Closing post
Time to wrap up…
The US-China trade war has continued to bubble away, worrying investors and economists.
The day began with the news that US treasury secretary Scott Bessent had accused China of trying to hurt the world’s economy, following its recent clampdown on rare earth exports.
“This is a sign of how weak their economy is, and they want to pull everybody else down with them. Maybe there is some Leninist business model where hurting your customers is a good idea, but they are the largest supplier to the world.
If they want to slow down the global economy, they will be hurt the most.”
China struck a slightly more conciliatory tone; its Ministry of Commerce has urged the US to work with Beijing.
A spokesperson for the ministry said today:
“The U.S. side cannot seek talks on one hand while threatening to introduce new restrictive measures on the other. This is not the right way to get along with China.
“China’s position concerning tariff or trade wars has been consistent -- if forced to fight, China will fight to the end, and for talks, the door is open.
China and the US began charging additional port fees on ocean shipping firms today too.
The International Monetary Fund has said the global economy has shown “unexpected resilience” in the face of Donald Trump’s tariffs, as it lifted its forecasts for world growth in 2025 and 2026.
The IMF also said:
The UK will have higher inflation than other advanced economies in 2025 and 2026…
…meaning the Bank of England should be careful about lowering interest rates
It has concerns about the boom in technology valuations
It believes US stock markets which have rallied during the AI boom are at risk of a “sudden, sharp correction” while government bond markets are under mounting pressure.
Elsewhere….
He told an event at Cambridge there is an increased danger of:
….a downside scenario, where inflation undershoots, and goes below target in late 2026, and the economy moves into a weakened state for a sustained period, with output and employment below potential, leading to undue damage to economic activity.
JP Morgan CEO Jamie Dimon has hinted there may be further private credit losses following the collapse of subprime lender Tricolor and auto parts supplier First Brands.
Profits have jumped at JP Morgan, and at Goldman Sachs.
US shares risk ‘sharp correction’ but markets seem complacent, IMF warns
US stock markets which have rallied during the AI boom are at risk of a “sudden, sharp correction” while government bond markets are under mounting pressure, the International Monetary Fund has warned.
In its Global Financial Stability Report, just published as policymakers gather in Washington for the IMF’s annual meetings, the Fund said that markets appear “complacent”.
It highlighted “increasing vulnerabilities in the financial system,” including in stock and bond markets, and among “non-bank financial intermediaries” (NBFIs) or “shadow banks”, which it warned are now closely bound to the banking sector.
US stock markets have repeatedly roared to record highs in recent months. The IMF said stocks do not appear as overvalued as they did during the dotcom bubble at the turn of the millennium. But it said the gains are worryingly concentrated among the “magnificent seven” tech firms, which include Apple, Nvidia and Meta.
“Concentration risk within the S&P 500 is at a historic high, with a narrow group of stocks spanning mega-cap IT and AI-related firms driving the broader index,” it said, adding that the magnificent seven account for 33% of the index.
More here:
(a timely warning, as Wall Street slides today….)
Video: IMF's new World Economic Outlook
After a resilient start to the year, the global economy is showing signs of a moderate slowdown. Our latest World Economic Outlook projects global growth to slow from 3.3 percent in 2024 to 3.2 percent in 2025 and 3.1 percent in 2026.
— IMF (@IMFNews) October 14, 2025
Here are the IMF’s latest forecasts for growth this year:
IMF Growth Projections for 2025
— IMF (@IMFNews) October 14, 2025
🇺🇸 US: 2.0%
🇩🇪 Germany: 0.2%
🇫🇷 France: 0.7%
🇪🇸 Spain: 2.9%
🇬🇧 UK: 1.3%
🇨🇳 China: 4.8%
🇯🇵 Japan: 1.1%
🇮🇳 India: 6.6%
🇷🇺 Russia: 0.6%
🇧🇷 Brazil: 2.4%
🇸🇦 Saudi Arabia: 4.0%
🇳🇬 Nigeria: 3.9% https://t.co/bbUb7LaE1v pic.twitter.com/pmeQ51geOW
Jamie Dimon warns of more 'cockroaches' after collapse of Tricolor and First Brands
Back in the banking sector, JP Morgan CEO Jamie Dimon has hinted there may be further private credit losses following the collapse of subprime lender Tricolor and auto parts supplier First Brands.
