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Andrew Bailey has signalled that a trade deal with the US will not save the UK from a growth slump as he opened the door for more interest rate cuts to boost the economy.
The governor of the Bank of England warned higher tariffs will weigh on UK growth, even though the country is less exposed than major exporters such as China and Germany.
“We do have to take very seriously the risk to growth,” Mr Bailey said at the Institute of International Finance in Washington DC. “Fragmenting the world economy will be bad for growth.”
Mr Bailey’s comments are a clear sign that policymakers are more concerned about the risk to growth from tariffs than higher inflation.
This suggests they will be more likely to respond to Mr Trump’s tariffs by reducing interest rates further from their current level of 4.5pc. The Bank is also likely to cut its predictions for growth next month when it releases its latest forecasts for the economy.
Asked if he believed if the UK may “escape some of the worst tendencies” of the Trump administration because of lower tariffs and hopes for a trade deal, Mr Bailey said: “You say the UK might escape, I would say yes, in one sense in relative [terms] but of course the UK is a very open economy and therefore it’s not just obviously the relationship between the US and UK, it’s also the relationship between the US, UK and the rest of the world that matters here.
“You have to take into consideration growth in the rest of the world... and we do have to take very seriously the risk to growth.”
Mr Bailey warned the economy was already suffering from years of low growth. He said: “We’ve had low growth in the UK since the financial crisis… we’ve had very weak productivity growth…we’ve got a population that is on average ageing.”
He added that pension funds had a role in boosting growth. The Treasury will unveil new proposals to get pension funds investing in the UK economy in the coming weeks and months.
Asked about the danger of a worker shortage, Mr Bailey said the UK needed to take the problem “very seriously” and ensure workers have “all the right training and incentives”.
Read the latest updates below.
09:02 PM BST
Signing off...
Wall Street has now closed, with provisional numbers saying that the S&P 500 rose 1.7pc, while the Dow Jones rose 1.1pc and the Nasdaq added 2.5pc.
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You can follow all the latest business and economics stories and analysis from The Telegraph here.
08:38 PM BST
It’s ‘fair’ that Europe cuts rates faster than US, says ECB
It is “fair and appropriate” that the eurozone cuts interest rates faster than the US Fed or the Bank of England, a European Central Bank (ECB) governing council member has said.
Francois Villeroy de Galhau told the Atlantic Council in Washington today: “There is currently no inflationary risk in Europe, and we can now almost say ‘mission accomplished’ when it comes to bringing inflation back to our 2pc target.
“The significant deceleration of wages is another proof thereof.”
He added: “It is therefore both fair and appropriate that, compared to the Federal Reserve or the Bank of England, the ECB has started cutting rates earlier, faster, and likely further this year.”
It comes a week after Donald Trump criticised Jerome Powell, the Fed chairman, for not cutting rates as fast as the ECB.
08:27 PM BST
Investors send Wall Street higher on hopes of moderation from Trump
Wall Street’s three main indexes remain strongly positive this evening as investors saw evidence that there are limits to how much pain Donald Trump is willing to inflict on markets.
The S&P 500 is up 1.4pc, the Nasdaq is up 2.4pc and the Dow Jones is up 0.9pc.
Peter Cardillo, chief market economist at Spartan Capital Securities in New York, said: “There seems to be some light at the end of the tunnel here in terms of the trade war.
“Investors are beginning to feel more confident that perhaps the worst of the trade rhetoric is over, that we’ve probably hit a temporary short-term bottom and stocks are likely to move a little bit higher in the coming days.”
08:02 PM BST
Fed flags gloomier economic conditions as tariffs fuel uncertainty
Uncertainty surrounding US trade policy is weighing on the world’s biggest economy, the US Federal Reserve has said.
“The outlook in several [of the Fed’s 12] districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose,” said the Fed’s Beige Book survey of economic conditions.
It added that “uncertainty around international trade policy was pervasive across reports” from the Fed’s 12 districts.
Information for the Fed’s report was collected on or before April 14, after many of Trump’s sweeping tariffs had been imposed and began rippling through the country.
Besides levies targeting different countries, Mr Trump has also imposed sector-specific duties on imports of steel, aluminium and cars.
Most districts saw “moderate to robust” vehicle sales in recent weeks as buyers rushed to make purchases ahead of tariff-related price increases, the Fed said.
But it noted: “Cuts to federal grants and subsidies along with declines in philanthropic donations caused gaps in services provided by many community organisations.”
07:26 PM BST
No unilateral reduction in China tariffs, White House says
There will be no unilateral reduction in tariffs on goods imported from China, White House press secretary Karoline Leavitt has said.
She told Fox News: “Let me be clear: there will be no unilateral reduction in tariffs against China. The president has made it clear: China needs to make a deal with the United States of America and we are optimistic that will happen.
“And when that continues it will be up to the president what the tariff rate on China will be, but we certainly need to see a reduction in tariffs and non-monetary tariff barriers from China as well.
“And we also need to continue seeing these companies abroad return their manufacturing to the United States of America so we can shore up these critical supply chains.”
Her comments echo those of Scott Bessent earlier this afternoon, who also said: “I would not be surprised if they went down in a mutual way”.
07:08 PM BST
Wall Street rises after Trump softens his rhetoric
US stocks are rising as a worldwide rally comes back around to Wall Street after Donald Trump appeared to back off his criticism of the Federal Reserve and his tough talk in his trade war.
The S&P 500 is up 2.1pc, the Dow is up 1.4pc and the Nasdaq has soared 3.1pc.
Wall Street’s gains followed strong moves higher for stocks across much of Europe and Asia. They also continue a dizzying, up-and-down run for financial markets as investors struggle with how to react to so much uncertainty about what Mr Trump will do with his economic policies.
The S&P 500 remains roughly 12pc below its record set earlier this year after briefly dropping roughly 20pc below the mark.
Trump’s changing positions also had an effect on the bond market, where the effective cost of US government borrowing fell. It is a turnaround from earlier this month, when spiking Treasury yields raised fears that Mr Trump’s actions were scaring investors away from American investments and weakening the US bond market’s reputation as one of the safest places to keep cash.
The yield on the 10-year Treasury fell to 4.39pc from 4.42pc earlier in the week.
06:52 PM BST
Bailey says US should sign up to international banking reforms
The governor of the Bank of England has urged the US to implement the latest international banking reforms, even after the UK delayed its roll out by a year three months ago.
