10 November 2026: Stealthy Brexit reversal? Norway’s warning raises awkward questions for Burnham

Britain’s labour market lost momentum in the weeks leading up to Chancellor John Healey’s Budget, as firms grew increasingly cautious about hiring amid uncertainty over taxes, borrowing costs and the wider economic outlook. According to the latest Recruitment and Employment Confederation and a KPMG survey, employers reduced hiring for the first time in four months, temporary placements also declined, and vacancies continued to fall.

The slowdown suggests businesses adopted a wait-and-see approach ahead of the fiscal statement, delaying recruitment decisions until the government’s plans became clearer. Concerns that the Budget could bring higher taxes or increased operating costs appear to have weighed on employer confidence.

The hiring pullback comes at a challenging time for the UK economy. Rising energy prices, higher interest rates and elevated borrowing costs are already squeezing company finances. The Bank of England’s recent rate increase has added to those pressures, prompting some firms to reassess expansion and staffing plans as borrowing costs increase.

While the labour market remains relatively resilient by historical standards, the latest data raises concerns that the tentative recovery seen earlier in the year may be stalling. If uncertainty eases following the Budget, hiring activity could stabilise, but businesses are likely to remain cautious until there is greater clarity over growth prospects and future cost pressures.

Norway’s intervention in the debate over Britain’s future relationship with the European Union has created an awkward political moment for Prime Minister Andy Burnham. As his government seeks closer economic ties with the bloc while insisting that Brexit will not be reversed, warnings from Oslo about the compromises required for membership of the European Economic Area have reignited questions about where the UK is ultimately heading.

Supporters of closer integration point to Norway’s access to the single market as evidence that stronger trade links can be achieved without rejoining the EU. However, Norwegian officials have long noted that such arrangements require countries to adopt many EU rules, make financial contributions, and accept a limited role in shaping regulations. These realities risk fuelling accusations from Brexit supporters that any move in that direction would be a “Brexit reversal” in name only.

For Burnham, the challenge is political as much as economic. Businesses continue to press for fewer trade barriers and easier access to European markets, while many voters remain wary of reopening the divisions of the 2016 referendum. The government therefore faces a delicate balancing act between improving economic relations with the EU and maintaining its pledge to respect the UK’s decision to leave.

The debate highlights a broader question: can Britain secure the benefits of deeper European integration without reigniting the Brexit arguments that have dominated politics for the past decade?

Most will remember the long nights of discussion in Parliament as Theresa May tried to convince Parliament that a workable departure could be achieved following the referendum more than ten years ago.

It was always likely the debate would be reopened when the Labour Party came to power; it is just a pity that, when Jeremy Corbyn was Labour Leader, the Party couldn’t have shown a little more backbone.

Chancellor John Healey’s most valuable political asset was once his credibility, but recent events have placed that reputation under intense strain. Critics argue that a widening gap between expectations and outcomes has weakened confidence in both his judgement and economic strategy. For financial markets, businesses and voters alike, trust is difficult to build and even harder to restore once it has been lost.

The challenge for Healey is that credibility is not measured by a single decision but by a pattern of consistency, transparency and delivery. If investors, employers and households begin to question whether government promises will be fulfilled, the political and economic costs can quickly mount. While supporters contend that it is too early to pass final judgement, opponents believe the damage is already substantial. Whether his standing can be rebuilt will depend on the government's ability to deliver stronger economic results and restore confidence in its direction.

Sterling performed well in global FX markets yesterday, recovering much of the ground lost at the end of last week as investor appetite for risk improved and demand for the US dollar eased. The pound rose just over 0.5% against the dollar, climbing back above 1.34 as concerns over AI-related equity losses subsided and falling oil prices reduced demand for traditional safe-haven assets.

Against the euro, Sterling was little changed, trading near 1.20 and remaining close to its strongest levels in around 20 months. Support came from last week's Bank of England rate increase and guidance that further tightening may be required if inflation pressures persist.

While the survey showing softer UK hiring highlighted some economic headwinds, traders largely focused on supportive interest rate expectations and improving market sentiment. The combination of relatively high UK yields, expectations of additional policy tightening and renewed confidence in the global growth outlook helped Sterling outperform the dollar.