JP Morgan revealed on Thursday that, while it had no exposure to First Brands, it had taken a $170m hit on its exposure to Tricolor.
Speaking to analysts today on an earnings call, Dimon said:
“My antenna goes up when things like that happen. I probably shouldn’t say this but when you see one cockroach, there’s probably more. And so everyone should be forewarned at this point.”
When asked whether there were inherent risks in lending to non-bank financial institutions, like private credit firms, Dimon said that it was a broad category and there were likely to be weak links:
“It’s a very broad category, non-bank financial institutions…. Yes, there will be additional risk in the category that we will see when we have a downturn. I expect it to be a little bit worse than other people expect it to be…
These are very smart players, they know what they’re doing, they’ve been around a long time. But they’re not all very smart. And we don’t even know the standards of other banks [that] are underwriting to some of these entities. And I would suspect that some of those won’t be as good as you think.”
He suggested this would shake out as part of the normal credit cycle.
“We’ve had a benign credit environment for so long, I think you may see credit in other places deteriorate more than other people think when in fact it’s a downturn. And you know, hopefully it’ll be a fairly normal credit cycle…but we think we’re quite careful and obviously we scour the world for things we should be worried about”.
Updated
Wall Street hit by US-China trade tensions
Stocks are falling sharply at the start of trading in New York, as traders are gripped by trade war worries.
The Dow Jones industrial average, which tracks 30 large UK companies, has shed 501 points or 1.1%, to 45,566 points.
The broader S&P 500 index is down 1.25%, while the tech-focused Nasdaq has shed 1.8%.
The selloff comes after US treasury secretary Scott Bessent accused China of trying to hurt the world’s economy, telling the FT:
“This is a sign of how weak their economy is, and they want to pull everybody else down with them.
Maybe there is some Leninist business model where hurting your customers is a good idea, but they are the largest supplier to the world,” he added. “If they want to slow down the global economy, they will be hurt the most.”
The tit-for-tat port fees rolled out by the US and China on each other’s vessels today are another sign that tensions are high, days after Trump threatened to impose new 100% tariffs on China.
IMF: Bank of England should be "very cautious" about easing interest rates
The IMF then fends several questions about the UK economy, including today’s forecast that it will have the higher inflation in the G7.
Q: Does the UK have an inflation problem?
Pierre-Olivier Gourinchas points out that the UK is also forecast to enjoy above average growth in the G7, “so it is doing something right”, he tells today’s press conference about its World Economic Outlook.
On inflation, the Fund believes that many of the drivers of inflation are temporary factors, including regulated prices, while falls in energy prices have dropped out of the window for inflation calculations.
But… the IMF does see an upside risk on UK inflation, he adds. He points to increase in labour costs, and increase in inflation expectations – which have been nudging up at the three and five-year level as well as at the shorter, one-year end.
He warns:
“Households and firms in the UK are becoming maybe a bit less certain that inflation is coming down quickly.”
As such, the Bank of England should be “very cautious in its easing trajectory”, he adds – meaning policymakers should not rush to cut interest rates.
<he then takes a question about the UK’s rising debt costs>.
Gourinchas says global factors are in play too – we are in an environment where bond investors are becoming more prudent about buying government debt.
He adds that the UK is still a solid economy, and the Fund is “not seeing risks there at all.”
Updated
Is IMF saying tech bubble is about to burst?
Q: Are you saying that the tech bubble is about to burst?
No-one can know for sure, IMF chief economist Pierre-Olivier Gourinchas replies.
He then cites the very robust investment in the tech sector sector, among companies who are developing AI systems and also those who are adopting it. This is sustaining activity in the US right now, he explains.
Gourinchas then points to the boom on Wall Street, saying that “the valuations in stock markets now reflect the prospects of profits in future”.
Those valuations are “quite elevated”, he explains, which is feeding into strong consumpion as people see their portfolio doing well.
So while the Fund can’t say whether this tech boom is going to correct, part of its job is to watch out for potential risks, and it is one of the risks.
Updated
Q: What impact will the weaker dollar have on emerging markets?