He said that so-called Basel regulations were “the playing field on which international banks operate”.
He told a conference in Washington: “It’s not for me to say what the US should do but I would strongly encourage that there is a Basel implementation - a Basel implementation. It’s for the US to decide what it is.
“The Basel standard is set. I think it’s important that we give the US time to decide what it wants to do but I would say that I hope the US will do it.”
The Basel rules attempt to safeguard against bank runs and collapses.
06:32 PM BST
Bailey ‘very frankly encouraged’ by Bessent
The governor of the Bank of England has said that he was “very frankly encouraged” by a speech by US Treasury secretary Scott Bessent on the IMF and World Bank.
Andrew Bailey said: “I read Secretary Bessent’s speech and I was very frankly encouraged because I think it’s important that there is a commitment to the multilateral institutions. But I think it’s also important we make clear that there are issues that we observe in the world today and in the way the system’s working.”
Although Mr Bessent said the IMF and the World Bank are “falling short”, he stopped short of calling for the US to withdraw from the institutions as some conservatives have advocated.
He said the Trump administration “will leverage US leadership and influence at these institutions and push them to accomplish their important mandates.”
06:26 PM BST
Bailey says right incentives needed to fix worker shortage
Andrew Bailey has said that the right incentives and training are needed to fix the worker shortage, as he said he was concerned over the quality of official labour statistics.
He flagged “the average ageing of the labour force”, saying: “It’s not because I’ve got anything against old people because I’m growing old myself. But if you’ve got a population that’s on average ageing, then labour supply will be affected.
“So we have to take that very seriously and have all the right training and incentives [to increase labour market participation].”
06:20 PM BST
Trade war will hurt growth, says Bailey
The governor of the Bank of England has warned that Donald Trump’s trade war will hurt growth.
Andrew Bailey said: “Trade does support growth. We got that from Adam Smith [but] fragmenting the world economy will be bad for growth.”
He added: “The UK’s a very open economy and therefore it’s not just the relationship between the US and the UK, it’s the relationship between the US, the UK and the rest of the world that matters here. When we do our modelling, we also have to take into consideration the effect of growth in the rest of the world.”
06:15 PM BST
Bailey: weak investment and ageing hurting growth
The governor of the Bank of England has said that weak investment and an ageing population is hurting growth.
Andrew Bailey said: “We’ve had low growth in the UK since the financial crisis... we’ve had very weak productivity growth... we’ve got a population on average that’s ageing. So [to grow] it really does then come down to productivity [but] the UK’s had weak investment.
He pointed to the “low level of risk capital in the pension system and where is technical change going to come from”.
06:06 PM BST
Reeves avoids answering whether US tariffs below 10pc is realistic
The Chancellor has refused to be drawn on whether she thought reducing US tariffs on British goods below 10pc was a realistic aim.
Asked whether it was realistic, Rachel Reeves told ITV News: “Let’s see where we get to.”
She added: “I do understand the concerns that the United States has about countries that run persistent, large trade surpluses with the US, but the UK is not one of those economies. We have balanced trade between our countries.”
In response to the suggestion that the UK would not be able to secure a carve-out, she said: “Let’s see where we get to. Those discussions are ongoing. They’re going well.”
She also declined to say that the UK would retaliate if it did not secure a tariffs carve-out, saying: “We’ve already announced that we are asking businesses for what they want to see, but I don’t think escalation is the right approach.
“We want to bring down trade barriers, not increase them. A trade war is in no one’s interest.”
06:04 PM BST
UK won’t rush to reach trade deal with US, Reeves says
The government is not in a rush to secure a trade deal with Donald Trump’s administration, Rachel Reeves has said as she ruled out making concessions on food standards.
“We’re not going to rush a deal. We want to get the right deal that’s in our national interest and those talks are ongoing,” Ms Reeves told reporters in Washington.
Reeves, like many of her global peers, hopes to make progress towards reducing Trump’s import tariffs while attending the International Monetary Fund and World Bank spring meetings in the US capital this week.
The Wall Street Journal reported on Tuesday that the US wanted Britain to reduce its levies and other non-tariff barriers on a variety of goods including a relaxation of rules on US agricultural imports, such as beef.
“We’re not going to be relaxing our food standards. We’ve been clear with the US about that and they respect that and understand that,” Ms Reeves said. “So that is not something that’s on the table in these discussions.”
06:02 PM BST
Reeves moves to block cheap imports undercutting British businesses
The Chancellor is to investigate Britain’s defences against cheap imports that undercut UK businesses amid the fallout from Donald Trump’s tariffs.
Rachel Reeves said she would review rules on “low value imports” due to concerns they unfairly benefit foreign companies such as Temu and Shein at the expense of British high street stores.
Under plans announced on Wednesday, the Trade Remedies Authority (TRA) will also “surge” resources into helping businesses report unfair practices such as “dumping”, in which goods are sold into the UK at below-market prices.
Ms Reeves said: “Today’s package will help businesses compete fairly with international exporters, supporting a world economy that provides stability and fairness for working people and businesses alike.”
Currently, imports valued under £135 do not have to pay customs duties, but some retailers have argued this gives preferential treatment to foreign firms that ship them directly to UK customers.
The move follows concern from businesses that the sweeping tariffs introduced by Mr Trump earlier this month could see some cheap goods that had been bound for the US rerouted to the UK, placing British retailers at a further disadvantage.
05:32 PM BST
FTSE 100 jumps after Trump rows back on threats
The FTSE 100 defied a gloomy economic survey and higher-than-expected public borrowing data to surge today, after Donald Trump dialled back some of his rhetoric.
London’s blue-chip index finished the day with a 0.9pc rise.
Mr Trump said on Tuesday that sky-high trade tariffs on China will “come down substantially but it won’t be zero”.
Meanwhile, he also abandoned his position on firing the head of the US Federal Reserve, Jerome Powell, saying he has “no intention” of sacking the central banker.
The row back comes days after the President called Mr Powell a “major loser” whose “termination cannot come fast enough”.
His latest comments sparked a global stock market rally, with Germany’s Dax rising 3pc and France’s Cac 40 rising 2.1pc.
Axel Rudolph, an analyst at trading platform IG, said: “Global stock indices regained all of Monday’s losses and rallied strongly as US President Trump assuaged investors’ concerns about the Fed’s independence by no longer wishing to fire its chair Jerome Powell.
“Hopes of a potential de-escalation in the US-China trade war and better-than-expected earnings by the likes of Tesla and Boeing also helped improve sentiment.
