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Econ World

By Carmel Crimmins, Reuters Econ World podcast host

Hello there,

Alright, so Donald Trump is back in the White House and governments and markets around the world are getting reacquainted with the volatility. The UK is a case in point. The volatility that washed over global bond markets this month gave UK Inc a particular jolt. The country's government is now under pressure to put the country on a credible growth trajectory or risk having to adopt politically unpopular austerity measures.

The British government's choice of a former Amazon executive to chair its antitrust regulator is a clear pitch for investment, including from Big Tech, and signals it is prepared to go easier on dealmaking if that would help. That's according to my colleagues in the UK.

On this week's Econ World pod, we talk to editor Alex Smith from Davos where British Finance Minister Rachel Reeves is banging the drum for investment into the UK. He tells us how her message is being received by CEOs and investors and we hear from the minister herself. Listen here.

Donald Trump made a virtual address to the World Economic Forum in Davos, his first major speech to global business and political leaders since returning to power. He told participants that he would demand that interest rates drop immediately and said he would ask Saudi Arabia and other nations to bring down the cost of oil.

The new president is dominating this year's meeting. He's putting executives under pressure to ditch diversity, equity and inclusion programmes. Some companies that are sticking with DEI initiatives are searching for new words to describe them.

Governments are also looking for ways to blunt the threat of U.S. tariffs, with the European Union's top economy official telling Reuters the bloc is open to discussing purchases of energy and arms from the United States.

The action quickly switches back to central banks tomorrow. The Bank of Japan is widely expected to raise interest rates at the end of a two-day meeting on Friday, barring any market shocks from Trump. Such a move will lift short-term Japanese borrowing costs to levels unseen since the 2008 financial crisis.

No rate cut is expected at the Fed's policy meeting next week. After two years of progress on inflation and surprisingly persistent economic growth, the Fed meets with one eye on new Trump administration policies and another on a bond market that has ratcheted up borrowing costs even as U.S. central bankers have been cutting interest rates.

The ECB rounds out the trio of major central banks meeting with a rate cut seen by many investors as a done deal after Trump did not impose blanket trade tariffs on the Europe zone on Day 1. Investors have now fully priced in four rate cuts from the ECB this year, a swing from recent days when a fourth move was seen as highly uncertain.

Next week's Econ World newsletter will be out a day earlier, on Wednesday. You have been warned!

As always, I'd love to hear from you by hitting reply on this email or finding me on LinkedIn.

The headlines

The chart

Our finance and markets editor Mike Dolan looks at the performance of US stocks under U.S. Presidents, back to the early 1960s.

The podcast

" You see it in Davos, the fascination with AI - both as an opportunity and as potentially as a threat. Clearly any measures that the government in the UK can take to give themselves an advantage potentially over European neighbors to get that kind of investment is going to be important."

Reuters Editor Alex Smith on the "UK" episode of Reuters Econ World.

On this week's show, we go deep on the UK economy. Britain's government needs to get the economy motoring again. Without a clear growth trajectory, it risks having to adopt politically unpopular austerity measures. So, what is it doing and how are investors reacting? Listen here.

The real world

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