IMF chief economist Pierre-Olivier Gourinchas says the US dollar has been weakening since January. That helps financial conditions in many emerging markets (as they often borrow in dollars) and also helps on the inflation front, as it means import prices don’t rise as much.
Asked about Egypt’s economic prospects, the IMF’s deputy chief economist, Petya Koeva-Brooks, says the Fund expects stabilization in its Suez canal and mining activities.
Inflation is expected to decline further, she adds.
The IMF are now taking questions about their World Economic Outlook:
Q: How much economic impact could the latest US-China trade tensions have?
Pierre-Olivier Gourinchas, the Fund’s chief economist, says the latest announcements show that trade uncertainty is still with us.
He points out that the situation is very fluid, and isn’t factored into the IMF’s baseline scenarios.
This sort of downside risk illustrates the potential that the global economy could take a turn for the worst if trade tensions become more elevated, Gourinchas says.
IMF: Four reasons to worry, as tariff shock dims growth prospects
The IMF are now presenting their latest World Economic Outlook at a press conference in Washington DC now.
The Fund’s chief economist, Pierre-Olivier Gourinchas, is explaining that the econonomic outlook is fragile and very sensitive to developments in trade outlook.
He points out that global trade developments continue to shape the economic outlook, warning that the tariff shock is dimming “already weak growth prospects”.
Gourinchas then cites four concerns
1) The technology boom, which he says has echoes of the dot-com boom of the late 1990s. There is a risk, he says, that stronger investment and consumption could lead to tighter monetary policy.
There is also a risk that markets sharply reprice tech investments.
2) Concerns about China’s growth model. Gourinchas points to weakness in its property sector, adding that it is hard to see how exports can continue to drive growth in the current trade climate.
3) There has been insufficient progress rebuilding fiscal space in many countries.
4) There are rising pressures on central banks, who are facing calls to ease monetary policy at the expense of price stability. That “always backfires”, he says, as eroded trust leads to higher inflation expectations.
Updated
World economy resilient amid Trump tariffs but outlook looks ‘dim’, says IMF
The global economy has shown “unexpected resilience” in the face of Donald Trump’s tariffs, but the full impact is yet to be felt, and outlook for growth remains “dim”, the International Monetary Fund (IMF) has warned.
As policymakers gather in Washington for its annual meetings, the IMF has upgraded its forecast for global GDP growth this year to 3.2%, from 3% at its last update in July. Next year’s global forecast is unchanged, at 3.1%.
The forecast for economic growth in the UK has also been modestly increased, from 1.2% to 1.3% this year – though slightly downgraded next year, also to 1.3%.
“To date, more protectionist trade measures have had a limited impact on economic activity and prices,” the IMF said in its latest World Economic Outlook (WEO).
IMF also lifts UK growth forecasts
The IMF has also bumped up its forecast for UK growth this year.
It now predicts UK GDP will grow by 1.3% in 2025, up from 1.1% forecast in April.
However, growth for 2026 has been dialled back to 1.3%, from 1.4% forecast six months ago, but the overall result of the two revisions is positive, overall, for the UK economy.
The Fund says:
In the United Kingdom, growth in 2025 and 2026 is expected to be 1.3 percent, revised, on a cumulative basis, slightly upward relative to April.
While this reflects strong activity in the first half of 2025 and an improvement in the external environment, including through the UK-US trade deal announced in May, the projected growth in 2025–26 is still lower by a cumulative 0.4 percentage point compared with the forecast in October 2024.
UK inflation to rise to highest in G7, warns IMF
Newsflash: UK inflation is set to surge to the highest in the G7 in 2025 and 2026, according to the latest forecasts from the International Monetary Fund.
The IMF makes the forecast in its latest outlook report, just released. Its economists now predict UK inflation will average 3.4% in 2025, up from a forecast of 3.1% back in April.
UK inflation is then expected to average 2.5% in 2026, up from 2.2% forecast in April.
In contrast, inflation in the euro area is forecast to average 2.1% this year, and drop to 1.9% next year.