“The economic backdrop remains less than rosy though, with UK public borrowing costs coming in above forecasts, the German private sector falling back into contraction and euro area economic activity nearly stagnating.”
05:25 PM BST
EU wants ‘more clarity’ from US in tariff talks
The European Union wants “more clarity” from the United States on its priorities in trade talks, Brussels has said.
“This engagement obviously requires clarity from both sides,” European Commissioner Valdis Dombrovskis said at an event in Washington. “Currently, indeed, one would wish for more clarity on expectations from [the] US side.”
05:24 PM BST
Trump eroding America’s brand, warns Wall Street titan
Hedge fund billionaire Ken Griffin has warned that the US has puts its brand at risk as a result of the actions of Donald Trump and his key lieutenants.
The boss of Citadel told a Semafor conference in Washington: “The United States was more than just a nation. It’s a brand - it’s a universal brand, whether it’s our culture, our financial strength, our military strength.
“America rose beyond just being a country. It was like an aspiration for most of the world. And we’re eroding that brand right now.”
He said that the US president, along with the secretaries of the Treasury and Commerce, “need to behave in a way that respects that brand”.
05:00 PM BST
EU ‘not giving up’ on America, but plans to diversify trade
The EU is not giving up on the United States despite tensions wrought by Donald Trump’s tariffs, the bloc’s economy chief has said.
Valdis Dombrovskis, the EU economy commissioner, told an event in Washington that “the European Union is not giving up on our closest, deepest and most important partnership with the United States.”
Washington and Brussels will likely need each other more in an “increasingly conflictual and competitive world,” he said.
Nonetheless, while the EU seeks to deepen existing partnerships, “we will also seal new partnerships across the world to diversify and strengthen our economic security at home,” Mr Dombrovskis said.
04:54 PM BST
Swiss minister hails ‘productive’ meeting with US trade negotiator
Guy Parmelin, the Swiss economy minister, has said he had had a “productive meeting” with Donald Trump’s top trade negotiator during a visit to Washington.
Switzerland was hit by a 31pc tariff by Mr Trump in his “liberation day” announcement, higher than the 20pc inflicted on the EU.
04:43 PM BST
Tariff optimism fuels Wall Street gains
Wall Street’s main indexes rallied this afternoon, with the S&P 500 touching a two-week high on hopes of a de-escalation in the trade war. Investors were also cheered as a result of Donald Trump abandoning his threat to fire Federal Reserve chairman Jerome Powell.
The S&P 500 is up 2.2pc, the Dow is up 1.8pc and the Nasdaq is up 3.1pc.
The Vix, Wall Street’s fear gauge, touched its lowest level since April 3.
Peter Andersen, of Andersen Capital Management, said: “Unless the president or the administration comes out with consistent statements - and by consistent, I mean by more than [a] 24-hour news cycle - this is a temporary rally.”
04:40 PM BST
Bessent says US will not cut Chinese tariffs unilaterally
Scott Bessent, the US Treasury secretary, has said Mr Trump is not offering to cut tariffs on China unilaterally.
He told reporters: “As I’ve said many times, I don’t think either side believes that the current tariff levels are sustainable, so I would not be surprised if they went down in a mutual way.”
It comes a day after Mr Trump said that tariffs “will come down substantially”.
04:23 PM BST
Britain is a ‘bridge between continents’
Rachel Reeves has claimed that Britain is a bridge between different trading blocs.
She said: “Britain [is] a bridge between continents, we benefit from our timezone, our language, our connections with countries around the world. One of the opportunities this week is to build on that.”
04:21 PM BST
Trade negotiations not just about US, says Reeves
Rachel Reeves has said that the UK is not just focussed on a new trade deal with the US.
She said: “Rightly there’s a lot of focus on the trade deal between the UK and the US, and that is crucially important for all the reasons that I have already mentioned.
“But we were also elected on a platform of resetting the relationship between the UK and the EU because we want to make it easier for Britain to trade with countries all round the world. And we are close to finalising an investment and trade agreement with India, one of the fastest growing economies in the world.”
04:12 PM BST
Reeves says UK offers stability amid volatility
The Chancellor has said that the brightest people and businesses should locate in the UK because it offers stability.
Rachel Reeves said: “The message I’m coming to Washington this week is... Britain is open for business, open for trade, open for investment, and we are changing the way our economy works to really attract the brightest and the best and fast-growing businesses.”
She added: “What the UK is able to offer is political, financial, economic stability in a world that is very volatile at the moment.”
04:08 PM BST
Reeves wants to cut non-tariff barriers against the US
Rachel Reeves has avoided being specific about what trade barriers the UK would cut to strike a deal with the US - but said that non-tariff barriers should come down.
“There are still tariffs, both ways, even before liberation day. I would like to see those barriers and non-tariff barriers removed,” she said.
04:06 PM BST
US wants a trade deal with UK, Reeves says
Rachel Reeves told the Semafor World Economy Summit in Washington that the US is keen on striking a deal over trade.
She said: “There’s certainly a deal to be done... We have balanced trade between our two countries....
“What we hear from the US administration is that they are keen to do a deal with the UK.”
She added: “We are willing to remove trade barriers in the UK, those trade barriers that do exist.”
03:58 PM BST
Dollar rebounds as White House seeks to ease tensions over Fed and China
The US dollar staged a tentative rebound against its peers today on hopes of lower trade tensions and after Donald Trump backed away from firing the head of the Federal Reserve.
Lee Hardman, senior currency analyst at Mitsubishi UFJ, said the “outright denial” from Donald Trump that he intended to fire Jerome Powell was an encouraging signal for the markets.
Mr Trump and US Treasury secretary Scott Bessent separately suggested that there could be a de-escalation in US-China trade tensions and any trade deal with China could “substantially” cut tariffs.
Investors hastened back to the dollar, which has been hovering near three-year lows in recent weeks and whose safe-haven status had been questioned in view of Trump’s trade policies and their potential impact on the US economy.
The US dollar index, which compares the American currency with a basket of peers, rose 0.6pc.
03:43 PM BST
Lutnick told Trump that firing Fed chairman would be futile
Howard Lutnick was instrumental in Donald Trump’s decision to abandon an attempt to force out Jerome Powell as the Fed chairman, according to the Wall Street Journal.
The Wall Street Journal said that the US Commerce secretary told Mr Trump that not only would firing Mr Powell cause market chaos and a tricky legal battle, it would also fail to change interest rates. He reportedly told the president that other Fed rate setters would approach monetary policy in a similar way.
