher yields
Higher yields mean that the government has to pay more to borrow money, which has significant implications for its fiscal policy. The rising cost of servicing government debt could force the government to either raise taxes further or cut spending to meet its fiscal rules.
This situation is reminiscent of the market turmoil following Liz Truss’s mini budget in 2022, which also led to a sharp rise in borrowing costs and a fall in the value of the pound.
The impact of these developments extends beyond the government. Higher borrowing costs are likely to affect households and businesses as well.
Economic growth at risk
Mortgage rates, which are influenced by government bond yields, are expected to remain high, putting additional pressure on homeowners. Businesses, on the other hand, may face higher costs of borrowing, which could lead to reduced investment and slower economic growth.
The UK is facing a challenging economic environment characterized by a falling pound, high treasury yields, and rising borrowing costs.
The recent budget has exacerbated these issues, leading to increased government borrowing and higher debt levels. As the government navigates these challenges, it will need to carefully balance its fiscal policies to avoid further economic instability and ensure sustainable growth and not more ‘unfunded’ debt.
As we head into 2025, the landscape of artificial intelligence (AI) regulation is poised to undergo significant changes, and these shifts are likely to have a profound impact on the stock markets.
The introduction of new regulations, particularly in regions like the European Union and the United States, will create both challenges and opportunities for investors.
One of the most anticipated regulatory developments is the European Union’s AI Act, which aims to set a global standard for AI regulation. This act is expected to impose stringent requirements on AI systems, particularly those used in high-risk sectors such as healthcare, finance, and law enforcement.
Companies operating in these sectors will need to invest heavily in compliance, which could lead to increased operational costs and potentially affect their profitability. As a result, stocks of companies heavily reliant on AI technologies may experience volatility as investors react to these new regulations.
In the United States, the political landscape is also shifting, with the incoming administration expected to take a more hands-on approach to AI regulation. President-elect Donald Trump has appointed Elon Musk to co-lead a new ‘Department of Government Efficiency – DOGE‘, which will focus on nascent technologies like AI. Musk’s influence and experience in the AI field could lead to more favourable policies for AI development, but it could also result in increased scrutiny and regulation of AI applications. Musk’s AI vision differs to that of Mark Zuckerberg’s for instance.
This dual approach of promoting innovation while ensuring safety and ethical use of AI could create a dynamic and unpredictable market environment.
The impact of AI regulation on the stock markets will not be uniform across all sectors. While companies in high-risk sectors may face challenges, those in industries like healthcare and finance could benefit from AI’s transformative potential.
For example, AI-driven innovations in healthcare, such as predictive diagnostics and personalised treatment plans, have the potential to revolutionize patient care and reduce costs. Companies that successfully integrate AI into their operations and comply with regulatory requirements could see their stock prices rise as investors recognize the long-term value of these advancements.
However, the regulatory landscape is not without its risks. Companies that fail to adapt to new regulations or face compliance issues may see their stock prices suffer. Additionally, the rapid pace of technological change means that regulations may struggle to keep up, leading to potential legal and financial uncertainties for companies operating in the AI arena.
AI regulation in 2025 is likely to create a complex and dynamic environment for the stock markets. While new regulations will pose challenges for some companies, they will also open up opportunities for those that can navigate the regulatory landscape successfully.
Investors will need to stay informed and agile, as the impact of AI regulation on the stock markets will be both significant and multifaceted.
Revised official figures indicate that the UK economy was weaker than initially estimated between July and September 2024. The economy experienced zero growth in these three months, down from an earlier estimate of 0.1%.
UK Chancellor, Rachel Reeves reportedly stated that the challenge to fix the economy “after 15 years of neglect is huge,” and October’s Budget would “deliver sustainable long-term growth, putting more money in people’s pockets.”
However, one of the UK’s leading business groups, the CBI, said its latest company survey suggested “the economy is headed for the worst of all worlds.”