The IMF (which doesn’t seem to share Alan Taylor’s concern that inflation could undershoot the Bank’s 2% target in a ‘bumpy landing’), says:
In the United Kingdom, headline inflation, which started picking up in 2024, is expected to continue rising in 2025 partly because of changes in regulated prices. This is projected to be temporary, with a loosening labor market and moderating wage growth eventually helping inflation return to target at the end of 2026.
The Fund also warns that trade conflicts are pushing up inflation, pointing to “increasing signs that the adverse effects of protectionist measures are starting to show”.
The economic outlook explains:
Patterns in net exports and inventories driven by front-loading behavior have largely reversed. Core inflation has risen in the United States, and unemployment has edged up. Inflation is stabilizing above central bank targets in several other countries, and inflation expectations are still fragile, worsening the trade-offs for monetary policymakers as uncertainty and tariffs start weighing on activity.
BoE's Alan Taylor warns of rising danger of 'bumpy landing' for UK economy
Bank of England policymaker Alan Taylor has warned that the UK economy is at a growing risk of “a bumpy landing”.
Speaking at King’s College, Cambridge (Taylor’s alma mater) today, he sticks to his reputation as a dovish member of the Bank’s monetary policy committee. He predicts that wage settlements will be pushed down in “an economy with rising unemployment and weak demand”, meaning little risk of an upward spiral in wage-led domestic inflation.
Taylor argues that there are now three plausible scenarios in 2026, of varying pain for consumers and businesses:
The first scenario is the “soft landing”, which Taylor fears is receding in terms of probability.
He says:
By maintaining what I think is a too restrictive path of interest rates, we may have braked too hard, such that inflation cannot smoothly return to target with the economy close to potential, as my votes have indicated.
The second scenario is the “bumpy landing”, which Taylor thinks is increasingly likely.
This, he says, is:
… a downside scenario, where inflation undershoots, and goes below target in late 2026, and the economy moves into a weakened state for a sustained period, with output and employment below potential, leading to undue damage to economic activity.
The third scenario is the “hard landing”, which Taylor calls “a deeper worry”. He says:
This was a remote and low probability event a year ago, but the risk is rising. In this scenario, weak demand at home can lead to a more forceful downturn, where recession dynamics start to kick in that can be very difficult to contain or even reverse. The economy has been flirting with zero growth, and the realisation of negative readings could easily change the future path for the worse. The probability of this outcome is now not trivial. This would be the ‘downside to the downside’ scenario and it would lead to an even more dramatic inflation undershoot than the second scenario. To end up here would be a mistake.
Taylor also outlines in his speech how the UK could find itself on the end of a “double diversion phenomenon” as Donald Trump’s tariff war diverts trade flows
He explains how this could lead to more goods from China arriving in the UK, unless London takes protectionist trade measures, making the “bumpy landing” more likely, saying:
First, the US raises barriers on imports from low-cost producers, who then redirect their goods to third countries, like the EU, who in turn respond with further barriers to those low-cost producers, who then move on again to direct their large flows of exports to an ever-smaller target group of open export markets. Naturally, the UK comes to mind as one of those potential targets.
Goldman Sachs profits jump too
An investment bank rebound has also boosted earnings for Goldman Sachs, where Q3 profits have jumped 37% to $4.1bn (£3bn).
That is up from just under $3bn during the same period in 2024, and was driven by a 42% surge in investment banking fees, thanks to the same jump in mergers and acquisitions and IPOs that boosted earnings at its larger rival JP Morgan (which reported results earlier today – see here for more).
Goldman’s CEO and chairman David Solomon says:
“This quarter’s results reflect the strength of our client franchise and focus on executing our strategic priorities in an improved market environment.”
However, he seemed to hint that the bank would be looking to cut costs, saying it needed to “operate more efficiently” and harness the benefits of AI.
Solomon said:
“We know that conditions can change quickly and so we remain focused on strong risk management. Longer term, we are prioritizing the need to operate more efficiently to seamlessly deliver the firm to our clients helped by new AI technologies.”
UK pension triple-lock set to rise by 4.8% after earnings revision
UK pensioners are on course for a bigger state pension boost next year than previously thought, thanks to a revision in today’s jobs data.
The Office for National Statistics now believes that pay, excluding bonuses, rose by 4.8% per year in the May-July quarter. A month ago it had estimated a rise of 4.7%.