Mr Trump has repeatedly criticised the Fed chairman, accusing him of being “Mr Too Late” and “a major loser”.
The Telegraph has approached the US Commerce Department for comment.
03:40 PM BST
Bessent: Energy abundance is key
Another one of Bessent’s key talking points is energy and an insistence that the West should continue to invest in oil and gas instead of focusing on the shift to renewables.
“The sine qua non for economic growth is energy abundance,” he says.
Bessent adds: “We want to have a model of strong baseload and then bolting on the alternative production, as opposed to beginning with alternative production and then having this latency or intermittency that makes it impossible to industrialise.”
03:31 PM BST
Bessent: Opportunity for big US-China deal
Bessent insists there’s an opportunity for a “big deal” between the US and China.
He’s bullish about the prospects for an economic rebalancing based on redrawing trade relations between the world’s two largest economies, saying: “This is an incredible opportunity.”
03:27 PM BST
Bessent: America First does not mean America Alone
We’re now into a Q&A with Scott Bessent, and there’s some relief around his initial comments.
The US Treasury Secretary insisted that Trump was still committed to international cooperation, adding: “America First does not mean America Alone.”
His focus, he says, is instead on “rebalancing” economic relations, particularly with China.
03:24 PM BST
Bessent: Treating China as developing country ‘absurd’
Bessent doesn’t hold back on his thoughts about how the World Bank approaches Beijing.
He says: “Treating China, the second largest economy in the world, as a developing country, is absurd.”
03:22 PM BST
Bessent: World Bank must be made fit for purpose
The World Bank must be made fit for purpose again, Scott Bessent has said.
The US Treasury accused the World Bank, much like the IMF, of “straying in certain respects from its core mission”.
He accused the Bank of “vapid, buzzword-centric marketing” and told it to refocus on its main aims to fuelling economic growth worldwide.
03:16 PM BST
Bessent attacks IMF over focus on social issues
The US Treasury Secretary has accused the IMF of “mission creep” by focusing too much on issues such as climate change.
Bessent said Trump wants to work with international financial institutions such as the IMF and World Bank, but that “under the status quo, they’re falling short”.
He attacked the organisations for “sprawling and unfocused agendas that have stifled their ability to focus on their core mandates”.
In particular, Bessent accused the IMF of giving “disproportionate time to gender, climate change and social issues”.
03:11 PM BST
Bessent: China needs to change
Bessent is now taking aim at China in particular, saying there was a particularly large trade imbalance between the US and China.
He says Beijing is overly reliant on exports – a system he says harms the “entire world”.
03:09 PM BST
Bessent: US suffered ‘large and persistent’ trade imbalances
Scott Bessent has said that US was suffering “large and persistent” trade imbalances before Donald Trump’s tariffs.
The US Treasury secretary said these imbalances were “not sustainable for the United States and not sustainable for global economies”.
03:01 PM BST
Scott Bessent to speak in Washington
Scott Bessent, the US Treasury Secretary, is about to speak at the IIF Global Outlook Forum on the sidelines of the IMF summit in Washington DC.
We’ll bring you the livestream and all the latest updates here.
02:39 PM BST
Doubt over US safe haven status bad for world, says Bundesbank chief
A strong US Treasuries market is good for everyone, even as investors have turned to German bunds.
That’s according to Joachim Nagel, President of the Bundesbank, who told Bloomberg: “It is not good news that there is a lot of doubt regarding the safe haven of US Treasuries.
“We need a good US Treasuries market. This is so important for the financial markets worldwide.”
Donald Trump’s tariffs chaos has driven many global investors away from US bonds – traditionally viewed as a safe haven asset.
Speaking on the sidelines of the IMF, Nagel acknowledged that some money had been redirected to Germany.
He said: “Germany is the stability anchor of Europe – German bunds are a perfect example of this. This will not go away. We need a good US Treasury market.”
02:03 PM BST
World’s largest car expo begins amid tariff backdrop
The world’s largest car expo opened its doors today in Shanghai against the backdrop of the deepening global trade war.
Auto Shanghai has nearly 1,000 exhibitors aiming to show off the best of the new electric car era despite the bumps in the road from Donald Trump’s tariff war.
“(Chinese brands) are really on the forefront of pushing the technology now, and have been for a few years,” said Stefan Rosen, the head of design for Lynk & Co, a joint venture between China’s Geely and Volvo.
Tariffs will be on the minds of foreign companies who make cars in China, such as the United States’ General Motors and Ford.
Beijing and Washington are at an impasse after Trump’s tariff policy triggered a tit-for-tat escalation between the world’s two largest economies, leading to staggeringly high levies.
Since last year, Chinese carmakers have also faced extra duties from the European Union.
“The tariff is having an impact on our business, mostly on profitability,” said Xpeng’s president Brian Gu told AFP.
“But, you know, we have a long-term commitment. We need to find a way to compete.”
02:02 PM BST
Trump trade war to push global debt over 100pc of GDP
Donald Trump’s trade war will help to drive global debt close to 100pc of GDP by the end of the decade, piling pressure on Rachel Reeves as she runs out of room to fight an economic downturn.
The International Monetary Fund (IMF) said Britain, the US, China, and France were among a handful of “key contributors” driving up global debt.
It said investor nervousness about the global outlook risked triggering a vicious cycle of higher borrowing costs and rising debt in both advanced and developing economies.
The Fund’s latest fiscal monitor warned that the trade war would push up public spending while reducing tax revenues, pushing overall debt above pandemic peaks.
Era Dabla-Norris at the IMF said: “We project global public debt to increase by 2.8 percentage points this year — more than twice the estimates for 2024 — pushing debt levels above 95pc of GDP.
“This upward trend is likely to continue, with public debt nearing 100pc of GDP by the end of the decade, surpassing pandemic levels. Amid substantial policy uncertainty and a shifting economic landscape, debt levels could rise even further.”
The IMF also warned that President Trump’s hopes of hundreds of billions of dollars in tariff revenues would be offset by a hit to growth from higher prices and slower growth.
“While higher tariffs may yield increased short-term revenue, this effect is likely to wane as higher prices lead to declining imports and output,” it said.
The Fund warned that “a significant rise in geoeconomic uncertainty” from tariffs and their implications for investment and global supply chains was likely to push up debt by 4.5pc of GDP in the medium term.
