Crisis is not extinguished: Damage Trump has done to stability has not gone away, says ALEX BRUMMER

Crisis is not extinguished: Damage Trump has done to stability has not gone away, says ALEX BRUMMER By ALEX BRUMMER FOR THE DAILY MAIL Updated: 17:06 EDT, 10 April 2025 e-mail 1 View comments Share markets have rallied since Donald Trump did his U-turn, but the damage is not over. The trade war between the world’s two largest economies, the US and China, is unresolved and that is an enormous uncertainty for global companies and markets. Steel and car tariffs, at a punishing 25 per cent, have not been dismantled.

In the UK, we learned the hard way how economic discourse and destructive policies can dismember confidence and growth. Chancellor Rachel Reeves’s £20billion black hole, the Prime Minister Keir Starmer’s naive speech in the Rose Garden last summer in which he piled on the misery, and finally the National Insurance increase in October snuffed growth after a robust first quarter last year. The Bank of England, the Office for Budget Responsibility and private sector economists have been slashing their forecasts ever since.



JP Morgan chairman Jamie Dimon’s recession forecast is still realistic despite American resilience. Threats: Donald Trump's trade war with China is unresolved and that is an enormous uncertainty for global companies and markets What the Trump conniption demonstrated is that even the innovative and fast-growing American economy can be easily thrown off course. The sell-off of US Treasuries, which saw the 30-year bond yield leap to 5 per cent, was recognition that despite the privilege of running a reserve currency, losing control of the public finances can be disastrous.

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Share this article Share HOW THIS IS MONEY CAN HELP How to choose the best (and cheapest) stocks and shares Isa and the right DIY investing account Britain finds it hard to escape the aftershocks as demonstrated by the Bank of England’s decision to postpone an auction of £600million of 30-year bonds. It opted for a bigger offer of £750million of shorter-dated gilts instead. Elon Musk’s Department of Government Efficiency may be horribly crude, but curbing national debt heading towards 165 per cent of output needs to happen.

As was the case in the build-up to the pandemic, it doesn’t take much for bond positions to unwind, causing money market chaos. Gold has been a safe place since Trump arrived in the White House. Oil is anything but.

Energy is sending out an unmistakable slump signal. The 90-day pause on levies has done little to ease the tension with Brent futures trading at just over $69 a barrel, 30 per cent down over the last year. As helpful as that may be for pump prices, it doesn’t augur well for international demand.

Equity prices have bounced. But no one should assume that the damage to stability done by the threat of a beggar-thy-neighbour trade war has gone away. Murphy’s law Investors aren’t terribly happy when Tesco, the biggest player in Britain’s very competitive grocery market, tells them it doesn’t like the look of the next financial year.

After a strong 2024-25 when market share zipped up to 28 per cent and operating profits reached £3.13bn, it is not counting on the same performance again. Pessimism is driven by fears that consumer confidence has turned negative, the £235million hit to income from the National Insurance increase, and still to be felt, impacts from Angela Rayner’s ill-advised Employment Rights Bill.

Chief executive Ken Murphy doesn’t want to surrender the market gains which have given it such a dominant role. It has shown it is capable of price matching German interloper Aldi. The next challenge comes from Asda’s executive chairman Allan Leighton who was among the original drivers of that chain’s expansion.

Murphy is keeping cash in his back pocket for when a price battle erupts. Analysts never much like downgrades and Tesco shares were hit despite the post-Trump tariff rally. Even in recession people want to eat well! Second term Financial Conduct Authority chief Nikhil Rathi has survived the night of the long knives among regulators and been given another five years in the job.

He is being rewarded for attaching himself to Rachel Reeves’s growth push. He has been supportive of reforms at his former employer, the London Stock Exchange, aimed at reviving the UK initial public offerings market. He has been less effective in pursuing financial wrongdoers.

Six years on, the probe into the collapse of Neil Woodford’s investment empire has still not been released. And the bright idea of ‘naming and shaming’ miscreants has been abandoned. The FCA has eased affordability tests for borrowers, in contrast to the Bank of England which has held firm against weakening regulation.

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