This is significant as this wage data is used in the UK’s pension triple lock, under which payments rise by the highest of inflation, earnings, or 2.5%.
“Those on the full new state pension could be on course for £241.30 per week rather than £241.05 while those on the full basic state pension will see their weekly payment rise to £184.90 rather than £184.75,” explains Helen Morrissey, head of retirement analysis at Hargreaves Lansdown.
JP Morgan points to softening jobs market, as profits jump
JP Morgan profits jumped by nearly 12% in Q3, as the US banking giant benefited from a surge in dealmaking, IPOs and market trading.
A new earnings update show that profits for the three months to the end of September rose to $14.39bn (£10.8bn) up from $12.9bn during the same period last year, following a 16% jump in investment banking fees over the quarter.
Corporate deals and stock market listings experienced a rebound after stalling in the wake of Trump’s tariff announcements in April, thanks in part to hopes of further interest rate cuts by central banks including the Federal Reserve.
The US lender said it also experienced an uptick in trading, which benefited its markets division and pushed revenues to a third quarter record of $9bn.
JP Morgan, which is seen as a bellwether for the US economy, signalled cautiously optimism about the economic outlook.
CEO Jamie Dimon says:
While there have been some signs of a softening, particularly in job growth, the U.S. economy generally remained resilient.
However, there continues to be a heightened degree of uncertainty stemming from complex geopolitical conditions, tariffs and trade uncertainty, elevated asset prices and the risk of sticky inflation.
As always, we hope for the best, but these complex forces reinforce why we prepare the firm for a wide range of scenarios.
The Saxo Strategy Team have summed up the situation in the US-China trade conflict today:
While US Treasury Secretary Scott Bessent indicated yesterday that he believes a meeting between President Trump and Chinese leader Xi Jinping might still take place in late October in South Korea, a general standoff remains on key issues and Bessent positioned China’s as the chief instigator of tensions. “This is China versus the world…They have pointed a bazooka at the supply chains and the industrial base of the entire free world. And you know, we’re not going to have it.”
Today, China announced fresh measures against US shipping interests, prohibiting any Chinese individuals or companies doing business with five US entities of Hanwha Ocean tariffs and export controls.
GM to take $1.6bn charge related to EV problems
In the auto industry, General Motors is setting aside $1.6bn to cover the cost of slower-than-hoped take-up of electric cars.
A public filing released this morning shows that GM’s third-quarter results next week will include a $1.6bn impact from its all-electric vehicle plans.
In the filing, GM says:
General Motors Company made significant investments and contractual commitments in the development of electric vehicles (EVs) to help the Company’s vehicle fleet comply with emissions and fuel economy regulations that were scheduled to become increasingly stringent.
Following recent U.S. Government policy changes, including the termination of certain consumer tax incentives for EV purchases and the reduction in the stringency of emissions regulations, we expect the adoption rate of EVs to slow.
$1.2bn of the cost relates to changes to GM’s EV capacity and manufacturing footprint. The remaining $400m relates to contract cancellation fees and commercial settlements associated with EV-related investments.
Rachel Reeves must avoid 'Scrabble bag' of tax rises, MPs hear
Rachel Reeves should avoid dipping into a ‘Scrabble bag’ of tax rises as she tries to close a funding shortfall in November’s budget, MPs have heard.
The Treasury committee is taking evidence from top experts about the chancellor’s tax options in the upcoming budget (you can watch the session here).
Dan Neidle, founder of Tax Policy Associates, tells the committee that Reeves has two choices if she decides to raise taxes. The wise way would be to raise one of the UK’s main taxes, or perhaps expand the base of VAT, moves that could break the Labour party’s manifesto pledges.
The less wise way, Neidle adds, is to raise the tax take “from picking from a Scrabble bag of lots of little, individual tax rises”.
This would be suboptimal, Neidle argues, as the UK has seen plenty of minute changes, here and there, to the tax system over the last 30 years.
He says:
Over that time the tax system has become more and more complex, accumulated more and more anomolies and political compromises that become baked in.
Every time you create 10 small tax rises or tax changes, you’re adding to that layer that have ossified our tax system. I very much hope she won’t do that.
