Japan and Switzerland’s economies contract as exports are hit by US tariffs; WPP shares jump amid ‘takeover interest’ – business live
Rolling coverage of the latest economic and financial newsChina travel warning for Japan sends shares in tourism and retail companies plungingUK government bonds are stable this morning, after a selloff last Friday when news broke that chancellor Rachel Reeves had scrapped controversial plans to raise income tax.News of the chancellor’s tax u-turn drove up the cost of borrowing, as investors worried that this month’s budget might create less fiscal headroom than the markets hoped.The recent deterioration in the labour market points to further downside risk to UK yields, as labour market softness should translate into a stronger foundation for lower inflation in 2026, alongside ongoing disinflationary progress, and an upcoming contractionary budget.As external MPC member Megan Greene has pointed out, the UK’s “Sahm Rule” threshold is around 0.75 – meaning a rise in the 3-month average unemployment rate from the lows of the trailing 12 months to above this level has been an indicator of recessions since 1975. The latest unemployment rate in the UK was 4.97%, and the rise in the “Sahm” indicator over the lows of the last 12m has been 0.71.If the unemployment rate rises above 5.2% in the next three months, the recession threshold will be triggered. Continue reading...
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Rolling coverage of the latest economic and financial news
UK government bonds are stable this morning, after a selloff last Friday when news broke that chancellor Rachel Reeves had scrapped controversial plans to raise income tax.
News of the chancellor’s tax u-turn drove up the cost of borrowing, as investors worried that this month’s budget might create less fiscal headroom than the markets hoped.
The recent deterioration in the labour market points to further downside risk to UK yields, as labour market softness should translate into a stronger foundation for lower inflation in 2026, alongside ongoing disinflationary progress, and an upcoming contractionary budget.
As external MPC member Megan Greene has pointed out, the UK’s “Sahm Rule” threshold is around 0.75 – meaning a rise in the 3-month average unemployment rate from the lows of the trailing 12 months to above this level has been an indicator of recessions since 1975. The latest unemployment rate in the UK was 4.97%, and the rise in the “Sahm” indicator over the lows of the last 12m has been 0.71.
If the unemployment rate rises above 5.2% in the next three months, the recession threshold will be triggered.
Continue reading...