“This increase is driven by a widening of the overall fiscal deficit, marked by higher expenditures and lower revenues, a persistent reduction in real output, and a temporary rise in long-term interest rates.”
It said a major economic shock could even see global debt rise to 117pc of GDP, which would represent the highest levels in peacetime. The IMF urged countries like the UK to do more to reduce debt burdens. It said:
“In an uncertain and rapidly changing world, countries will need to first and foremost put their own fiscal house in order.
“Advanced economies should tackle issues related to aging populations by reprioritising spending, advancing pension and healthcare reforms, and broadening the tax base.”
01:33 PM BST
Reeves was already in trouble. Now Trump has snuffed out all growth hopes
Rachel Reeves is in the lion’s den. The Chancellor has flown to Washington, where she will meet Scott Bessent, Donald Trump’s treasury secretary, in the hope of smoothing the way to a trade deal between Britain and the US.
Such a deal is desperately needed: the International Monetary Fund (IMF), hosting its annual meetings in the US capital, on Tuesday cut its growth forecasts for Britain and for the world.
Britain’s GDP would grow by 1.1pc this year and 1.4pc in 2026, the IMF said, down from 1.6pc and 1.5pc in predictions made months ago.
Partly, this is caused by the US trade war. Trump’s taxes on imports to the US threaten both his own economy and the prosperity of every other nation, so anything Reeves can do to soften the blow via negotiations will be welcome.
But even with a trade deal, the Chancellor faces higher borrowing costs and spending with little room for error.
01:18 PM BST
Trump trade war looms over Boeing despite smaller-than-expected losses
Boeing reported a smaller than expected loss for the first three months of the year as it waits to see if it can avpid becoming collateral damage in the US-China trade war.
The planemaker confirmed its targets to raise commercial plane production as it bolsters its safety efforts.
The aviation giant reported a loss of $123m (£92.5m) the first quarter, which was smaller than the $343m loss in the year-ago period.
It affirmed 2025 production targets for both the 737 MAX and 787 Dreamliner despite being dragged into the Trump administration’s trade dispute with China.
Beijing has barred China’s airlines from accepting deliveries from Boeing in retaliation against Trump’s tariffs.
The ban will apply to all existing orders from the US manufacturing giant, while Beijing has also told the country’s carriers not to buy any aircraft-related equipment or parts from other American companies.
12:42 PM BST
Corporation tax revenues at risk
Corporation tax revenues have been put at risk from an economic slowdown which has hit just as the Government pushed ahead with its latest increase in the minimum wage, an economist has said.
The economy has grown more weakly than expected, with business confidence shattered by the £25bn raid on employers’ National Insurance Contributions, which kicked in this month, and so is not included in the public sector borrowing figures published by the ONS.
Julian Jessop, fellow at the Institute of Economic Affairs, said this, and the increase in the minimum wage, is slowing growth, squeezing company profits and so harming corporation tax revenues.
“The economy has been weaker, and the anticipation of the cost increases in April have already been hitting profits and therefore returns on capital,” he said.
“The flip side of NICs going up is that companies are paying more in National Insurance, potentially, but less in other taxes.”
12:28 PM BST
Pound flat amid doubts over economy and public finances
The pound was little changed against the dollar as investors were cautious about how to interpret a flurry of news, including a downturn in private sector activity.
Sterling was flat at $1.33 having earlier dropped as much as 0.7pc versus the US currency, which had strengthened after Donald Trump hinted at a deal on tariffs with China and signalled he would not sack Federal Reserve chairman Jerome Powell.
Although it recovered against the dollar, the pound was down 0.2pc versus the euro, which was worth 85.7pc after data showed output in the private sector dropped at its sharpest pace in two and a half years in April amid the “liberation day” tariff onslaught.
Separate official figures showed the Treasury borrowed £14.6bn more than forecast in the year to March.
Lee Hardman, an analyst at MUFG, said: “The market may be reluctant to take kind of a strong view at this point in terms of how that’s likely to impact the UK economy and pound.
“But certainly if you look at the (PMI) figures today ...it does show that business confidence did drop more sharply than expected in April, so that certainly increases the risk of the UK economy slowing down more in the second quarter.”
12:25 PM BST
Treasury overshoots borrowing forecast by £15bn as non-doms flee Britain
The Government borrowed £14.6bn more than expected last year as non-doms fled Britain, undermining tax receipts and blowing a hole in Rachel Reeves’s plans.
Capital gains tax, charged on the profits made on the sale of assets, brought in £11.2bn in the first three months of 2025, down from more than £13bn in the same period a year ago, the Office for National Statistics said.
Self-assessed income tax revenues also came in lower than the Office for Budget Responsibility anticipated.
Weak growth in bonuses in financial services also hit growth in pay-as-you-earn income taxes and national insurance. In total, government revenues for last year came in £7.8bn below forecasts, the OBR said.
Alongside surging spending on benefits, public sector pay and debt interest payments, it meant the Treasury borrowed £151.9bn in the financial year ending last month, £20.7bn more than in the previous 12 months and £14.6bn more than the OBR predicted just last month.
Andrew Griffith, shadow business secretary, said the weak tax receipts are a direct result of the Chancellor’s record-breaking £40bn of tax increases in her October Budget.
“If you set out with a vengeance to destroy incentives to work and chase wealth creators overseas, it should be no surprise when tax revenues fall short and borrowing surges,” he said.
“A sensible Chancellor would change course urgently. But I am not sure we have one of those.”
Maxwell Marlow at the Adam Smith Institute, said it indicates the Government is driving the global rich out of the country, and so losing the taxes they would have paid on UK shores.
“The OBR’s correction that Capital Gains and Self-Assessed Income Tax receipts are £1bn below estimates is highly concerning, and could be linked to the departure of thousands of high net worth non-doms,” he said.
“By killing the golden goose with these tax reforms, the Government has chased away wealth creators, and thus brought in less tax revenue than they anticipated. ASI modelling shows that, by 2035, the British economy could be £14bn worse off every year, than if the government did not abolish the status.
“It is imperative that the Treasury rapidly amend its offering to high net worth individuals, and attract more private investment to the UK.”
12:12 PM BST
Investors switching from US to European stocks, says Barclays
Nervous US investors are flocking to European stocks amid Donald Trump’s relentless tariff U-turns, Barclays strategists have said.
Emmanuel Cau, an analyst at the bank, said what he called a “sell America” movement had benefited stocks in the rest of the world.