Helen Miller, director of the Institute of Fiscal Studies, takes a similar line. She explains that Reeves could raise lots of additional tax revenues without breaking manifesto promises.
“Whatever Rachel Reeves decides to do, there’s a huge opportunity to reform taxes to improve ecoonomic growth.”
Yesterday, the IFS advised the chancellor to avoid “a half-baked dash for revenue” by stitching together unrelated tax-raising measures.
Ruth Curtis, CEO of the Resolution Foundation, says there is a strong case for raising taxes at this budget, pointing out that UK borrrowing costs are higher than other rich countries.
Curtis explains that in a world of low growth and sticky inflation, it is important that tax rises minimise the impact on growth and inflation.
Curtis also argues that the chancellor must thinnk about how the distribution of the pain of tax rises hits as the UK has barely emerged from cost of living crisis,
Dr Arun Advani, professor of economics at Warwick University, point out that if the spending side of budget is fixed, tax rises are the only thing left.
And in a move towards Neidle’s scrabble bag, Advani argues there are plenty of ways of raising taxes that also improve the tax system.
He points to areas where otherwise equal behaviour is treated differently by the tax system.
This creates complexity, scope for tax avoidance, and is very bad for economic efficiency and growth, Advani warns, adding:
Fixing those things would raise money while making the tax system better.
China hits back at US on shipping with Hanwha curbs
Shares in South Korean shipping giant Hanwha Ocean have dropped by 5.75% today after China sanctioned its US units and threatened further retaliatory measures on the industry.
Bloomberg reports:
The sanctions, targeting five US units of Hanwha Ocean Co., fueled a slump in global equities on Tuesday as traders dialed back hopes for an easing of tensions between the world’s largest economies….
In its announcements on Tuesday, China said it was looking into the impact of the US Trade Representative’s Section 301 investigation into the nation’s maritime sector, and may roll out more responses.
Hanwha Ocean’s subsidiaries assisted and supported investigative activities of the US government, thereby endangering China’s sovereignty, security and development interests, according to a commerce ministry statement.
Updated
Silver price hit record high in "almighty short squeeze"
Silver has hit a record high today, as US-China trade tensions fuel a dash into safe-haven assets.
Rising expectations of US interest rate cuts, and the on-going ‘debasement trade’, also helped to push silver to a record high of $53.60 per ounce.
Silver is also being pushed up by “an almighty short squeeze, and physical supply crunch,” reports Michael Brown, senior research strategist at Pepperstone.
Concerns about a lack of liquidity in London have sparked a worldwide hunt for silver, with benchmark prices soaring to near-unprecedented levels over New York, Bloomberg report.
European markets dip in risk-off mood
Europe’s stock markets have followed their lead from Asia, and dropped in early trading.
In London, the FTSE 100 share index has dropped by 30 points, or 0.3%, with mining companies leading the fallers.
There are larger losses in other markets, with Germany’s DAX down 1%, and France’s CAC dipping by 0.85%.
Victoria Scholar, head of investment at interactive investor, says:
“Trade tensions between the US and China are escalating as both countries started collecting port fees on shipping firms, pushing up costs on both sides. This has dashed global market sentiment with a sea of red across Europe after yesterday’s market reprieve.
US futures are pointing lower, reversing course after the S&P 500 logged its best day since May and the Nasdaq closed up 2.2%. Cryptocurrencies are selling off with bitcoin down over 3% and ether and solana both nursing losses of over 5% each. Oil is also caught up in the selling with brent down over 1%.”
Mediterranean Shipping Company has denied any involvement in the potential acquisition of a stake in British airline Easyjet (see earlier post) after reports it was considering a move.
A spokesperson told Reuters:
“MSC denies any involvement in this matter.”
The new port fees rolled out by the US and China today show that the trade war has “sailed into its next act”, says Stephen Innes, managing partner at SPI Asset Management, adding:
This time the battlefield isn’t cyberspace or chip fabs—it’s container ports. The U.S. and China have turned the world’s docks into toll booths.
EasyJet shares jump on report of interest from MSC
A flurry of takeover talk speculation has pushed up shares in budget airline EasyJet this morning.