Overall, the pound enjoyed a constructive session, gaining strongly against the greenback while holding firm against the single currency, reinforcing its position as one of the better-performing major currencies in recent weeks.

FOMC member Austan Goolsbee, who will regain his vote on the committee next year, delivered one of the clearest acknowledgements yet that the Federal Reserve remains short of its inflation objective, arguing that officials must come to terms with what he described as a failure on the “cost side and inflation side” of the Fed’s mandate. He noted that while economic growth and the labour market have remained relatively stable, inflation remains the dominant problem facing policymakers.

Goolsbee warned that price pressures are no longer confined to energy costs or tariffs and are seeping into the wider economy. “Inflation is becoming more broad-based, particularly across services, raising concerns that underlying demand remains too strong”. He also highlighted the rapid expansion of AI-related investment and data centre construction as a potential source of economic overheating.

His comments reinforce the view that the Federal Reserve may need to keep monetary policy restrictive for longer, with several officials already signalling that further rate increases could be necessary. For markets, Goolsbee’s remarks underline the Fed's growing concern that inflation has proven far more persistent than policymakers hoped and may require a more forceful response to bring it back towards the 2% target.

No one knows precisely when the AI investment boom will fade, but the key issue is whether spending continues to generate sufficiently strong returns. At present, major technology firms are still investing heavily in data centres, chips and AI infrastructure, and policymakers such as Goolsbee have identified AI-related spending as a potential source of excess demand in the US economy.

The monthly jamboree around employment data will likely continue as long as AI investment delivers returns. Artificial intelligence is often seen as a threat to jobs, but recent economic trends suggest it may also be supporting employment growth.

The surge in AI investment has triggered substantial spending on data centres, semiconductor production, electricity infrastructure and software development, creating demand for workers across a range of industries. Goolsbee highlighted the rapid AI data-centre build-out as a potential source of stronger economic demand, noting that companies are increasingly competing for skilled labour.

Beth Hammack and Thomas Barkin, Goolsbee’s colleagues on the FOMC, have signalled a preference for a gradual but persistent path to raising interest rates as policymakers seek to return inflation to the Fed’s 2% target. Both officials argued that inflation remains uncomfortably high and that monetary policy will need to move further into restrictive territory to contain price pressures.

In 2027, one of these more dovish members loses their vote (Hammack), while Barkin has his vote restored.

Rather than relying on large, abrupt rate increases, Hammack favours a series of smaller, more frequent moves, arguing that this approach would be less disruptive for households, businesses and financial markets. She also warned that allowing inflation to remain elevated risks embedding an inflationary mindset among consumers and companies.

Barkin echoed that view, describing inflation as still “too high” and noting that gradual tightening remains the most appropriate path. Their comments reinforce expectations that the Federal Reserve is not finished raising rates and that policymakers remain focused on restoring price stability, even if they choose a measured pace rather than aggressive policy shocks.

In President Donald Trump’s second term, Silicon Valley’s most powerful executives made an unusually public show of allegiance. Top CEOs took prominent seats on the dais at Trump’s inauguration, showering the President with gifts and donations, including contributions to the White House ballroom.

For two years, they enjoyed extraordinary access to Trump as his administration rolled back regulations, weakened government oversight and embraced artificial intelligence’s rapid expansion. Some right-leaning tech figures, such as Elon Musk and venture capitalist David Sacks, took formal roles in the administration.

But as Democrats swept races across the country last week, propelled in part by Americans’ rage over data centres and fears about AI, some tech leaders are now plotting a dramatic shift in strategy.

In group chats and phone calls, a group of left-leaning donors and advisers are quietly coalescing around a vision to wrest control of the agenda from the Trump-aligned industry leaders.

It is too soon to tell whether this new group will carry sway over the tech industry as a whole as Congress changes hands. Still, nascent signs suggest top companies are preparing for a new political reality in which Americans, and Democrats, are deeply sceptical of the combative, build-at-all-costs race with China that dominated the Trump years.

These new voices are exploring policies that would have been unpalatable to industry until recently, such as slowing or pausing data centre development, showering communities with billions of dollars in concessions for schools and job training, and requiring data centres to use union labour and to shield residents from higher electricity bills.

