\n<\/p>\n
Bank of England policymaker Alan Taylor has warned that the UK economy is at a growing risk of \u201ca bumpy landing\u201d.<\/strong><\/p>\n Speaking at King\u2019s College, Cambridge (Taylor\u2019s<\/strong> alma mater) today, he sticks to his reputation as a dovish member of the Bank\u2019s monetary policy committee. He predicts that wage settlements will be pushed down in \u201can economy with rising unemployment and weak demand\u201d, meaning little risk of an upward spiral in wage-led domestic inflation.<\/p>\n Taylor<\/strong> argues that there are now three plausible scenarios in 2026, of varying pain for consumers and businesses:<\/p>\n The first scenario is the \u201csoft<\/strong> landing\u201d<\/strong>, which Taylor<\/strong> fears is receding in terms of probability.<\/p>\n He says:<\/p>\n 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.<\/p>\n The second scenario is the \u201cbumpy<\/strong> landing<\/strong>\u201d, which Taylor thinks is increasingly likely.<\/p>\n This, he says, is:<\/p>\n \u2026 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.<\/p>\n The third scenario is the \u201chard<\/strong> landing\u201d<\/strong>, which Taylor calls \u201ca deeper worry\u201d. He says:<\/p>\n 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 \u2018downside to the downside\u2019 scenario and it would lead to an even more dramatic inflation undershoot than the second scenario. To end up here would be a mistake.<\/p>\n Taylor also outlines in his speech how the UK could find itself on the end of a \u201cdouble diversion phenomenon\u201d as Donald Trump\u2019s tariff war diverts trade flows<\/p>\n He explains how this could lead to more goods from China arriving in the UK, unless London takes protectionist trade measures, making the \u201cbumpy landing\u201d more likely, saying:<\/p>\n 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.<\/p>\n Share<\/span><\/span><\/p>\n Key events<\/p>\n <\/span>Show key events only<\/p>\n Please turn on JavaScript to use this feature<\/span><\/p>\n <\/span><\/p>\n The IMF then fends several questions about the UK economy, including today\u2019s forecast that it will have the higher inflation in the G7.<\/strong><\/p>\n Q: Does the UK have an inflation problem?<\/em><\/p>\n Pierre-Olivier Gourinchas<\/strong> points out that the UK is also forecast to enjoy above average growth in the G7, \u201cso it is doing something right\u201d, he tells today\u2019s press conference about its World Economic Outlook.<\/p>\n 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.<\/p>\n But\u2026 the IMF does see an upside risk on UK inflation, he adds. He points to increase in labour costs, and increase in inflation expectations \u2013 which have been nudging up at the three and five-year level as well as at the shorter, one-year end.<\/p>\n As such, the Bank of England should be \u201cvery cautious in its easing trajectory\u201d, he adds \u2013 meaning policymakers should not rush to cut interest rates.<\/p>\n .<\/p>\n Gourinchas <\/strong>says global factors are in play too \u2013 we are in an environment where bond investors are becoming more prudent about buying government debt.<\/p>\n He adds that the UK is still a solid economy, and the Fund is \u201cnot seeing risks there at all.\u201d<\/p>\n Share<\/p>\n Q: Are you saying that the tech bubble is about to burst?<\/em><\/p>\n No-one can know for sure, IMF chief economist Pierre-Olivier<\/strong> Gourinchas<\/strong> replies.<\/p>\n 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.<\/p>\n Gourinchas <\/strong>then points to the boom on Wall Street, saying that \u201cthe valuations in stock markets now reflect the prospects of profits in future\u201d.<\/p>\n Those valuations are \u201cquite elevated\u201d, he explains, which is feeding into strong consumpion as people see their portfolio doing well.<\/p>\n So while the Fund can\u2019t 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.<\/p>\n Share<\/p>\n Updated at\u00a009.33 EDT<\/p>\n Q: What impact will the weaker dollar have on emerging markets?<\/em><\/p>\n IMF<\/strong> chief economist Pierre-Olivier Gourinchas<\/strong> 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\u2019t rise as much.