The downward revisions will be a setback for Labour, which has prioritised boosting economic growth. It has promised to deliver the highest sustained economic growth in the G7 group of wealthy nations.
Separate figures released last week showed that inflation, the rate at which prices increase over time, is rising again at its fastest pace since March 2024. But it is close to the Bank of England target of 2%
The Bank of England voted to hold interest rates at the last meeting, stating that it believed the UK economy had performed worse than expected, with no growth between October and December 2024.
Businesses have warned that measures announced in October’s Budget, including a rise in employer national insurance and a higher minimum wage, could force them to raise prices and reduce the number new jobs.
The UK inflation rate has gone up for the second month in a row, rising at the fastest pace since March 2024. The UK inflation rate rose to 2.6% in the year to November 2024, according to official figures.
However, the rise was predicted by economists and was apparently within the range of the expected increase anticipated.
Fuel and clothing were significant contributors to the increase. Additionally, rising ticket prices for concerts and theatrical performances played a role according to data from the Office for National Statistics (ONS).
The Bank of England raises interest rates to maintain inflation at its target of %. The next rate decision is on Thursday 19th December 2024 and economists anticipate that rates will remain at 4.75%.
Prices for food and non-alcoholic drinks, alcohol and tobacco, and footwear all rose at a faster pace last month.
A wider measure of inflation showed housing and household services costs, including rent, rose by 3.5%.
Gross Domestic Product (GDP) fell by an estimated 0.1% on a monthly basis, the ONS said Friday 13th December 2024, attributing the downturn to a decline in production output.
It marked the second consecutive economic downturn, following a 0.1% GDP decline in September 2024. Sterling declined on the back of these disappointing figures, trading 0.3% lower against the U.S. dollar in early trade.
However, ‘real’ GDP is estimated to have grown 0.1% in the three months to October 2024, the ONS said, compared to the previous three months ending in July 2024.
In a statement on Friday 13th December 2024, U.K. Finance Minister Rachel Reeves reportedly conceded that the October figures were ‘disappointing,’ but defended the government’s economic strategies. I expect the chancellor would have been quick to own the success had the GDP improved – especially after the ‘for growth’ budget.
The economy has grown just once over the past five months and is 0.1% lower than before Labour won the election. That may suggest it’s not just the Budget that is holding the economy back. Instead, the drag from higher interest rates may be lasting longer than was calculated.
Either way, be it budget or inflation pressure – the UK economy isn’t growing.
UK GDP January 2022 – October 2024
Note: preliminary ONS figures may be revised in future assessments
In November 2024, business confidence in the U.K. dropped to its lowest point since January 2023, as reported by BDO, a business advisory and accountancy firm.
Concurrently, KPMG noted that UK job vacancies decreased at the quickest pace since the pandemic began. This downturn coincides with warnings from businesses that the Labour Party’s ‘pro-growth’ budget could exacerbate inflation and decelerate hiring.
Tax increases do not fit well with a ‘pro-growth’ agenda. Also, GDP predictions made by the UK chancellor for 2025 through 2027 are lame.
The Labour budget has notably affected U.K. business confidence for a variety of critical reasons:
Tax Increases: The budget introduced a substantial hike in National Insurance contributions for employers, raising the rate to 15% on salaries above £5,000. This increase has led to concerns about higher operational costs, which many businesses fear will result in job cuts and reduced investment.
Minimum Wage Hike: The budget also included an inflation-busting increase in the minimum wage. While this aims to improve living standards, it has added financial pressure on businesses, particularly those in sectors with tight margins like retail and hospitality.
Economic Uncertainty: The combination of these measures has created a sense of economic uncertainty. Businesses are worried about their ability to absorb these additional costs, leading to a decline in overall optimism.
Investment Concerns: The increased costs have forced many businesses to reconsider their investment plans. Some have already announced cuts to expansion projects and other growth initiatives.
Next Increase: in public workers pay looms nigh.
