31 July 2025: Corbyn supporters warn Starmer of real change coming

Former Labour Party Leader Jeremy Corbyn’s hard-left supporters are planning to “take back” the Party from current leader Sir Keir Starmer, as Corbyn announced the formation of a new political party yesterday.

He has joined forces with Zara Sultana, who was dismissed from the Parliamentary Party a year ago on disciplinary grounds.

It seems that, despite wanting to see middle-of-the-road politics from the likes of Tony Blair and now Starmer, the electorate, particularly young voters, eventually want to see a return to more extreme policies that are associated with the radical end of the political spectrum.

With Reform UK well ahead in the polls, socialists are tiring of both Keir Starmer’s brand of New Labour and Rachel Reeves’ plans for welfare reform.

UK shoppers have remained resilient as the economy sputters, but any retailer will tell you a successful year boils down to the fourth quarter. Even as Britons head to their summer holidays, the predictions for winter are worrisome, unwelcome news for Chancellor of the Exchequer Rachel Reeves, as consumers contribute 60% of the country's gross domestic product.

Rising inflationary pressures have started biting into households’ spending power. A survey by the Confederation of British Industry (CBI) showed on Monday that retail sales declined for the 10th straight month in July.

However, the pace of decline in retail sales was less severe than what was seen in June. The data improved to -34, up from -46 in June.

Even after just one year in power, the country is becoming wary of what Reeves has planned for her Autumn Budget, following last year’s increase in taxes and the “attack” on the elderly and vulnerable.

It is hard to imagine any pensioners looking forward to the Holiday Season with any kind of expectation when they will always have, at the back of their mind, what the Government will impose next, using the excuse of making things better in the long run.

The boss of HSBC has joined a growing chorus of bankers cautioning Rachel Reeves against increasing taxes on banks in her autumn budget, warning it would risk “eroding” investment and ultimately harming UK growth.

Georges Elhedery, its chief executive, said banks in the UK were already subject to the highest level of taxes on profits compared to other sectors, and paid more than in most other countries. He said placing further financial pressures on lenders could spell trouble for the UK economy.

“Additional taxation on banks does run the risk of eroding our continued investment capacity in the business and in supporting our customers, and ultimately in delivering growth for the UK,” he said on Wednesday, as the bank revealed a 29% drop in second-quarter profits.

The intervention comes amid growing speculation that Reeves could use her autumn budget to announce a fresh round of tax rises, as forecasts for public finances worsen.

The public sees things a little differently, with banks often criticised for their level of profits, especially when they have reduced their risk appetite over the past few years. Reeves may face a difficult task in October as she contemplates disappointing either the City of traditional Labour Supporters.

The pound is now threatening its long-term support, having fallen to a low of 1.3227 yesterday and closed at 1.3235.

The Fed shocked no one, other than President Donald Trump, last evening by voting to leave interest rates unchanged, as they have done for the entire year so far.

The Federal Reserve held interest rates steady on Wednesday for a fifth meeting in a row, despite officials splintering over the right time to restart cuts after an extended pause.

In standing pat, the Central Bank kept interest rates at a range of 4.25% to 4.5%, a level reached in December after a series of reductions at the end of last year.

The Federal Open Market Committee (FOMC) voted 9-2 to keep rates unchanged and stated that it will assess incoming data, evolving outlook, and the balance of risks carefully before taking a decision on rate cuts.

Two members of the powerful Board of Governors dissented. Christopher J. Waller, a governor, and Michelle W. Bowman, vice chair for supervision, both of whom were appointed by President Trump.

Both Waller and Bowman have canvassed for lower rates recently, as the financial community questioned their independence from the Administration. Meanwhile, Fed Chair Jerome Powell hinted at no imminent rate cuts, emphasising careful assessment of incoming data before future decisions.

The Federal Open Market Committee (FOMC) voted 9-2 to keep rates unchanged and stated that it will assess incoming data, evolving outlook, and the balance of risks carefully before taking a decision on rate cuts.

“In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” Powell commented at his press conference.

Expectations of clear rate-cut signals were not met. Powell did not offer any definitive hint about a potential rate cut in September. The market will now have to rely on incoming data, starting with tomorrow’s Employment Report, to anticipate the future trajectory of interest rates in the US.

Powell reiterated the Fed's focus on controlling inflation and highlighted that while inflation is easing, the tariff policy has raised the risk of price pressures rising significantly.

It is important to consider that the US economy is in a solid position with low unemployment and reasonable growth of 1.2 per cent in H1 2025.

In brief, the US economy is not screaming for a monetary stimulus through rate cuts immediately. Therefore, going forward, the Fed is likely to respond to incoming data and evolving outlook, as it always does.

The current “clamour” for rate cuts is mostly emanating from Washington, not Wall Street, as markets are still moving in a positive direction.

The dollar reacted positively to the announcement from the Fed. And the lack of any hint at a September cut added to the positivity towards the Greenback.

The index rallied to a high of 99.98 and closed at 99.96 as it now targets 101. 80, the high it made in mid-May.

There were mixed messages yesterday from the Eurozone economy, as Germany reported a 0/1% contraction in Q2, while the rest of the region reported 0.1% expansion.

The toll expected to be seen from the trade agreement reached last weekend between Donald Trump and Ursula von der Leyen is likely to keep the economy on the back feet.

Germany’s economy contracted slightly in the second quarter, erasing part of the modest growth it achieved earlier this year, as newly imposed U.S. tariffs took a toll on exports and broader economic performance.

Preliminary figures released Wednesday by the Federal Statistical Office (Destatis) revealed a 0.1% quarter-on-quarter drop in gross domestic product (GDP). This followed a 0.3% increase in the first quarter and was largely in line with economists’ forecasts.

"The German economy is losing momentum after a positive start to the year," the agency stated.

While consumer and government spending both rose, Destatis reported that weaker investment in machinery, equipment, and construction played a significant role in dragging overall growth into negative territory.

There is a feeling that investors are seeing the announcement of investment funds from both the public and private sectors will provide a “silver bullet” that will cure all that ails Germany and the wider Eurozone.

However, without customers willing to buy products that are considered more expensive than those of a similar standard produced elsewhere, the economy is likely to continue to stagnate.

It may well be that the ECB will become concerned about the possibility of stagflation as the currency reverses the significant gains it has made so far this year, which undoubtedly contributed to the fall in inflation.

The German economy's performance was hit by lower investments in several areas, including construction, although household and government consumption provided some support, the data showed.

The French economy proved more resilient than expected in the second quarter of 2025.

GDP growth, according to figures published by the National Institute of Statistics and Economic Studies (INSEE)yesterday, stood at 0.3%, up from 0.1% in the first quarter.

This represents the country's best quarterly performance since the third quarter of 2024. "It's good news," said Economy Minister Eric Lombard, speaking on RTL radio yesterday morning. "The 0.3% growth we saw in the second quarter clearly shows that, at a time when the tariffs were already in effect, companies are holding up" against the shock of the trade war.

The statistics, however, tell a somewhat different story. Final domestic demand, which includes both household consumption and business investment, was flat in the second quarter after a slight decline of 0.1% in the first.

The domestic French economy was, therefore, stagnant throughout the first half of the year.

The Euro fell away dramatically following the Fed announcement and the output data. It reached a low of 1.1401 and closed marginally higher.

Having “given back” a large part of the gains it made in April following Trump’s “Independence Day Speech”, the Euro now has very little to commend it.

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