He said: “Not only are EU investors starting to repatriate their US assets, but US investors are now buying more EU equities too, and this trend may still be in its early stages.”
Germany’s Dax 40 has jumped 3.6pc in the last five days and France’s Cac 40 also rose 3.1pc, while the S&P 500 has slumped 2.3pc.
Mr Cau reiterated his “preference for the more domestically exposed stocks in Europe”, buoyed by stronger medium-term growth on the Continent.
He added that the hit to earnings of a stronger euro would be “manageable” if the euro “goes up for good reasons”.
These wuld include a lift to EU GDP growth, which woulc likely come from Germany’s plans to ramp up defence spending and lower ECB interest rates.
The US dollar index in comparison has fallen 10pc from its year-to-date highs on the back of “concerns about tariffs and reduced Fed independence”, though he noted the languishing dollar could “bounce on any trade deal or de-escalation news”.
11:57 AM BST
FTSE 100 climbs amid hopes for China-US tariff deal
The FTSE 100 climbed after Donald Trump signalled a tariff deal between the US and China could happen “pretty quickly”, writes Max Head.
The UK’s flagship stock index was up 1.4pc at lunchtime after the US president said on Tuesday that America’s 145pc tariffs on China will “come down substantially”.
US treasury secretary Scott Bessent also said that America’s trade war with the world’s second largest economy was not sustainable, giving a boost to stock markets around the world.
The Dax in Germany was up 2.6pc while the Cac 40 in France gained 2.1pc, following Wall Street and Asian indexes higher.
In London, chemicals company Croda was the best performer on the FTSE 100, rising 9.4pc after announcing positive quarterly sales results.
Mining companies Antofagasta and Anglo-American were also among the top performers, rising 6.7pc and 6.5pc, respectively.
11:20 AM BST
Traders ramp up bets on rate cuts as private sector activity slows
The Bank of England will cut interest rates next month, according to money markets, amid a slowdown in private sector activity since Donald Trump’s “liberation day” tariffs.
Traders ramped up bets on reductions in borrowing costs, with three cuts priced in by the end of the year.
Derivatives trades indicate there is a 57pc chance that the Bank of England will make back-to-back rate cuts.
It comes as Rachel Reeves faces huge pressure over the state of the public finances just as President Trump wages his tariff trade war which has begun to show signs it has hit economic growth.
Closely watched PMI data showed Britain’s private sector activity contracted in April at the fastest pace in two-and-a-half years.
10:54 AM BST
Wall Street poised for rally as Trump U-turns on Powell
US stock indexes were on track to surge at the opening bell after President Donald Trump backed off from his threats to sack the head of the Federal Reserve and raised hopes for a trade deal with China.
Shares of Tesla, meanwhile, rose 6.3pc in premarket trading after chief executive Elon Musk said he would step back from his duties cutting federal budgets for the Trump administration to focus on the EV maker.
Trump said on Tuesday he had “no intention” of firing Fed chair Jerome Powell, walking back from his comments that Powell’s termination could not come “fast enough” after heavy criticism in the past few days.
Wall Street stocks were also lifted amid hopes for trade negotiations between the US and China, which have been locked in an escalating tit-for-tat tariff war.
Trump expressed optimism that a trade deal with the country could “substantially” lower tariffs on Chinese goods.
In premarket trading, the Dow Jones Industrial Average was up 1.6pc, the S&P 500 gained 2.1pc and the Nasdaq 100 rose 2.4pc.
10:36 AM BST
Britain paying price for Reeves ‘fiddling the fiscal rules’, say Tories
Shadow chancellor Mel Stride said the latest public borrowing figures “lay bare the price the British people are paying for Rachel Reeves’ choices”.
He said: “By fiddling the fiscal rules, increasing borrowing by £30 billion a year and piling up debt - these figures are alarming but not surprising.”
The self-imposed fiscal rules limit the Government’s ability to borrow to fund day-to-day spending.
10:15 AM BST
Reeves caused public borrowing ‘debacle’
Rachel Reeves should “stop giving away free money to people and organisations that don’t deserve it” in order to start getting the public finances in order, according to Telegraph readers.
Here is a selection of views from the comment section below and you can join the debate here:
09:50 AM BST
UK private sector shrinks at fastest pace in two and a half years
Britain’s private sector output shrank at its fastest pace in two and a half years in April, a closely watched survey showed, as business optimism plunged amid Donald Trump’s trade war.
The S&P Global flash UK PMI index showed a contraction in activity for the first time since October 2023, with its reading of 48.2 the lowest since November 2022. A reading below 50 indicates shrinking output.
Exports fell in April at the fastest pace since May 2020 after President Trump announced his “liberation day” tariffs.
Aside from the pandemic, manufacturing exports declined at the fastest pace since February 2009.
Chris Williamson, chief business economist at S&P Global, said: “While recent months have been characterised by UK businesses treading water, broadly stagnating since last autumn’s Budget, businesses are reporting more of a struggle to keep their heads above water in April.”
He added: “Job cutting remains aggressive as business optimism about the year ahead sank to a two-and-a-half-year low, and one of the lowest levels yet recorded by the survey, even surpassing the low seen in the immediate aftermath of the Brexit vote in 2016.
“The disappointing survey reflects the impact of headwinds from both home and abroad. The biggest concern lies in a slump in exports amid weakened global demand and rising global trade worries, but higher staffing costs have also piled pressure on companies – linked to the National Insurance and minimum wage changes that came into effect at the start of the month.”
09:30 AM BST
German economy at risk of downturn as Trump trade war looms
Donald Trump’s trade war risks pushing the German economy back into reverse, as activity in the private sector edged downwards in April.
The eurozone’s largest economy, which had shown signs of revival from extra Government borrowing for spending on defence and infrastructure, was knocked back again last month, according to the purchasing managers’ index (PMI), an influential survey from S&P Global.
Germany’s PMI score fell to 49.7 in April, down from 51.3 in March. Any index reading of below 50 indicates private sector activity is contracting.
France’s score dropped further below 50 to 47.3, indicating the long struggle for its businesses is worsening.
The eurozone as a whole stagnated, as its PMI slid from 50.9 to 50.1.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, which runs the survey with S&P Global, said manufacturers have been boosted by higher defence spending and lower energy prices, helping them withstand American tariffs.
“The service sector has turned into a bit of a party pooper. Activity has shrunk instead of growing, which it had been doing almost continuously since February 2024,” he said.