EasyJet’s shares are up over 7%, leading the risers on the FTSE 100 share index.
The rally appears to be sparked by a story in Italian newspaper Corriere della Sera, which is reporting that global logistics giant Mediterranean Shipping Company is reportedly working in tandem with an investment fund about possibly investing in the airline, which is worth around £3.5bn..
According to Corriere della Sera, MSC has long wanted to add a passenger airline to its vast portfolio which includes ports, cruise ships and container ships, cargo carriers, and clinics.
Updated
Close Brothers lift motor finance scandal bill to £300m
UK lender Close Brothers has put aside an extra £135m to deal with the motor finance scandal, as lenders grapple with the rising cost of potential compensation claims.
The company is one of many lenders exposed to an ongoing scandal in which drivers were overcharged for loans as a result of commission paid to car dealers. It has now made a total provision of £300m to deal with potential costs.
It follows a similar warning from Lloyds Bank yesterday, which announced it had made a further £800m provision to deal with the motor finance scandal, taking its total to almost £2bn.
Both lenders have updated their estimates following a consultation paper by the Financial Conduct Authority. But Close Brothers said this morning:
“[The group] does not believe the redress methodology proposed by the FCA appropriately reflects actual customer loss or achieves a proportionate outcome.
“...the FCA’s proposed approach to assessing unfairness does not align with the legal clarity provided by the supreme court judgement in respect of the “Johnson” case, which confirmed that the test for unfairness is highly fact specific and must take into account a broad range of factors. The group will continue to engage with the FCA in respect of these points.
This summer the supreme court sided with one of three consumer complaints related to car finance, with judges concerned about “unfair” treatment by car lenders towards Mark Johnson, a 35-year-old factory worker from south Wales.
An FCA spokesperson said:
“Many motor finance lenders did not comply with the law or the rules. It’s time their customers get fair compensation. Recent court judgments show that liabilities exist no matter what.
“We believe our scheme is the best way to settle the issue for both consumers and firms, and alternatives would be more costly and take longer. We recognise not everyone will get everything they would like. But it’s vital we draw a line under the issue so a trusted motor finance market can continue to serve millions of families every year.”
Shares in Close Brothers, which is listed in London, have dropped by 2% in early trading.
Pound falls after UK jobs report
The pound is weakening this morning after new data showed a rise in UK unemployment, and a drop in numbers on company payrolls.
The UK jobless rate rose to 4.8% in the June-August quarter, the Office for National Statistics has reported, its highest level since 2021.
The ONS’s data also shows that regular wage growth dropped 4.7% in the quarter, down from 4.8% in the previous three months, a three-year low.
Average weekly earnings in the three months to August 2025 were up 4.7% on the year excluding bonuses, down slightly from 4.8% last month.
— Office for National Statistics (ONS) (@ONS) October 14, 2025
Including bonuses the rate was 5.0%, up from last month’s figure of 4.8%.
Read the release ➡ https://t.co/LxpFPc90Mb pic.twitter.com/nsPUZ6wxxS
Adding to the disappointing picture, the number of payrolled employees is estimated to have fallen by 10,000 in September, and by 100,000 over the last year.
The revised estimate of payrolled workers in August 2025 shows an increase of 10,000 from July, though provisional estimates show a decrease of 10,000 for September.
— Office for National Statistics (ONS) (@ONS) October 14, 2025
Read the release ➡️ https://t.co/tZB6zImgAq pic.twitter.com/on2R0rkLbu
In response, the pound has dropped by over half a cent against the US dollar to $1.3275, close to a two-month low.
Chris Beauchamp, chief market analyst at IG, says:
“This morning’s data provides little in the way of good news for the struggling UK economy, and puts more pressure on the Bank of England and the government to act to provide more support.
Sterling looks at the mercy of continued US dollar strength, both from a data outlook and as short positioning in the greenback continues to unwind.”
Updated
China has taken countermeasures against five U.S.-linked subsidiaries of South Korean shipbuilding firm Hanwha Ocean, Reuters reports.
Organisations and individuals within China are prohibited from engaging in any transactions, cooperation or related activities with these entities, the Chinese commerce ministry said on Tuesday.