This potential upheaval comes as Nvidia CEO Jensen Huang faces one of the biggest challenges of his leadership after the company's board launched an independent investigation into reports about his relationship with a businesswoman identified by US intelligence agencies as a suspected Chinese spy. Huang has acknowledged the relationship, apologised to his family and employees, and pledged to cooperate fully with the inquiry. Nvidia has said it has no reason to believe national security or company secrets were compromised and has expressed confidence in his leadership.

The controversy comes at a sensitive time for Nvidia, which sits at the centre of the global AI boom. Investors are assessing the potential governance and reputational risks, while analysts warn that any uncertainty surrounding Huang's future could create instability given his pivotal role in the company's success. Despite the scrutiny, Nvidia maintains that Huang remains committed to leading the company without interruption.

The US dollar weakened in global foreign exchange markets yesterday as investor risk appetite improved, reducing demand for safe-haven assets. The greenback gave back some of the gains it made late last week, as traders grew less concerned about the sell-off in AI-related stocks and took encouragement from lower oil prices.

Across wider FX markets, sentiment improved as fears of further escalation in the Middle East eased, which contributed to lower oil prices and reduced demand for traditional defensive assets. Commodity-linked and growth-sensitive currencies generally benefited from the improved market mood, while the dollar lost some of its safe-haven appeal.

Nevertheless, expectations for further tightening by the Federal Reserve remain largely intact, with markets still anticipating another rate increase later this year. As a result, the dollar's decline appeared more like a corrective pullback than a fundamental shift in the broader policy outlook.

Overall, it was a softer session for the dollar and a more constructive one for risk-sensitive currencies across global FX markets.

The race to succeed Christine Lagarde as President of the European Central Bank is a contest between two highly respected central bankers, with the Eurogroup describing both candidates as “excellent”. Kyriakos Pierrakakis, the Eurogroup president, praised former Bank of Spain governor Pablo Hernández de Cos and former Dutch central bank chief Klaas Knot for their extensive experience and international standing.

The strong endorsement reflects the importance of the appointment at a time when the ECB faces persistent inflation challenges, geopolitical uncertainty and questions over the future path of interest rates. While Hernández de Cos is often viewed as the more moderate candidate, Knot is widely regarded as a policy hawk, suggesting the choice could influence the ECB’s policy tone in the years ahead.

Eurozone leaders are under pressure to decide quickly, with Pierrakakis saying the aim is to conclude the process before the end of the year. The negotiations may also be linked to other senior ECB appointments, including replacing Philip Lane as chief economist and Isabel Schnabel on the Executive Board.

For markets, the encouraging message is that Europe has two credible, experienced candidates available, helping ensure continuity and confidence at arguably one of the world's most influential central banks.

As her influence at the ECB wanes, Governing Board Member Isabel Schnabel told reporters yesterday that European governments must consolidate stretched public finances and resist financial deregulation, enabling the European Central Bank to fulfil its mission of keeping inflation in check.

“The ECB’s ability to fulfil its primary mandate relies on robust fiscal and regulatory frameworks that ensure monetary dominance,” Schnabel said in a speech in Frankfurt, adding that only then can it act decisively when price stability is at risk.

Reflecting on her seven years at the ECB before she leaves in January for the IMF, the hawkish German policymaker also recommended that central banks remain agile to deal with unexpected economic trends, focus on the projected inflation path when reacting to shocks, and keep a lean balance sheet.

High borrowing levels in major Eurozone nations such as France are stoking fears that the ECB may be forced to prioritise keeping sovereign debt markets stable over controlling inflation, a situation known as fiscal dominance. At the same time, there’s pressure to water down the mass of regulations passed after the 2008 financial crisis.

Her speech largely sidestepped the ECB's current challenges. Consumer prices are rising at double the 2% target, and markets expect officials to add to the two interest-rate hikes enacted since the Iran war broke out.

Schnabel said the ECB is “well positioned to address the current inflation challenges”.

The euro enjoyed a generally positive session yesterday, benefiting from a broader retreat in the US dollar as investor sentiment improved and demand for safe-haven currencies eased. The single currency advanced against the dollar, along with most major currencies, as traders became more willing to take on risk amid falling oil prices and reduced concerns about financial market volatility.

Overall, it was a constructive day for the euro and most major currencies, while the dollar underperformed across global FX markets.

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