“This has pushed the whole [eurozone] economy into stagnation territory. A faster drop in new business suggests this weakness might stick around for a while.”
09:18 AM BST
Long-term UK government borrowing costs fall as gilt sales cut
The cost of long-term government borrowing in Britain has fallen after the Treasury said it would reduce the number of bonds it sells to investors.
The yield on 30-year UK gilts dropped 11 basis points to 5.26pc, in sharp contrast to rising yields for European peers, in a boost to the Chancellor after official figures showed Treasury borrowing overshot forecasts in the year to March.
It comes as the Debt Management Office, an executive arm of the Treasury which sells debt to investors, said it would cut its bond sales target by £100m.
Longer-dated debt sales will be reduced by £10.4bn, it said, leading to a clamour from bond investors to buy-up higher yielding long-term UK bonds.
The yield on bonds – a benchmark for the cost of government debt – falls as the price increases.
Overall, the Debt Management Office plans to sell £299.1bn of gilts in this fiscal year.
09:01 AM BST
Treasury borrowing shows risks of Reeves’s ‘minimal’ headroom
The overshoot in Treasury spending shows the dangers of Rachel Reeves leaving herself “minimal” headroom in the public finances, economists have said.
The Office for Budget Responsibility (OBR) has underestimated Treasury borrowing requirements over successive forecasts, predicting back in March last year that public sector new borrowing would hit £87bn in 2024/25.
This was revised higher to about £127bn in Ms Reeves’s first Budget and then to about £137bn in the Spring Statement last month. The actual figure was nearly £152bn.
Meanwhile, the Chancellor left herself just £9.9bn of headroom over the next five years, which the Institute for Fiscal Studies (IFS) said was a risk during “such volatility in growth, tax revenues, and debt servicing costs”.
Nick Ridpath, an economist at the IFS, said: “Today’s data show higher-than-expected government borrowing over the last financial year, including higher than was forecast in the Spring Statement just last month.
“And it is much higher than was forecast in the March 2024 Budget.
“This serves to highlight the uncertainty surrounding these – or indeed any – fiscal forecasts.
“The Chancellor’s fiscal rules which apply to forecast borrowing in 2029–30, are only being met by a hair’s breadth. Today’s data highlights the clear risk that is being taken with that strategy.”
08:37 AM BST
National debt surpasses £95,000 per household
The national debt has left a burden of about £95,300 on every household in Britain as Rachel Reeves faces the likely prospect of raising taxes or cutting public spending to balance the Treasury’s books.
Public sector net debt now stands at £2.8 trillion, which is roughly 95.8pc of GDP, according to the Office for National Statistics.
The national debt has risen by £3,500 over the last year, with Donald Trump’s trade war putting more pressure on the public finances.
ICAEW director of public sector and taxation Alison Ring said: “Today’s numbers show that the reality is much worse than the £22bn ‘black hole’ in the 2024/25 budget identified by the incoming government last summer, with higher debt interest and weaker tax receipts adding to the Chancellor’s financial headaches.”
She added: “The Chancellor will be relieved that the 2024/25 financial year is now firmly behind her.
“In theory, the large tax rises coming into force this month should help refill the public purse to pay for the government’s missions to grow the economy and reform and improve public services.
“Unfortunately, the public finances remain vulnerable to the economic headwinds caused by those tax rises that, together with a global trade war, are likely to put significant pressure on the Chancellor as she seeks to stick to her fiscal rules in the current financial year.”
08:26 AM BST
Public finances ‘weak heading into trade war’
The Chancellor will have to raise taxes in October as the £14.6bn overshoot in Treasury borrowing last year shows the public finances were already weak before Donald Trump launched his trade war, economists have said.
Public sector borrowing was £151.9bn last year, exceeded OBR forecasts published in March of £137.3bn, which itself had been revised higher from its projection in October of £127.5bn.
Elliott Jordan-Doak of Pantheon Macroeconomics said the upward revision to the OBR’s forecasts in the Spring Statement had illustrated “how quickly the public finances have run away from official forecasts”.
He said: “Looking ahead to the next fiscal year and the upcoming October Budget, fracturing global trade and geopolitical uncertainties are going to make the Chancellor’s life even more difficult.
“We had already expected that the Government would need to increase defence spending beyond its recent commitment of 2.5pc of GDP — to at least 3pc of GDP by 2027 — with a mix of borrowing and tax increases to take the strain.
“But President Trump’s tariffs now mean a likely hit to GDP growth this year and next, which will further weigh on the public finances.
“The public finances were already in a difficult position heading into the trade war, and we think both taxes and borrowing will need to be raised in the October Budget.”
08:15 AM BST
FTSE surges as Trump rows back on Powell threats
The FTSE 100 surged at the open after Donald Trump said he has “no intention” to sack Federal Reserve chairman Jerome Powell after days of threats that sparked market turmoil.
The UK’s flagship stock index jumped 1pc at the open to 8,409.99 while the mid-cap FTSE 250 gained 0.9pc to 19,417.14 as the US treasury secretary hinted there was a chance of a trade agreement between the US and China.
Scott Bessent said that America’s trade war with the world’s second largest economy was not sustainable, telling a JP Morgan investor summit there was “a big deal to be done”.
07:58 AM BST
Surging debt costs leave Reeves in ‘precarious’ position over Trump tariffs
Donald Trump’s tariffs have left the public finances in a “precarious” position, economists have warned, as Rachel Reeves already faces rising costs of servicing the national debt.
Public sector borrowing surged as debt interest payments hit their highest level on record for the month of March, the ONS said.
Debt interest payments reached £4.3bn last month, the highest March figure since monthly records began 27 years ago, helping to send Treasury borrowing well over official forecasts.
It has left public sector net debt excluding public sector banks worth about 95.8pc of GDP, which is the highest level since the 1960s.
Nabil Taleb, economist at PwC UK, said: “This reflects the fiscal challenge the Chancellor faces. Higher debt servicing costs as a share of total revenues will leave the public finances more exposed to future economic shocks.
“Reeves continues to hold the fiscal line, but the next six months will be critical—and she needs some clear wins.
“While her Spring Statement restored the £9.9bn headroom, that cushion remains precarious. In the worst-case scenario outlined by the Government’s independent forecaster, Trump’s new tariffs could alone shave 1pc off UK GDP—enough to wipe out the headroom entirely.
“The rising cost of government borrowing and growing global uncertainty are compounding the pressure for Rachel Reeves to put tax rises on the table during the Autumn Budget.”