These factors have collectively contributed to a significant drop in business confidence, with many firms bracing for a challenging economic environment ahead
The United Kingdom has given the world an impressive array of groundbreaking inventions that have transformed various aspects of modern life
From Isaac Newton’s reflecting telescope in 1668 to Frank Whittle’s jet engine in 1937 and Tim Berners-Lee’s creation of the World Wide Web in 1989.
British inventors have continually pushed the boundaries of science and technology. The development of penicillin by Alexander Fleming in 1928 revolutionised medicine, while Michael Faraday’s work on the electric motor and electromagnetic induction laid the foundation for modern electrical engineering.
Innovations like the steam engine, the world’s first underground railway, stainless steel, and the hovercraft have significantly advanced transportation and industry.
Contributions such as the structure of DNA by Francis Crick and James Watson, the MRI scanner by Sir Peter Mansfield, and the vaccination by Edward Jenner have had profound impacts on health and science.
These inventions reflect the ingenuity and creativity that have positioned the UK as a leader in innovation and progress.
Top 60 list of British inventions – in no particular order
The Reflecting Telescope (Isaac Newton, 1668)
The Seed Drill (Jethro Tull, 1701)
The Steam Engine (Thomas Savery, 1698; improved by James Watt, 1765)
The World’s First Underground Railway (The Tube) (1863)
Penicillin (Alexander Fleming, 1928)
The Jet Engine (Frank Whittle, 1937)
The Electric Light Bulb (Joseph Swan, 1879)
The World Wide Web (Tim Berners-Lee, 1989)
Stainless Steel (Harry Brearley, 1913)
The Electric Motor (Michael Faraday, 1821)
The First Programmable Computer (Charles Babbage, 1837)
The Thermos Flask (Sir James Dewar, 1892)
Television (John Logie Baird, 1925)
Vaccination (Edward Jenner, 1796)
The Steam Locomotive – (George Stephenson, 1814)
The Lawnmower (Edwin Budding, 1830)
The Hovercraft (Christopher Cockerell, 1955)
The Safety Bicycle (John Kemp Starley, 1885)
The Cat’s Eye Road Reflector (Percy Shaw, 1934)
The Structure of DNA (Francis Crick and James Watson, 1953)
Concorde (British and French collaboration, 1969)
The Fax Machine (Alexander Bain, 1843)
The Electric Transformer (Michael Faraday, 1831)
Electromagnetic Induction (Michael Faraday, 1831)
Radar (Sir Robert Watson-Watt, 1935)
The Spinning Frame (Richard Arkwright, 1769)
The MRI Scanner (Sir Peter Mansfield, 1971)
The ATM (John Shepherd-Barron, 1967)
The Marine Chronometer (John Harrison, 1761)
The Tin Can (Peter Durand, 1810)
The Hydrogen-Oxygen Fuel Cell (Sir William Grove, 1839)
The Floating Breakwater (Sir Samuel Bentham, 1804)
The Sinclair ZX80 (First Affordable Home Computer) (Sir Clive Sinclair, 1980)
The Universal Joint (Robert Hooke, 1667)
The Submarine Periscope (Sir Howard Grubb, 1914)
The Identity Card System (Sir Edward Henry, 1916)
The Collapsible Baby Carriage (Owen Maclaren, 1965)
Thermal Insulation (Lord Kelvin, 1894)
The Jet Engine (Sir Frank Whittle) – successfully tested in 1941
The Jet Engine Afterburner (Sir Frank Whittle, 1946)
Carbon Fibre (Sir Harold Kroto, 1961)
The Modern Ship Propeller (Francis Pettit Smith, 1836)
The Computer From early mechanical computers to modern electronic computers by Charles Babbage, ADA Lovelace (1842) to modern electronic computers – Sir Clive Sinclair
The Fire Extinguisher (George William Manby, 1818)
The Postage Stamp (Rowland Hill, 1840)
The Flushable Toilet – Sir John Harrington (1596) – (Thomas Crapper, 1861)
Torpedo (Robert Whitehead, 1866)
The Triple Expansion Steam Engine (Arthur Woolf, 1804)
The Bicycle – Kirkpatrick Macmillan (1842)
IVF – Robert Edwards, Patrick Steptoe & Jean Purdy
The Telephone – Alexander Graham Bell (1876)
The Cat’s Eye – Percy Shaw (1934)
Pneumatic Tyre – Robert William Thompson (1847)
The Refrigerator – William Cullen (1755)
TheSteam Engine – Thomas Newcomen (1712)
Cement – Joseph Aspdin (1842)
The Thermos Flask – Sir James Dewar (1892)
The Cat Flap – Sir Isaac Newton
The above are just a few examples of British ingenuity and creative inventive ability.
