10 December 2025: MPs plan to quiz Reeves over her divisive Budget

If the UK recycled its own plastic waste rather than shipping it overseas for disposal, the economy could benefit by nearly £1 billion. That is the conclusion of a report commissioned by a leading waste management firm.

The UK’s recycling rate is on an upward trajectory, according to DEFRA data from 2013 to 2024. The report suggests this trend is likely to be sustained for the rest of the decade, citing the introduction of the Simpler Recycling Schemes in 2027. These, and several schemes like them, could significantly benefit the economy, both in job creation and economic viability.

Rachel Reeves is to appear in front of the Treasury select committee this morning, in what should be the most comprehensive questioning she has faced since the budget a fortnight ago. Shortly before Labour came to power last year, polling showed that voters backed more public spending, even if it meant higher taxes. It turns out they’re actually not so sure, once the tax hikes bite.

YouGov has found that 45% of respondents now say the government “taxes too much and spends too much,” the highest proportion since it started asking in 2019. Only 20% say it taxes and spends too little.

In June 2024, the numbers were 28% and 35% respectively. This shows a significant turnaround in voter attitudes.

Job postings in the capital have plummeted since the pandemic, according to the recruitment website Indeed. It said today that advertised vacancies are down 29% in London compared with February 2020, the worst-performing region apart from the broader South East (on 31%).

It has been noted that the City has never fully recovered from COVID, with remote working and the migration of many white-collar workers to the deep suburbs. This has a knock-on effect throughout the south, with affluent areas initially bearing the brunt of Labour’s threatened mansion tax, before it became a reality. While at the same time, prices in more affordable boroughs have also flatlined or dipped in recent years.

The survey also showed a sharp drop in vacancies for low-wage occupations like hospitality, in contrast to Germany, France and Italy, where these roles are more in demand. British shops, pubs and restaurants “have been more exposed to rising payroll costs and substantial minimum wage increases,” Indeed says, by way of explanation.

Job losses may also be coming to the Bank of England in 2026. The Bank of England has issued a warning to its workforce over job cuts but stressed the scheme is "entirely voluntary". A report in the Daily Telegraph comments that the Bank’s Governor, Andrew Bailey, does not rule out compulsory redundancies further down the line.

The Bank is planning to upgrade its IT systems, which will be funded by cost savings from cuts to staff whose roles will be eliminated. There has been no mention of AI being part of the upgrade, with white-collar unions admitting concerns about a significant rationalisation of jobs within the sector.

The pound lost ground yesterday, with the substantial gains it made this time last week being gradually eroded. It fell to a low of 1.3287 and closed at 1.3301. Market analysts believe that the pound may suffer in the first quarter of 2026 as a “rising tide of unemployment” is seen nationally. This will have the dual effect of reducing tax receipts and increasing the welfare bill, both of which will erode Rachel Reeves’ fiscal headroom.

Later today, it is expected that the Chairman of the Federal Reserve will announce that, at its latest meeting, the FOMC voted in favour of a 0.25% reduction in the target for Fed Funds. This will not be the most remarkable outcome of the meeting, as it is also likely that Jerome Powell will announce what has become known as a “hawkish cut”

Even that may not be the most pivotal announcement before the Fed closes its doors for the Christmas Holiday, with President Trump expected to put forward to Congress the name of Kevin Hassett to replace Powell when his term as Chairman ends in May.

The President has made it clear that immediate interest-rate reductions will be a critical factor in evaluating his choice to lead the Central Bank. There may be further questions about Donald Trump exerting undue influence on the Central Bank. However, in his latest speech, Hassett showed his more independent side, praising Powell for his ability to wrangle the often diverse attitudes toward monetary policy among members of the FOMC.