07:43 AM BST
Pay rises and benefit increases send expenditure higher
The Treasury overshot borrowing forecasts after increases in pay, benefits and pensions sent expenditure soaring.
Public expenditure was £6.2bn higher in March than the same month last year at £88.9bn, outweighing higher tax receipts of £93.5bn, which were £2.5bn higher than the same month in 2024.
The rise in expenditure was down to inflation-linked increases in many benefits and pensions, as well as pay rises, inflation increasing the government’s running costs and a £1.3bn increase in debt interest payments.
Grant Fitzner, the ONS’s chief economist, said: “Our initial estimates suggest public sector borrowing rose almost £21bn in the financial year just ended as, despite a substantial boost in income, expenditure rose by more, largely due to inflation-related costs, including higher pay and benefit increases.
“At the end of the financial year, debt remained close to the annual value of the output of the economy, at levels last seen in the early 1960s.”
07:30 AM BST
Reeves will likely need to raise taxes, warn economists
Chancellor will likely need to raise taxes in the Budget this autumn, economists have said, after Treasury borrowing overshot official forecasts set just a month ago.
Borrowing rose to £16.4bn last month, the ONS figures show, which was higher than the upwardly revised £12.3bn borrowed in February and steeper than analysts had predicted.
It was the third-highest March borrowing figure since monthly records began, helping annual borrowing overshoot OBR forecasts by £14.6bn.
Ruth Gregory, deputy chief UK economist at Capital Economics, said it showed Britain’s fiscal position was “was overshooting the OBR’s forecast even before the influence from the tariff chaos is felt”.
She said: “This raises the chances that if the Chancellor wishes to stick to her fiscal rules, more tax hikes in the Autumn Budget will be required.”
She added: “Further bad news for the Chancellor is on the way. The rise in borrowing costs since March has already whittled down the headroom against the fiscal mandate from £9.9bn to £7.7bn.
“And the OBR has yet to incorporate the likely upward impact on borrowing from the tariff shock.
“All of this means that Reeves may not be too far away from having to raise money again in the Autumn Budget, by cutting spending and/or raising taxes, to meet her fiscal rules.”
07:21 AM BST
Treasury minister seeks to ‘tear out waste’ as borrowing surges
The Chief Secretary to the Treasury said he would “tear out waste” as public sector borrowing overshot annual forecasts by £14.6bn just a month after the projections were published.
Darren Jones said: “Economic stability is crucial within a changing world.
“We will never play fast and loose with the public finances, that’s why our fiscal rules are non-negotiable and why we are going through every penny of taxpayer money spent, line by line, for the first time in 17 years to tear out waste.
“We are laser-focused on making sure taxpayer money is delivering our Plan for Change missions to put more money in people’s pockets, rebuild the NHS and strengthen our borders.”
07:18 AM BST
Treasury overshoots borrowing forecasts by £14.6bn
The Treasury overshot its borrowing forecasts by £14.6bn last year, official figures showed, as the International Monetary Fund (IMF) delivered a blow to Rachel Reeves by cutting its growth projections for Britain.
Public sector borrowing, excluding banks, hit £151.9bn in the year to March, according to the Office for National Statistics (ONS).
It was well ahead of projections made just last month by the Office for Budget Responsibility (OBR) that Treasury borrowing would hit £137.3bn for the 2024/25 financial year.
It also surpassed by £24.4bn the OBR’s forecast at the October Budget for borrowing of £127.5bn.
Public sector borrowing was £20.7bn higher than the previous year, the ONS said, and the third highest on record.
It comes as the Chancellor faces a greater challenge to balance the public finances following a downgrade in growth projections for Britain by the IMF.
The UK is now expected to grow by 1.1pc this year and 1.4pc in 2026, down from projections of 1.6pc and 1.5pc just three months ago.
While the Fund said “the impact of recent tariff announcements would weigh on growth, it said that “an increase in gilt yields, and weaker private consumption amid higher inflation as a result of regulated prices and energy costs” for the decision to cut its UK growth forecasts.
The Chancellor is in Washington this week where she has vowed to “defend British interests” in meetings.
07:12 AM BST
Good morning
Thanks for joining me. The Treasury borrowed 14.6bn more than official forecasts during the last financial year, new data show, as Rachel Reeves battles to balance the public finances.
The Office for National Statistics (ONS) said public sector borrowing, excluding banks, hit £151.9bn in 2024/25, which was well ahead of the Office for Budget Responsibility’s forecasts of £137.3bn. It had forecast borrowing of £127.5bn at the October Budget.
It comes as the Chancellor faces a more challenging task to balance the nation’s books after the International Monetary Fund (IMF) downgraded its growth outlook for Britain.
5 things to start your day
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Reeves cannot blame Trump for British growth downgrade, warns IMF | Chancellor vows to defend British interests in Washington as UK economic forecasts slashed
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Surging government borrowing risks fresh market chaos, warns IMF | Trump’s trade war expected to trigger further bond turbulence amid high global debt
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Petrol prices to slump as Trump’s trade war kills oil demand | Lower pump costs are expected at the end of the year as oversupply looms
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Pharma giant plots US weight-loss drug factory | Roche expects to create 12,000 American jobs after president’s tariff threats to foreign drug giants
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Jeremy Warner: The unbelievable luck of Mark Carney | Canadian PM and former Bank of England governor has been blessed with good timing
What happened overnight
Stock markets were enjoying a much-needed relief rally in Asia after Donald Trump said he had no plans to fire the head of the Federal Reserve, and hinted at lower tariffs for China.
The dollar jumped sharply across the board after Trump walked back the threats to dismiss Fed chairman Jerome Powell.
The US president also reiterated he wanted to do a deal with China where tariffs would not be anywhere near 145pc, adding that he would set the terms of a deal if Beijing did not enter talks.
Treasury secretary Scott Bessent was reported earlier on Tuesday saying that he believes there will be a de-escalation in US-China trade tensions, but negotiations with Beijing have not yet started and would be a “slog”.
Investors reacted by buying back into beaten-down stocks. Japan’s Nikkei jumped 1.9pc, while South Korea’s main index rose 1.6pc.
On Wall Street, the Dow Jones Industrial Average rose 2.7pc, to 39,186.98, the S&P 500 rose 2.5pc, to 5,287.76 and the Nasdaq Composite rose 2.7pc, to 16,300.42.
In the bond market, the yield on 10-year US Treasury notes was 4.400pc, down from 4.421pc on Monday night.