Marketing Newscast

(Edited 07 April 2025)

Friday’s City AM headline perhaps summed it up best: “Bloodbath”. At the end of last week’s trading, the FTSE All Share had dropped over 222 points, or 4.87% by close, and this morning it is 226.97 points or 5.17% down at the time of writing. The steep drop follows a further collapse in the prices of Asian stocks overnight: - the Hang Seng in Hong Kong sank nearly 13.3%, its worst day since 1997, and marking a 20% fall since its record highs last month; Japan’s Nikkei fell 7.8%, also a 20% drop on its December high. Last week, the US stock markets lost $6tn (£4.7tn), suggesting investors have lost confidence because US President Donald Trump is showing no signs of letting up on his trade tariff war. The USA is Britain’s largest export partner, so the introduction of tariffs has naturally sparked huge fears for our economy. Analysis from KPMG predicts Trump’s 10% tariff charge on the UK will shave 0.8% off anticipated growth over the next two years, leaving Britain £21.6bn worse off by 2027. Such a scenario would, inevitably, put further pressure on Chancellor Rachel Reeves - not to mention the public purse - and make yet more tax rises even more likely; today, Reeves’ Employer National Insurance Contributions (NICs) hike kicks in, no doubt further dampening investor sentiment and business confidence. Yael Selfin, KPMG’s chief UK economist, warned: “There are so many things that could get worse. Ultimately, the main worry is confidence. Trade disruption is bad, but uncertainty is the big unknown.” JP Morgan has raised the risk of a global recession this year to 60% from 40%, while also predicting a downturn in the US; all this predicted in a note to clients entitled “There will be blood”. Meanwhile, a new poll of 600 businesses by the British Chamber of Commerce (BCC) reveals that 62% of UK firms that trade with the US expect to be negatively affected by Trump’s tariffs. A third of these firms plan to increase prices in response to the trade war, while according to a BDO survey published over the weekend, UK firms’ hiring intentions are near a 12-year low.

So how should Britain deal with the fallout? Only 21% of the firms polled for the BCC survey above believe the Government should hit back with retaliatory tariffs, rather the situation has ramped up a sense of urgency to do a trade deal with the US. BCC Director General Shevaun Haviland said: “There is strong support for the Government’s approach to continue negotiation and not immediately retaliate. We believe a deal can be done as the US has already been open to talks.”

Former Chancellor Jeremy Hunt is urging Prime Minister Sir Keir Starmer to embrace Brexit freedoms and turn Britain into “Singapore-on-Thames”. Erecting more trade barriers will risk tipping Britain into recession and consigning the economy to permanently lower growth, he said, and told Starmer he should instead make Britain a low-tax nation that welcomed free trade in order to find prosperity.

Oil prices are another casualty of Trump’s tariffs; they have fallen in four years. The price of Brent crude, the international benchmark, dropped towards $63 a barrel, having lost nearly 15% over the last five trading days, and nearly 30% from more than $90 a barrel a year ago. US-produced West Texas Intermediate also fell below $60 a barrel for the first time since 2021. This fall was aided by a surprise announcement by OPEC+ countries that they would be increasing supply. ING’s head of commodities strategy Warren Patterson explained to City AM that this could be a response to excess production from Iraq and Kazakhstan: “US President Trump is taking a more hawkish view towards Iran and Venezuela with stricter sanctions. OPEC+ might feel that this provides it with the opportunity to increase supply, especially after Trump announced secondary tariffs for buyers of Venezuelan oil and threatened similar measures for buyers of Iranian and, potentially, Russian oil.” “It is no secret that Trump wants lower oil prices and has pressured the Saudis to boost supply,” he added.

The good news is the cost of short-term UK Government borrowing has fallen as investors swop stocks for bonds. The yield on two-year UK gilts dropped more than 10 basis points to 3.81%, its lowest level since September last year. The Bank of England is also now far more likely to cut interest rates, despite the risk of recession and rising prices – good for mortgage holders, if not savers. The pound has also risen against the US dollar again, standing now at $1.292.

Amidst the global financial turmoil, President Trump remains sanguine and is refusing to back down. “I don’t want anything to go down,” he said in response to media questions about stock market falls, “but sometimes you have to take medicine to fix something”. Trump also said he thought China had “panicked” and “played it wrong” when it announced it would be heaping 34% levies against all American goods from 10^th April. Meanwhile, Trump’s Treasury Secretary Scott Bessent is insisting there is “no reason” to expect a downturn in America, but that the US economy will continue to thrive because of strong job numbers, lower borrowing rates and falling oil prices. “Markets are organic animals and you never know what the reaction’s going to be. We get these short-term market reactions from time to time,” he told journalists yesterday.

Israel will be the first country to meet with Donald Trump since his tariff announcement last week; Benjamin Netanyahu will meet the US President in Washington today in an attempt to overturn the shock 17% levy slapped on Israeli imports.

In other news…

Car-loan mis-selling scandal latest: The Financial Conduct Authority (FCA) has told the Supreme Court that a landmark court ruling by the Court of Appeal that could see thousands of British drivers receive compensation payouts worth up to £38bn went “too far” in taking a “sweeping approach” when it declared car salesmen owe a fiduciary duty to the customers to disclose any commissions, fees or bonuses they receive on any car loans they sell. The regulator says the earlier ruling, which declared it unlawful for lenders to pay “secret” commissions to car salesmen for persuading customers to take out motor finance loans, should be overturned. The FCA submission was made ahead of a three-day hearing brought by two car finance lenders, Close Brothers and FirstRand Bank, both accused of mis-selling car loans, that is expected to finalise the matter.

Energy Secretary Ed Miliband has approved plans for a giant wind farm to be built in the English Channel, despite hundreds of objections. Rampion 2, a £4bn development stretching 50 miles along the south coast from Brighton to Bognor Regis, features dozens of turbines as tall as the Eiffel Tower.

Luton Airport’s expansion plans have also been given the green light by the Government. Transport Secretary Heidi Alexander has overruled The Planning Inspectorate – which urged her to reject it on environmental grounds - to approve a near-doubling of capacity at the airport; a new terminal created by 2043 will see some 32m passengers pass through, it is expected.

Bedford-based energy supplier Rebel Energy has gone bust after allegedly raiding funds that were supposed to be ring-fenced for paying green levies. The collapse comes Ofgem banned Rebel Energy from taking on new customers or making most types of payment on 14^th March, after the energy regulator found £2.6m was missing from a ring-fenced account set aside to collect so-called Renewables Obligations, a shortfall that has since risen to £4.9m. “That effective freeze on the company’s activities, plus the missing money, has now led to the firm’s collapse with its website updated to state it has ceased trading,” The Telegraph says. Rebel Energy had marketed itself as “fighting for fairness in energy” with a website pledging to “battle the injustices that burden our customers and the planet.” Its failure means about 80,000 domestic customers and 10,000 businesses have been left without a supplier.