<\/p>\n Share<\/p>\n Asked about Egypt\u2019s economic prospects, the IMF\u2019s deputy chief economist, Petya<\/strong> Koeva-Brooks<\/strong>, says the Fund expects stabilization in its Suez canal and mining activities.<\/p>\n Inflation is expected to decline further, she adds.<\/p>\n Share<\/p>\n The IMF are now taking questions about their World Economic Outlook:<\/p>\n Q: How much economic impact could the latest US-China trade tensions have?<\/em><\/p>\n Pierre-Olivier Gourinchas,<\/strong> the Fund\u2019s chief economist, says the latest announcements show that trade uncertainty is still with us.<\/p>\n He points out that the situation is very fluid, and isn\u2019t factored into the IMF\u2019s baseline scenarios.<\/p>\n 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 <\/strong>says.<\/p>\n Share<\/p>\n The IMF are now presenting their latest World Economic Outlook at a press conference in Washington DC now.<\/strong><\/p>\n The Fund\u2019s chief economist, Pierre-Olivier Gourinchas<\/strong>, is explaining that the econonomic outlook is fragile and very sensitive to developments in trade outlook.<\/p>\n He points out that global trade developments continue to shape the economic outlook, warning that the tariff shock is dimming \u201calready weak growth prospects\u201d.<\/p>\n Gourinchas <\/strong>then cites four concerns<\/p>\n 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.<\/p>\n There is also a risk that markets sharply reprice tech investments.<\/p>\n 2) Concerns about China\u2019s growth model. Gourinchas<\/strong> 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.<\/p>\n 3) There has been insufficient progress rebuilding fiscal space in many countries.<\/p>\n 4) There are rising pressures on central banks, who are facing calls to ease monetary policy at the expense of price stability. That \u201calways backfires\u201d, he says, as eroded trust leads to higher inflation expectations.<\/p>\n Share<\/p>\n Updated at\u00a009.14 EDT<\/p>\n Heather Stewart<\/span><\/p>\n The global economy has shown \u201cunexpected resilience\u201d in the face of Donald Trump\u2019s tariffs, but the full impact is yet to be felt, and outlook for growth remains \u201cdim\u201d, the International Monetary Fund (IMF) has warned.<\/strong><\/p>\n 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\u2019s global forecast is unchanged, at 3.1%.<\/p>\n The forecast for economic growth in the UK has also been modestly increased, from 1.2% to 1.3% this year \u2013 though slightly downgraded next year, also to 1.3%.<\/p>\n \u201cTo date, more protectionist trade measures have had a limited impact on economic activity and prices,\u201d the IMF said in its latest World Economic Outlook (WEO).<\/p>\n Share<\/p>\n The IMF has also bumped up its forecast for UK growth this year.<\/strong><\/p>\n It now predicts UK GDP will grow by 1.3% in 2025, up from 1.1% forecast in April.<\/p>\n 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.<\/p>\n The Fund says:<\/p>\n 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.<\/p>\n 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\u201326 is still lower by a cumulative 0.4 percentage point compared with the forecast in October 2024.<\/p>\n Share<\/p>\n 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.<\/strong><\/p>\n 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.<\/p>\n UK inflation is then expected to average 2.5% in 2026, up from 2.2% forecast in April.<\/p>\n In contrast, inflation in the euro area is forecast to average 2.1% this year, and drop to 1.9% next year.<\/p>\n The IMF<\/strong> (which doesn\u2019t seem to share Alan<\/strong> Taylor\u2019s<\/strong> concern that inflation could undershoot the Bank\u2019s 2% target in a \u2018bumpy landing\u2019), says:<\/p>\n 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.<\/p>\n The Fund<\/strong> also warns that trade conflicts are pushing up inflation, pointing to \u201cincreasing signs that the adverse effects of protectionist measures are starting to show\u201d.<\/p>\n The economic outlook explains:<\/p>\n 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.<\/p>\n Share<\/p>\n Bank of England policymaker Alan Taylor has warned that the UK economy is at a growing risk of \u201ca bumpy landing\u201d.