24 September 2025: Inflation is set to surge, and growth drop

The Jaguar Land Rover plant in the Midlands has not seen any vehicles roll off its production line since the end of August due to the ongoing issues from a cyber attack. This is not only costing the company millions in lost production every day, but is having a significant knock-on effect on the firms further down its supply chain.

From the producer of sunroofs for Range Rovers to the firm that shuffles the employees by coach at the start and end of their shifts, the entire area is suffering and the cost to the UK economy is immeasurable.

It has now come close to the point that suppliers will have to begin to lay workers off, as the crisis is unlikely to end for at least another week. A Government spokesman, on a visit to the plant in Solihull a suburb of Birmingham yesterday told reporters that it is supporting the company in many ways, but financial support is being provided by its parent, Indian giant Tata Motors, for which the Prime Minister is grateful.

A similar ransomware attack on Marks and Spencer earlier this year cost the company hundreds of millions of pounds in lost revenue. The JLR situation is far more serious, since it has shut down the firm's entire production.

The Organization for Economic Co-operation and Development issued its interim global review yesterday, and it was not a welcome report for the UK and Chancellor in particular. The OECD believes that for the whole of 2025, the UK will suffer the highest inflation rate among the G7 group of the world's richest nations, at 3.5%.

This is likely to mean that the Bank of England will not feel inclined to support growth by cutting interest rates again this year. It also forecast the UK economy will grow at a sluggish rate of 1.4% this year, even though this will be the second-strongest rate, after the U.S., in the group.

Following fast on the heels of Rachel Reeve's apparent plan to add VAT to taxi fares, comes the news that she is reconsidering another raid on the pensioners’ winter fuel allowance in her Budget. This is sure to create a similar situation to last year's announcement as 500k pensioners are set to miss out. The measure was the subject of a U-turn last year, with similar protests set to be made later this year should she go ahead.

Reeves is also said to be considering taxing income from private pensions even as the state pension inches closer to the ceiling on the tax-free allowance.

The pound rallied on the back of the likelihood that the Bank of England will leave rates unchanged for the rest of this year. It reached a high of 1.3536 and closed at 1.3526.

U.S. President Trump gave world leaders the benefit of his opinions on where they are going wrong as he addressed the General Council of the United Nations yesterday.

Standing like the World President in some third rate sci-fi movie Trump concentrated on three main areas; immigration, global warming and failure to end wars.

He told the assembled company that Europe is being invaded by immigrants. He was particularly critical of London Mayor, Sir Sadiq Khan, who he said wanted to bring in Sharia’a law in London, while European Leaders appear powerless to stem the flow into their nations and the “experiment” of open borders has been a miserable failure.

He went on to say that in his opinion, global warming is the biggest “con-job” ever visited upon the world, while green energy production is a myth. He again criticized the UK for stopping drilling for oil in the North Sea.

He also went in for a little self-congratulation by claiming that he had ended seven wars. He has only been unable to end an eight, Russia’s invasion of Ukraine, because members of the European Community continue to buy Russian oil and gas. He called for a total ban on European purchase of Russian energy to make the use of sanctions effective.

The UK was again criticized for recognizing the Palestinian State, saying that the barbarism of Hamas on October 7th 2024 had been rewarded.

Several news agencies, including the BBC, immediately went about refuting most of what the U.S. The president had said. The idea of sharia’a law in London was briefly mentioned in a social media post in 2022 and was immediately discarded, while one of the conflicts, between Egypt and Ethiopia, which began over the damming of the Nile was settled in a day with the U.S. playing a minor role.

When Trump addressed the congress eleven years ago, its members openly laughed when he made several of his more outlandish statements, but this time he was heard out with a degree of reverence and received an ovation when he finished. Such is the status of the U.S. in the modern world.

Several members of the FOMC have “come out to play” following the news blackout around last week’s meeting.

Federal Reserve of Chicago President Austan Goolsbee told reports that the Fed is conscious of inflation remaining above its 2% target and will therefore proceed cautiously when agreeing rate cuts, while his colleague Fed Governor Michelle Bowman said that the Federal Reserve may be late in supporting the labour market and could need to speed the pace of rate cuts if demand weakens and businesses begin to lay off workers,

"It's a lot easier to support the labour market by lowering the federal funds rate than it is to fix it after it's broken," Bowman said in remarks that laid out the case for putting full weight on potential problems in the job market and largely dismissing inflation risks.

The dollar index lacked any forward impetus yesterday and suffered a small loss on the day. It fell to a low of 97.21 and closed at 97.23.

Bureaucracy in Germany cost the economy an estimated €67 billion in 2024, according to a new study by the Association of Research-Based Pharmaceutical Companies (VFA)

The figure amounts to roughly 1.5% of the country’s economic output.

Administrative burdens reduce productivity and divert resources from areas such as research and development or production, according to the report.

The costs cited in the study are conservatively estimated and mostly reflect the working hours spent on bureaucracy.

In the pharmaceutical industry, one in five working hours is spent on documentation and reporting obligations, the VFA notes in a paper presented at Tuesday’s Innovative Healthcare Industry Day in Berlin.

The focus is on compliance costs, and the study does not compare any financial benefits companies may gain from bureaucracy.

In its latest report, the OECD cut its economic outlook for Germany on Tuesday, though it upgraded its forecast for the Eurozone economy for this year.

The OECD expects GDP to expand marginally, by 0.4% this year and by 1.1% in 2026. These figures are both 0.1% lower than previous forecasts.

Donald Trump's tariffs could put Germany, already the only G7 economy that has contracted for the last two years, on track for a third year of recession for the first time in its post-war history.

By way of contrast, the eurozone's forecast was slightly upgraded. Trade tensions and geopolitical uncertainties loom, though easier credit conditions offer a silver lining.

“The autumn of reforms has begun,” German Chancellor Friedrich Merz told Parliament this week. With the country mired in a structural economic crisis, he promised sweeping changes, claiming the moment was about “nothing less than the future of our country”.

Yet his rhetoric was short on specifics, and his government’s plans fall far short of fundamental reform. Germans are unlikely to be stirred by Merz’s pep talk.

Most agree with his diagnosis: Germany is in serious economic trouble. A recent survey showed that three-quarters of Germans had “grave” or “very grave” concerns about the economy.

But few believe Merz has solutions. Only 22% are satisfied with his government’s work. While he acknowledges the scale of necessary reforms, there’s little sign he’s willing or able to tackle the root problems.

Meanwhile, The Head of French defence company Dassault said on Tuesday his firm could build the future European fighter jet by itself, as tensions persist with Germany over the multi-billion-euro project.

The Future Combat Air System (FCAS) programme was launched in 2017 to replace ageing planes used by France, Germany and Spain. But the scheme, jointly developed by the three countries, has stalled as disagreements grow between Dassault and Airbus, which represents German and Spanish interests.

"The answer is yes," Dassault's Eric Trappier said when asked by reporters at a factory opening event if Dassault could build a sixth-generation fighter jet on its own.

"I don't mind if the Germans are complaining. If they want to do it on their own, let them do it on their own," he added. Analysts estimate it will cost 100 billion euros to develop the new jet and its cutting-edge technologies, scheduled to be operational in 2040.

The euro made marginal gains on a day that was driven by politics, not economics. It reached a high of 1.1820 and closed at 1.1815.

Have a great day!