The UK is renowned for its inventiveness and continues to have a wealth of contributions to offer the world
The inflation rate, which measures price changes, hit 2.3% in the year to October 2024, a bigger-than-expected increase from 1.7% in September 2024.
The increase was in part due to an increase in the regulator-set energy price cap that took effect in October 2024, which is expected to increase energy price inflation through the winter.
The Office for National Statistics (ONS), said while higher energy costs had contributed, this increase was offset by falls in live music and theatre ticket prices.
The UK economy expanded by just 0.1% from July to September 2024, as announced in the most recent official data release.
The growth was less than anticipated, and the Office for National Statistics (ONS) reported that most sectors experienced subdued activity over the quarter.
Labour, having prioritised economic growth upon assuming power, found Chancellor Rachel Reeves expressing dissatisfaction with these figures, which represent the initial three months of the new administration.
Several economists have attributed the uncertainty surrounding the contents of October’s Budget as a factor impeding growth.
This impact was notably pronounced in September, when the economy saw a contraction of 0.1%.
Moreover, the government is contending with criticism from certain businesses that are opposed to the tax increases introduced in the Budget.
Whichever way you look at these figures; they’re utterly dire.
As of September 2024, the UK’s national debt stands at £2,685.6 billion, which is approximately 100% of the country’s GDP. This is the highest level of public sector debt since 1961.
UK debt and its borrowing
As of 2024, the United Kingdom’s national debt has reached a staggering £2,685.6 billion, an amount equivalent to the nation’s GDP. This surge in debt, driven by persistent borrowing, has sparked significant economic and political debate.
Historical context
The UK’s debt levels have fluctuated over time, influenced by wars, recessions, and policy decisions. However, the current debt level marks a significant peak not seen since the early 1960s.
The Financial Crisis of 2008 saw the debt-to-GDP ratio rise sharply as the government borrowed heavily to stabilize the banking sector and stimulate the economy. More recently, the COVID-19 pandemic necessitated extensive government borrowing to fund health services, furlough schemes, and business support measures, exacerbating the debt situation.
Government borrowing
Government borrowing, or public sector net borrowing, is the amount by which government expenditures exceed its revenues. This borrowing is essential for funding various public services, infrastructure projects, and welfare programs.
While borrowing can be a tool for stimulating economic growth, especially during downturns, it also raises concerns about fiscal sustainability and the burden on future generations.
Economic Implications
High levels of national debt can have profound economic implications. On the one hand, government spending can stimulate economic activity, create jobs, and drive growth. However, excessive borrowing can lead to increased interest payments, diverting resources from essential services like healthcare and education.
Additionally, high debt levels can reduce investor confidence, potentially leading to higher borrowing costs for the government and businesses.
Debt management strategies
The UK government employs various strategies to manage its debt. These include issuing government bonds to investors, which provide a relatively low-cost means of borrowing. The Bank of England also plays a crucial role, particularly through its monetary policies, such as setting interest rates and implementing quantitative easing programs.
The government’s fiscal policy, which includes tax and spending measures, is another key component in managing the debt.