<\/strong><\/p>\n Speaking at King\u2019s College, Cambridge (Taylor\u2019s<\/strong> alma mater) today, he sticks to his reputation as a dovish member of the Bank\u2019s monetary policy committee. He predicts that wage settlements will be pushed down in \u201can economy with rising unemployment and weak demand\u201d, meaning little risk of an upward spiral in wage-led domestic inflation.<\/p>\n Taylor<\/strong> argues that there are now three plausible scenarios in 2026, of varying pain for consumers and businesses:<\/p>\n The first scenario is the \u201csoft<\/strong> landing\u201d<\/strong>, which Taylor<\/strong> fears is receding in terms of probability.<\/p>\n He says:<\/p>\n 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.<\/p>\n The second scenario is the \u201cbumpy<\/strong> landing<\/strong>\u201d, which Taylor thinks is increasingly likely.<\/p>\n This, he says, is:<\/p>\n \u2026 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.<\/p>\n The third scenario is the \u201chard<\/strong> landing\u201d<\/strong>, which Taylor calls \u201ca deeper worry\u201d. He says:<\/p>\n 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 \u2018downside to the downside\u2019 scenario and it would lead to an even more dramatic inflation undershoot than the second scenario. To end up here would be a mistake.<\/p>\n Taylor also outlines in his speech how the UK could find itself on the end of a \u201cdouble diversion phenomenon\u201d as Donald Trump\u2019s tariff war diverts trade flows<\/p>\n He explains how this could lead to more goods from China arriving in the UK, unless London takes protectionist trade measures, making the \u201cbumpy landing\u201d more likely, saying:<\/p>\n 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.<\/p>\n Share<\/p>\n Kalyeena Makortoff<\/span><\/p>\n An investment bank rebound has also boosted earnings for Goldman Sachs, where Q3 profits have jumped 37% to $4.1bn (\u00a33bn).<\/strong><\/p>\n 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 \u2013 see here for more).<\/p>\n Goldman\u2019s<\/strong> CEO and chairman David<\/strong> Solomon<\/strong> says:<\/p>\n \u201cThis quarter\u2019s results reflect the strength of our client franchise and focus on executing our strategic priorities in an improved market environment.\u201d<\/p>\n However, he seemed to hint that the bank would be looking to cut costs, saying it needed to \u201coperate more efficiently\u201d and harness the benefits of AI.<\/p>\n Solomon<\/strong> said:<\/p>\n \u201cWe 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.\u201d<\/p>\n Share<\/p>\n","protected":false},"excerpt":{"rendered":" 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 \u201ca bumpy landing\u201d. Speaking at King\u2019s College, Cambridge (Taylor\u2019s alma mater) today, he sticks to his reputation as a dovish member of the Bank\u2019s<\/p>\n","protected":false},"author":1,"featured_media":27964,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[3189,8063,303,1404,2456,5638,2841,132,11913,3611],"class_list":{"0":"post-27963","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-bank","9":"tag-bumpy","10":"tag-business","11":"tag-economy","12":"tag-englands","13":"tag-increasingly","14":"tag-landing","15":"tag-live","16":"tag-suffer","17":"tag-taylor"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/27963","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=27963"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/27963\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/27964"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=27963"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=27963"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=27963"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}IMF: Bank of England should be “very cautious” about easing interest rates<\/h2>\n
Is IMF saying tech bubble is about to burst?<\/h2>\n
IMF: Four reasons to worry, as tariff shock dims growth prospects<\/h2>\n
World economy resilient amid Trump tariffs but outlook looks \u2018dim\u2019, says IMF<\/h2>\n
IMF also lifts UK growth forecasts<\/h2>\n
UK inflation to rise to highest in G7, warns IMF<\/h2>\n
BoE’s Alan Taylor warns of rising danger of ‘bumpy landing’ for UK economy<\/h2>\n
Goldman Sachs profits jump too<\/h2>\n