15 August 2025: Business leaders demand “no tax rises in the Autumn”

In the three months to June, the UK economy grew by just 0.2% according to data published yesterday by the Office for National Statistics, beating analysts’ estimates, but slowing after 0.7% growth was seen in Q1.

“Today’s economic figures are positive, with a strong start to the year and continued growth in the second quarter,” said Chancellor Rachel Reeves.

“But there is more to do to deliver an economy that works for working people,” she added in a statement, following a challenging first year in power for the Labour government as the economy struggles to grow significantly.

According to data published on Tuesday, the UK jobs market has continued to cool as vacancies fell and the number of people on payrolls dropped, the latest official figures suggest.

Job openings fell by 5.8% between May and July. The fall was experienced across all sectors of the economy. The ONS commented that there is evidence that some firms are not currently recruiting, even to replace workers who have moved on.

However, the fall was not as severe as had been feared.

Average wage growth and the unemployment rate were unchanged at 5% and 4.7% respectively.

Growth was led by services, with computer programming, health and vehicle leasing growing,” noted the ONS’ director of economic statistics. Overall GDP grew 0.4% in June after contracting slightly in April and May, the statistics office added. June’s figure “will be welcome news for the government, which has had a frustrating time chasing elusive growth.

Employment is expected to continue declining due to the ongoing impact of the measures announced in last year’s Budget. While there are hopes that Reeves will take action in this year’s budget, there are fears that she will continue to concentrate on lowering fiscal deficits, buoyed by the increase in GDP in June.

Reeves is understood to have axed the Labour Government's cash-cutting quango after only one year.

In 2024, the Office for Value-For-Money was created to analyse spending, investment proposals and potential inefficiencies to protect taxpayers' money. Over the last 12 months, the quango's chairman, David Goldstone, was reportedly paid £950 a day while only being expected to work one day per week on average a month.

Notably, Goldstone was also unable to advise on certain projects, including HS2, due to conflicts of interest despite soaring costs.

The pound had a negative reaction to the data, although it remained in its week’s range. It fell to a low of 1.3521 and closed at 1.3529.

President Trump will meet Russian President Vladimir Putin at an airbase in Alaska later today as the world’s two most powerful leaders try to agree on a ceasefire following Russia’s invasion of Ukraine. This marks their first face-to-face meeting for six years.

As he prepared to leave, Trump promised, “Putin is not going to mess around with me”.

The US president also floated the idea that European leaders could be invited to participate in a second meeting, which would include Volodymyr Zelenskyy.

The main purpose of the meeting is to set up talks that will include European Leaders as well.

Less than two weeks after U.S. President Donald Trump fired the head of the Bureau of Labor Statistics over the release of weak jobs numbers, the department delivered another batch of troubling economic data for the Trump administration’s agenda: accelerating producer prices.

Wholesale inflation climbed in July at the fastest pace in three years, in a sign that import taxes are pushing up prices for domestic producers, and economists warn that higher consumer prices could be next.

The producer price index (PPI) rose 0.9 per cent in July from the month before, more than three times faster than expected, and the largest monthly increase since March 2022, the BLS said Thursday.

While the annual change in producer prices for core goods, which exclude food and energy, increased at the fastest rate since 2023, the bigger driver of wholesale prices was in services, particularly wholesale and retail trade services, a measure of corporate profits.

PPI, which measures the change in prices that domestic producers receive for their goods and services, was significantly stronger than the consumer price index numbers released by the labour department earlier this week.

This is one of the first signals that the effect of increased tariffs on imports of raw materials and finished goods is having an effect on the economy. It is likely that the producer price increases will find their way into increased consumer price inflation going forward.

This will have a significant impact on the likelihood of the Fed feeling able to lower interest rates next month.

While Raphael Bostock, the President of the Atlanta Fed, told reporters that he still expects one more rate cut in 2025, his colleague from Chicago, Austan Goolsbee, believes that the FOMC should pause to take stock of the overall effect of tariffs on inflation.

The dollar index rallied to a high of 98.32 and closed at 98.21 as it continued a roller coaster journey through low liquidity and increased volatility. This should come to a halt following the Labor Day holiday, which is coming up. This traditionally marks the end of the summer.

Even as the Eurozone’s quarterly growth reached 0.1% in the period from April to the end of June, according to new official data, market analysts predict that there will be just one more rate cut this year, most likely in December.

The malaise that is affecting the region’s largest economy, Germany, is at risk of spreading wider.

One glowing exception to this is Spain, which is growing at more than twice the Eurozone average.

While the eurozone's gross domestic product (GDP) increased minimally in the second quarter of the year, the Spanish economy led the growth among the eurozone countries with an expansion of 0.7%, matched only by Slovenia.

In the region as a whole, including nations outside the Eurozone, GDP growth was 0.2%, with Romania, with a 1.2% increase, and Poland, with 0.8%, outperforming Spain's growth, which was at the same level as Bulgaria's (0.7%), according to the GDP growth estimate.

Romania’s growth was, however, a factor of the positivity it is getting from its imminent adoption of the Euro.

Overall, this puts into perspective the comments made recently by former ECB President Jean-Claude Trichet, in which he praised the stability that has been created by the introduction of a single currency and monetary policy.

On the evidence of yesterday’s data, the opposite is true.

The European Central Bank will hold interest rates at 2.00% in September, according to the majority of economists polled by Reuters, with the eurozone's economic outlook broadly unchanged after the EU agreed a trade deal with the United States.

Expectations have shifted from the previous poll in July, when the majority of economists had forecast another rate cut next month. Now policymakers are seen waiting until December if they opt to cut rates one more time, but there is no longer a consensus on where the deposit rate will be by end-year.

While most respondents said the 15% U.S. tariff on EU goods could weigh on growth and dampen price pressures, upcoming fiscal support, particularly from Germany, and reduced uncertainty are seen keeping the bloc on a steady growth path.

Inflation is already at the ECB's target of 2%, providing additional assurance for policymakers. The central bank held rates last month, after a cumulative 200 basis point reduction since June 2024.

The steady economic outlook is in contrast to the Trump-dominated United States, where the jobs market is weakening, inflation is ticking higher, and the Federal Reserve, which has held rates steady all year, faces growing doubts over its future independence from political interference.

The euro lost a little ground yesterday as the dollar briefly recovered lost ground, but it is unlikely to move out of its current range until there is greater clarity on the effect of tariffs on both the U.S. and European economies.

This single currency closed at 1.1648, having fallen to a low of 1.1631 earlier in the day.

Have a great day!