The future
Looking ahead, the UK’s debt trajectory will depend on several factors, including economic growth rates, government policy decisions, and global economic conditions.
While reducing the debt burden is a priority, balancing fiscal responsibility with the need for economic stimulus remains a delicate act. Policymakers must navigate this complex landscape to ensure long-term economic stability and prosperity for future generations.
UK debt in direct relation to UK GDP from 1980 – 2024
Since the 1950s, UK debt has gone through several cycles. Post-World War II, debt was high due to reconstruction efforts.
The 1980s saw a decline in debt, thanks to privatisation and reduced public spending. However, the 2008 financial crisis caused a sharp increase, followed by more borrowing during the COVID-19 pandemic, reaching 100% of GDP in 2024.
UK public sector borrowing
Public sector debt as a proportion of GDP
How does the UK government borrow money?
The government raises funds by issuing financial instruments known as bonds. A bond represents a commitment to repay borrowed money in the future, typically with periodic interest payments until maturity.
UK government bonds, or ‘gilts’ are generally regarded as secure investments, carrying minimal risk of non-repayment. Institutions both within the UK and internationally, including pension funds, investment funds, banks, and insurance companies, are the primary purchasers of gilts.
Additionally, the Bank of England has purchased substantial amounts of government bonds in the past as an economic stimulus measure through a mechanism known as ‘quantitative easing’.
How much is the UK government borrowing?
The government’s borrowing fluctuates monthly. For example, in January, when tax returns are filed, there’s typically a surge in revenue as many pay a significant portion of their taxes at once. Therefore, it’s more informative to consider annual or year-to-date figures.
In the financial year ending March 2024, the government borrowed £121.9 billion. The latest data for September 2024 indicates borrowing at £16.6 billion, up by £2.1 billion compared to September 2023.
The national debt refers to the total amount owed by the government, which stands at approximately £2.8 trillion. This figure is comparable to the gross domestic product (GDP) of the UK, which is the total value of goods and services produced in the country annually.
The current debt level has more than doubled since the period from the 1980s up to the 2008 financial crisis. Factors such as the financial crash and the Covid pandemic have escalated the UK’s debt from its historical lows to where it is now.
However, when considering the economy’s size, the UK’s debt is relatively low compared to much of the previous century and to that of other major economies.
How much money does the UK government pay in interest?
As the national debt increases, so does the interest that the government must pay. This additional cost was manageable when interest rates were low throughout the 2010s, but it became more burdensome after the Bank of England increased interest rates.
The government’s interest payments on the national debt are variable and reached a 20-year peak in early October 2023. Approximately a quarter of the UK’s debt is tied to inflation, meaning that payments increase with rising inflation.
This situation led to a significant rise in the cost of debt service, though these payments have begun to decrease. If the government allocates more funds to debt repayment, it could result in reduced spending on public services, which were the original reason for the borrowing.
In conclusion, while the UK’s debt and borrowing levels present challenges, strategic management and informed policy decisions will be crucial in navigating the path forward.
The UK debt total vs GDP is now as of 2024 all but 100%
UK inflation fell unexpectedly to 1.7% in the year to September 2024, the lowest rate in three-and-a-half years
This indicates that inflation, which is the rate at which prices increase over time, is currently below the Bank of England’s target of 2%, potentially leading to further reductions in interest rates next month.
The Office for National Statistics (ONS) reported that petrol and diesel prices saw a notable decrease, falling by 10.4% in September 2024compared to the same month the previous year.
Additionally, the cost of fares for domestic, European, and long-haul flights contributed to the lower inflation rate. While fares typically decrease after the summer peak, this year they have reduced more than usual.
UK interest rate at 1.7% below the Bank of England target of 2%
UK interest rate at 1.7% below the Bank of England target of 2%
With inflation dropping below economists’ expectations, the markets are anticipating a cut in interest rates at the Bank of England’s upcoming meeting in November 2024. The present rate stands at 5%, and a reduction of 0.25% is now deemed highly probable.
