21 November 2025: There have been plenty of reviews of the budget already!

The Budget will be delivered to MPs in the House of Commons next week, but the public could be forgiven for believing that the Chancellor has already told us where she plans to raise money over the next year and, just as importantly, where the funds raised will be spent.

Such is Rachel Reeves' lack of confidence in her ability to do one of the most critical jobs in the Cabinet that she feels the need not only to seek verification from her colleagues, but also to obtain a high degree of verification from voters.

Even as she has told her Treasury staff to spread rumours of tax rises and public spending cuts, she has still been forced to make embarrassing U-turns as her backbench colleagues have rebelled against policies that either betray their principles or go against the manifesto under which the Labour Party was elected last year.

There has even been a U-turn over a rumoured rise in income tax, which begs the question: why does the Prime Minister tolerate a Chancellor who is yet to prove to him, the Cabinet and MPs that she has the credentials to fulfil the role?

Is it simply that there is no one capable of doing a better job than her? Even Cabinet reshuffles have been forced upon the Prime Minister to a large extent, as its members make significant errors of judgement in their private lives that show they are unfit for office, and no better than those who immediately preceded them.

The fall in inflation, which was announced this week when the core rate fell for the first time in five months, should not be considered sufficient to save Ms Reeves, since if the Treasury were doing its job correctly, she would have been planning for months based on the fact that consumer prices would peak at 4% and now begin to decline gradually.

Still, financial journalists have said that the fall in inflation has given Reeves an early Christmas present in the form of a rate cut by the Bank of England before the end of the year.

The foundation of the UK’s global financial technology dominance is under threat as an unprecedented surge in economic pessimism, with 81% of founders reporting low confidence, fuels a talent flight risk and raises serious questions over the nation’s ability to retain investment.

The mood among UK fintech investors has shifted dramatically. The annual fintech survey revealed that 81% of the network’s founders now report low confidence in the nation’s general economic outlook. This is a significant surge in pessimism, up sharply from just 46% the previous year, highlighting how persistent inflation, slowing growth, and political uncertainty have eroded faith in the UK’s macroeconomic stability.

The pound tried to regain the ground it lost in the previous session, but again ran into a wall of sell orders. It reached a high of 1.3123 but fell back to close at 1.3070.

The employment data published has gone some way toward vindicating the decisions Jerome Powell and his more hawkish colleagues on the FOMC have made recently.

The non-farm payrolls report, originally due on October 3 but delayed by the 43-day US government shutdown, showed 119,000 jobs were created in September.

That was far stronger than analysts expected, and economists say it showed that a rate cut ‘is neither prudent nor necessary’ in December.

But unemployment in the US rose to a four-year high of 4.4 percent, a further headache for investors trying to anticipate the central bank’s next move.

The latest snapshot of the US labour market showed an unexpected rebound of 119,000 jobs in September, but a loss of 8,000 jobs in August and a lower total for July. The report was initially scheduled for October 3 but was released yesterday, seven weeks after the government shutdown.

It comes as earnings reports from some of America’s major companies flash warning signs about the US economy, with consumers and businesses becoming more cautious about their spending.

President Donald Trump escalated his criticism of Federal Reserve Chair Jerome Powell earlier this week, sharpening questions around the central bank’s leadership as the White House moves closer to naming a successor.

Speaking at the U.S. Saudi Investment Forum in Washington, Trump said he “would love to fire” Powell and publicly pressed Treasury Secretary Scott Bessent to push for faster rate cuts.

Trump added that Commerce Secretary Howard Lutnick was “a little bit more for firing,” saying he believed Lutnick would tell him to “get him the hell out.”

Last month, Bessent confirmed that the list of candidates to replace Powell has been narrowed to five, and Trump said a replacement is likely to be named by year-end.

Bessent said the finalists are Fed Governors Christopher Waller and Michelle Bowman, National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, and BlackRock executive Rick Rieder, according to multiple media outlets.

Trump’s recent remarks compressed the timeline for naming Powell’s successor and have pushed the issue closer to the centre of market debate.

As we enter the part of the year when it is difficult to separate fact from fiction due to traders and investors are reluctant to consider the New Year for fear of losing profit that has already been successfully banked, the Powell story is likely to grab centre stage until Trump “bites the bullet” and makes a decision, always assuming that the decision has not been made but not yet relayed to the market.

The dollar index consolidated its gain above the 100 level yesterday, though there remains concern that the sands continue to shift under its recent strength. It is in uncharted waters currently and needs to move above the 101.20/50 level to show investors that its strength is built on a solid base.

In its monthly economic update, the Bundesbank forecast slight growth in the fourth quarter, noting that “overall, industry and exports could stabilize.”

Germany could close 2025 with a modest economic uptick, the country’s central bank said on Friday — a signal that Chancellor Friedrich Merz’s efforts to reboot Europe’s largest economy may be starting to gain traction.

In its monthly economic update, the Bundesbank forecast slight growth in the fourth quarter, noting that “overall, industry and exports could stabilize.”

Germany has weathered a turbulent year, as attempts to recover from two consecutive years of recession were hampered by the tariff offensive launched by its principal trading partner, the United States. Growth has fluctuated throughout 2025, though the government’s latest outlook projects a 0.2% expansion for the whole year, followed by a stronger rebound in 2026.

The Bundesbank cautioned that German industry continues to struggle with a “poor competitive position,” limiting its ability to benefit from moderate global economic growth. The ongoing US tariff regime means “no stimulus from foreign demand” is expected in the near term, though the initial shock from the levies is beginning to subside.

“Industry is likely to stabilise in the current quarter, but will probably remain weak,” the Central Bank said.

Chancellor Merz has pledged to revive the economy, which has been hit not only by tariffs but also by an industrial downturn driven by fierce Chinese competition, elevated energy prices and sluggish demand in key export markets.

His government has announced a package of public spending measures and relief initiatives, including reduced electricity prices for energy-intensive industries.

A French textile company with production based in France generates returns to the French economy equivalent to 84% of its turnover, compared with 35% for an importer, according to a study commissioned by the Union des Industries Textiles (UIT) and the Union des Industries Textiles & Habillement Nord.

This shows the benefit of keeping production in high-end businesses within France. Although imported garments are “catching up”, even if the label is from a high-end retailer, the “manufactured in” label tells its own tale.

The euro area annual inflation rate was 2.1% in October 2025, down from 2.2% in September. A year earlier, the rate was 2.0%. European Union annual inflation was 2.5% in October 2025, down from 2.6% in September. A year earlier, the rate was 2.3%. Eurostat, the statistical office of the European Union, publishes these figures.

The lowest annual rates were registered in Cyprus (0.2%), France (0.8%) and Italy (1.3%). The highest annual rates were recorded in Romania (8.4%), Estonia (4.5%) and Latvia (4.3%). Compared with September 2025, annual inflation fell in fifteen Member States, remained stable in three and rose in nine.

This should bring into sharp relief the anomaly the ECB faces in trying to set monetary policy for such a disparate group. However, the ECB focuses on a single figure and shows little regard for individual nations' price levels.

The Euro is bottoming out close to its medium-term low. Yesterday it fell to 1.1502, but rallied to close at 1.1523.

Have a great day!