Powell is no stranger to attempts to influence him, as he was a successful legal advocate before Trump convinced him to take the helm at the Fed during his previous Presidency. He has continually ploughed his own furrow and had excellent relationships with both President Biden and the Previous Treasury Secretary Janet Yellen. It is expected that during his press conference later, he will imply that he did not vote for a rate cut. However, he has always said that he respects those who are less concerned about the possibility of a flare-up in inflation caused by what he feels may be an injudicious rate cut.

The U.S. economy is expected to slow in 2026 amid a downturn in optimism among households and businesses, according to a basket of monthly economic indicators. The Leading Economic Index, or LEI, published yesterday by The Conference Board, fell 0.3% to 98.3 in September, after a similar 0.3% decrease in August.

“Weakening expectations from consumers and businesses led to an overall contraction in the index,” said Justyna Zabinska-La Monica, senior manager for business-cycle indicators at The Conference Board. Also contributing to the downward momentum were weaker new orders from manufacturers of consumer goods and materials and initial claims for unemployment insurance, the Conference Board’s report said. By contrast, stock prices contributed positively to the index.

The LEI is considered a predictive index. It is based on 10 components, among them manufacturers’ new orders, building permits for new private housing units, stock prices and consumer expectations, and aims to signal shifts in the business cycle.

Economic activity is set to weaken after strong midyear consumer spending and disruptions in the fourth quarter as the Federal Government shutdown set in, Zabinska-La Monica added.

The Conference Board expects gross domestic product to rise by 1.8% in 2025, before slowing to 1.5% in 2026.

The dollar index continued to make ground as it moved away from its short-term level of support. Yesterday it climbed to a high of 99.32 and closed at 99.24.

Central Bank independence is critical for monetary stability, Bank of Italy Governor Fabio Panetta said yesterday, amid a spat between the Italian government and the European Central Bank over the country's gold reserves.

The ECB urged Rome on Monday to reconsider a proposed amendment to its 2026 budget law that would state that the Bank of Italy's gold reserves belong to "the Italian people," warning the move could jeopardise the Central Bank's independence.

Without explicitly mentioning gold reserves, Panetta said in a speech that monetary stability rests on "the authority of the State and the credibility of an independent central bank."

Italian Economy Minister Giancarlo Giorgetti intends to write to ECB President Christine Lagarde to clarify that Rome has no plans to undermine the independence of the Bank of Italy, according to Reuters.

The Bank of Italy Governor also noted "the weakening of some of the dollar's traditional pillars," while China's yuan and the euro both have the potential to become more global currencies, but are not currently in a position to match the greenback.

It is unlikely that the U.S. would ever support the elevation of the Yuan to a more global presence, given the mistrust of the Chinese Administration; the same is true of the Euro, but for different reasons.

"Multipolarity could increase diversification, spreading the burden of global liquidity provision and reducing global dependence on the US policy cycle. But it could also amplify volatility and contagion risks," Panetta warned.

Meanwhile, President Trump voiced his most significant criticisms of Europe yet in an interview yesterday.

Top EU officials tried to set the record straight after President Trump denounced Europe as a “decaying” group of countries ruled by “weak” leaders. Trump is clearly disappointed by the seeming inability of the EU to make any meaningful contribution to the negotiations about a deal for peace in Ukraine.

Trump slammed Europe as poorly governed and failing to regulate migration in an interview with POLITICO’s Dasha Burns that aired last evening. “I think they’re weak,” the Republican said, referring to the continent’s presidents and prime ministers, adding, “I think they don’t know what to do. Europe doesn’t know what to do.”

ECB Governing Council and Executive Board member Isabel Schnabel has returned to the speaking circuit with some typically forthright views on the Eurozone economy. She highlighted the possibility that the economy could exceed growth expectations, particularly in areas like household expenditures and public spending.

This is a final mitigation for calls for a rate cut. Schnabel is already on record as saying that she believes that the next move in official rates will be a hike.

The Euro initially advanced to a high of 1.1657 following Schnabel’s remarks, but ran into selling pressure near its recent high and fell back to close at 1.1626.

Have a great day!