The UK Labour government aimed to attract foreign investment on Monday 14th October by hosting its first International Investment Summit in London
Prime Minister Keir Starmer, Chancellor Rachel Reeves, and Business Minister Jonathan Reynolds headed the one-day event at London’s Guildhall, with an attendance of approximately 200 executives from both the UK and abroad.
Notable attendees were former Google Chairman Eric Schmidt, Goldman Sachs CEO David Solomon, BlackRock CEO Larry Fink, and GSK CEO Emma Walmsley. Poppy Gustafsson, the newly appointed Investment Minister and co-founder of the British cybersecurity company Darktrace, were also present to advocate for the UK as a favourable business environment.
The UK government unveiled a relaxation of regulations and announced investment deals worth billions of pounds in sectors such as artificial intelligence, life sciences, and infrastructure, while Starmer proclaimed it’s ‘a great moment to back Britain.’
‘We will rip out the bureaucracy that blocks investment and we will make sure that every regulator in this country take growth as seriously as this room does,‘ Starmer reportedly told delegates.
UK Prime Minister Keir Starmer on Monday 14th October 2024 vowed to slash regulatory red tape to boost investment in the country.
“We’ve got to look at regulation across the piece, and where it is needlessly holding back investment … mark my words, we will get rid of it,” he reportedly told delegates at the UK’s International Investment Summit.
The government on Sunday 13th October 2024 announced the launch of a new industrial strategy, designed to focus on eight “growth-driving sectors.”
The prime minister reportedly restated that growth was the “No. 1 test of this government,” and reiterated plans for the U.K. to become the fastest-growing G7 economy.“
Starmer also outlined stability, strategy, regulation and improving Britain’s global standing as “four crucial areas” in his pitch for Britain.
“Private sector investment is the way we rebuild our country and pay our way in the world,” Starmer said
In a panel discussion with Starmer, Google’s ex-CEO Eric Schmidt expressed his surprise upon learning that the Labour party had shifted to ‘strongly’ support growth.
Schmidt is eager to see the execution of this approach and encouraged the government to increase investment in artificial intelligence to fulfill broader growth objectives.
Electric car sales to private buyers are 6.3% lower so far in 2024 despite £2 billion of manufacturers discounts
Electric car sales in the UK are facing challenges despite the growth in the number of electric vehicles (EVs) on the roads. The Society of Motor Manufacturers and Traders (SMMT) has indicated that the proportion of EV sales has not surpassed 18%, with the market mainly propelled by fleet operators, not private consumers.
It has been suggested that the industry will struggle to meet the government target of 22% of new car sale in 2024 being ‘zero-emission vehicles’.
Contributing factors to this slowdown include the high costs, a limited public charging infrastructure, and range anxiety.
Nonetheless, September 2024 saw a record number of new electric car registrations, exceeding 56,000. Yet, the long-term viability of these figures is uncertain, as they were bolstered by substantial discounts.
And yet the electric car still remains an equally expensive option by direct comparison.
In August 2024, the U.K. economy experienced a 0.2% growth on a month-on-month basis, according to preliminary figures released by the Office for National Statistics on Friday 11th October 2024.
But there is a warning of a potential UK slowdown despite the August pick-up.
Over the three months leading to August, Britain’s economic growth also registered a 0.2% increase, which was marginally below the expectations of economists.
A rebound in construction and a robust month for accountancy, manufacturing, and retail sectors contributed to a 0.2% boost in the economy, following a stagnation in growth over the prior two months.
However, the Office for National Statistics (ONS) noted that economic growth has been weaker relative to the first half of the year and of a potential slowdown.
Last month, the average UK house price nearly reached a record high, buoyed by decreasing mortgage rates that have lifted buyer confidence, Halifax reports.