China: If forced, we will fight to the end
China’s Ministry of Commerce has urged the US to work with Beijing, and to show sincerity in trade talks.
A spokesperson for the ministry said today:
“The U.S. side cannot seek talks on one hand while threatening to introduce new restrictive measures on the other. This is not the right way to get along with China.
“China’s position concerning tariff or trade wars has been consistent -- if forced to fight, China will fight to the end, and for talks, the door is open.
Japan’s Nikkei index has closed for the day, down 2.58%, it’s biggest one-day fall since the market turmoil in April when Donald Trump kicked off his trade war.
Japan's Nikkei Closes Down 2.58%, Biggest One-Day Drop Since April
— LiveSquawk (@LiveSquawk) October 14, 2025
Japanese investors are nervous about the domestic political situation, following a split between the ruling Liberal Democratic Party and the smaller Komeito party.
Last Friday, Komeito quit their coalition, a move which makes it harder for the LDP’s new leader, Sanae Takaichi, to become Japan’s next prime minister.
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The US also began imposing tariffs on imported lumber, kitchen cabinets and some furniture today.
The new levies, announced by Donald Trump last month, will introduce a 10% tariff on imports of softwood lumber, while duties on certain upholstered furniture and kitchen cabinets start at 25%.
The White House claimed the duties will boost US industries and protect national security. But, as they’re paid by the importer, they risk pushing up the cost of building and fitting out a home.
Trump and Xi still on track for meeting, Bessennt says
Scott Bessent has also revealed that US president Donald Trump remains on track to meet Chinese leader Xi Jinping in South Korea in late October
Spealing to Fox Business, Bessent said:
“The 100% tariff does not have to happen. The relationship, despite this announcement last week, is good. Lines of communication have reopened, so we’ll see where it goes.”
“President Trump said that the tariffs would not go into effect until November 1. He will be meeting with Party Chair Xi in Korea. I believe that meeting will still be on.”
Bessent also claimed that “We have substantially de-escalated,” – shortly before appearing to re-escalate by accusing China of trying to damage the the global economy.
US and China to roll out tit-for-tat port fees today
A new front has opened up in the bubbling US-China trade tensions today too – at the two country’s ports.
From today, the US and China will begin charging additional port fees on ocean shipping firms.
China said today it had started to collect the special charges on U.S.-owned, operated, built, or flagged vessels. Chinese-built ships would be exempted from the levies, though.
The US is also scheduled to start collecting similar fees today on ships linked to China. This is an attempt to shake China’s grip on the global maritime industry and bolster U.S. shipbuilding.
Athens-based Xclusiv Shipbrokers Inc said in a research note:
“This tit-for-tat symmetry locks both economies into a spiral of maritime taxation that risks distorting global freight flows.”
Introduction: Scott Bessent accuses China of trying to damage global economy
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Tensions between the US and China continue to swirl, even though fears of a renewed trade war cooled on Monday.
US treasury secretary Scott Bessent has thrown more fuel on the fire overnight, by accusing China of trying to hurt the world’s economy.
Bessent criticised Beijing for imposing new export controls on rare earths last week – a move which riled president Trump – suggesting the move would backfire.
“This is a sign of how weak their economy is, and they want to pull everybody else down with them. Maybe there is some Leninist business model where hurting your customers is a good idea, but they are the largest supplier to the world.
If they want to slow down the global economy, they will be hurt the most.”
Bessent’s comments come as the mood in the markets turns sour again, following a rally on Monday after Trump seemed to calm a situation which he inflamed on Friday by threatening China with 100% tariffs
Stock markets across the Asia-Pacific region are mainly in the red today, with China’s CSI 300 index down 0.6%, Hong Kong’s Hang Seng losing 1.2% and Japan’s Nikkei dropping by 2.1%.
Cryptocurrencies are also weakening, with Bitcoin dropping by 2.7% and ether shedding 5%.
The row threatens to overshadow the annual meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF) which are taking place in Washington DC this week.
The agenda
7am BST: ONS labour market
8am BST: UK grocery inflation data
9am BST: IEA’s monthly oil market report
2pm BST: IMF World Economic Outlook press briefing
3.15pm BST: IMF’s Global Financial Stability Report
