Bailey also softened his earlier stance on the budget’s inflationary risks. He now suggests that the new measures, including rules likely to dampen competition for workers, might actually ease price growth by slowing wage increases. Wage growth remains a critical metric for the Bank of England as it shapes its interest rate policy path. This tempered perspective could help lift UK consumer sentiment, which recently dipped according to a survey by S&P Global Market Intelligence.
In a parallel development, global economic cooperation took centre stage this week as Chinese President Xi Jinping met with Prime Minister Keir Starmer. The meeting is being interpreted as a signal of China’s intent to foster stronger business ties with Britain amid global trade tensions. China, of course, potentially faces fresh headwinds from U.S. as President-elect Donald Trump has vowed to impose a 60% tariff on Chinese imports. Yet, Xi’s remarked this week that he was willing to work with Trump’s administration, which has maintained a pro-business stance despite its hardline trade policies.
Still to come this week we have a speech from Bank of Japan’s Governor, Ueda, US initial jobless claims, Eurozone consumer confidence and UK retail sales.
Nicola Tune, Portfolio Specialist