Halifax, the UK’s largest mortgage lender, noted that the average house price climbed to £293,399 in September 2024, narrowly missing the record of £293,507 set in June 2022.
According to Halifax, house prices have been on an upward trend for three consecutive months as market conditions have improved.
Easier mortgage affordability, driven by robust wage increases and declining interest rates, has enhanced confidence among buyers, leading to a rise in the number of mortgages agreed upon over the past year.
Halifax has recorded a 4.7% increase in house prices compared to the previous year, marking the most rapid growth rate since November 2022.
Increase in VAT: Adjusting the Value Added Tax (VAT) rate could generate substantial revenue.
Pension Tax Relief: Limiting pension tax relief to the basic rate of income tax could raise around £15 billion per year. Pension tax relief raid.
Windfall Tax: Increasing the windfall tax on the profits of oil and gas companies could also contribute significantly.
General Tax Increases: N.I., Income Tax, Capital Gains Tax, Inheritance Tax,
Public Sector Efficiency
Improving Productivity: Enhancing public sector productivity by just 5% could deliver up to £20 billion in benefits annually.
New Taxes or Levies
Green Taxes: Introducing or increasing taxes on carbon emissions and other environmental levies could help raise funds while promoting sustainability.
Digital Services Tax: Expanding the scope of the digital services tax to cover more online businesses could also be a potential revenue source.
Electric vehicle tax: new tax bands for electric cars
Spending Cuts
Reducing Public Expenditure: Identifying and cutting down on non-essential public spending could help balance the budget.
Economic Growth
Stimulating Growth: Policies aimed at boosting economic growth, such as investing in infrastructure and innovation, could increase tax revenues indirectly by expanding the tax base. But this will take time to fully materialise.
Each of these measures comes with its own set of challenges and implications, so the government would need to carefully consider the economic and social impacts before implementation.
Black hole?
The Chancellor has recently pointed to a ‘black hole’ in the public finances, referencing the recent uncovering of an ‘unbudgeted’ £22bn overspend in the current tax year following her tenure commencement at No. 11 Downing Street in July.
The reality of this newfound deficit is subject to debate. However, given that the Chancellor has ruled out the possibility of borrowing for day-to-day expenses, it seems she very likely she might be compelled to raise taxes to offset these expenditures.
N.I. and Pension raid?
In its last year, the Conservative government cut taxes by £20 billion by reducing the National Insurance rate. Reversing this cut would be a direct way to increase revenue, taking us back to the financial situation before last November.
Currently, many people receive a 40% tax relief on pension contributions but are taxed at 20% when they withdraw. This ‘inconsistency’ could easily become a target for the Chancellor.
Additionally, employers’ National Insurance contributions are not applied to pension contributions or withdrawals, and individuals can even take a tax-free lump sum from their pension after having received tax relief on their contributions.
Understanding the complexities is not necessary to see that a chancellor in search of extra tax revenue may consider pension contributions as a significant source of additional income.
The UK budget is due on: 30th October 2024 – let’s see just by how much UK taxes are increased – because they will be.
The UK’s economic growth for the period between April and June 2024 was lower than initially estimated, as reported by the ONS
The Gross Domestic Product (GDP), which quantifies the economic activity of companies, governments, and individuals within a country, increased by 0.5%, a revision from the preliminary figure of 0.6%.
Both the manufacturing and construction sectors experienced greater declines than initially calculated.
This information comes to light as the Labour government, which prioritises economic growth, gears up to present its first Budget at the end of October 2024.
The Office for National Statistics (ONS), the publisher of these statistics, noted a significant 3.1% decrease in the production of transport and related equipment during this quarter, following a sustained period of expansion, a stark contrast to the initially estimated 0.7% decrease.
The ONS indicated that this downturn could be attributed to factories scaling back production in anticipation of the transition towards electric vehicle manufacturing.
Additionally, the construction sector saw a downturn, continuing the trend of decreased new home construction.
However, the ONS said that the outlook was improving.
