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Issue 264 | 20th October, 2025

UK

• UK Gross Domestic Product (GDP) expanded 0.1% in August, after contracting by 0.1% the previous month. For the three months to August, GDP expanded 0.3% sequentially.
   
• The UK unemployment rate increased from 4.7% to 4.8% in September, indicating a loosening in the UK labour market. The number of payrolled employees increased by 10k between July and August, before falling by the same amount in September. Meanwhile, wage growth excluding bonuses, eased between June and August to 4.7% year-on-year, from the 4.8% recorded over the preceding three-month period.
   
• Bank of England Chief Economist, Huw Pill made an address at a London conference last week and warned interest rates should be kept higher for longer amid growing fears over stubbornly high inflation.
   
• He said inflation was proving stickier than anticipated as households and businesses come under pressure from fast-rising prices. The Bank’s monetary policy committee will hold its next vote on rates on 6th November, three weeks before Chancellor Rachel Reeves’s Autumn Budget.
   
• Data from the Office for National Statistics showed that UK exports to the United States fell by £700m in August. This was in part due to “falls in exports of machinery and transport equipment, chemicals and material manufactures.” Shipments to Europe also declined, with UK exports to the EU decreasing by £800m in August 2025, due to a £500m fall in exports of machinery and transport equipment, and a £200m fall in chemical exports.

North America

• Global markets saw significant volatility last week as two significant events sparked investor cautiousness. Firstly, President Donald Trump made new trade threats against China via social media the prior week, before US-China representatives positively walked back some of the tensions made. Secondly, a pair of US regional banks disclosed problems with loans involving allegations of fraud, sparking wider concerns in global credit markets.
   
• US earnings season began on Tuesday, with several big banks (including JPMorgan Chase, Wells Fargo, and Citigroup) reporting stronger-than-expected results. On Friday morning, approximately 12% of S&P 500 companies  had reported earnings, of which, 86% beat consensus estimates that added to investor buoyancy.
   
• Federal Reserve (Fed) Chair, Jerome Powell, suggested that the central bank could cut interest rates again at their next meeting at an event on Tuesday. Powell referred to the Fed’s mid-September meeting, noting that the “downside risks to employment” have shifted the balance of risks in the economy, leading investors to believe that the central bank is likely to remain on the path to easing borrowing costs at its next meeting. This is despite inflation remaining above target.
   
• The Fed also released its ‘Beige Book’ – a report published eight times a year that gathers information from regional banks on economic conditions – which noted little economic change to its last report. Consumer spending marginally fell, employment holds steady for now, wages rose, but consumer prices rose further.

Europe

• In France, the government of newly reappointed Prime Minister, Sebastien Lecornu, survived no-confidence motions posed by opposition parties after he suspended a pension reform law – a decision demanded by the left – to avoid a potential snap election.

Asia

• China reported that factory gate prices fell 2.3% in September year-on-year, marking the 36th consecutive month of declines. Although the pace of decline has slowed from August’s 2.9% fall. Consumer prices dropped 0.3%, steeper than economists’ forecasts. Positively, the core consumer price index, which excludes food and energy, rose to a 19-month high of 1.0%. Though this shows some price growth, the economy continues to combat deflationary pressures, largely from a prolonged housing market slump that has further weakened consumer demand.
   
• In terms of economic policy for China, the ‘fourth plenum’ – a high-level political meeting of Communist Party officials – is scheduled for 20th – 23rd October. This meeting allows for officials to put forward a proposal from top leaders on China’s next five-year plan, laying out the country’s economic and social development goals. Investors will look for comments on domestic consumption, a key factor in handling higher US tariffs. 

Sources: Bloomberg, Reuters, Yahoo Finance, The Guardian, Proactive Investors, BBC, Oxford Economics 

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