Stock markets set to fall, Bank of England deputy governor warns; Trump threatens UK with ‘big tariff’ over digital services tax – business live | Business
Introduction: Stock markets are too high and set to fall, says Bank of England deputy
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Stock markets are too high, and are going to drop back at some point due to the many risks facing the global economy, one of Britain’s top central bankers has warned.
Bank of England deputy governor Sarah Breeden has issued the prediction to the BBC, at a time when the US stock market has risen to record levels despite the Middle East conflict.
She points out:
“There’s a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point.”
This chimes with the latest assessment from the Bank’s financial policy committee, which pointed to the risks from high AI valuations, AI disruption, and the private credit market.
As she explains, the big fear is that several risk crystallise at the same time – such as an econonomic shock that leads to a rapid readjustment of AI valuations, and hurts confidence in private credit.
Breeden is clear that she’s not predicting a correction imminently… but is focused on making the UK financial system strong enough to cope.
“What we are watching for: is how might those prices fall? Will there be a sharp adjustment downwards? And if there is such an adjustment, how will that affect the economy?
I’m not saying it will happen today, tomorrow, in 12 months’ time. It’s ensuring that if it happens the system is resilient.”
The agenda
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7am BST: UK retail sales report for March
-
9am BST: IFO survey of German business confidence
-
10.30am BST: Russia interest rate decision
Key events
Trump threatens UK with ‘big tariff’ over digital services tax
The threat of a new UK-US trade war has reared up again, after Donald Trump has threatened to impose tariffs on the UK if it does not drop its digital services tax on US social media firms.
Speaking to reporters from the Oval Office on Thursday, the US president said:
“We’ve been looking at it and we can meet that very easily by just putting a big tariff on the UK, so they better be careful.
“If they don’t drop the tax, we’ll probably put a big tariff on the UK.”
The digital services tax, which was introduced in 2020, imposes a 2% levy on the revenues of several major US tech companies.
The Trump administration has been pushing back against it; in December, the US paused its promised multi-billion-pound investment into British tech in protest that trade barriers hadn’t been lowered.
Introduction: Stock markets are too high and set to fall, says Bank of England deputy
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Stock markets are too high, and are going to drop back at some point due to the many risks facing the global economy, one of Britain’s top central bankers has warned.
Bank of England deputy governor Sarah Breeden has issued the prediction to the BBC, at a time when the US stock market has risen to record levels despite the Middle East conflict.
She points out:
“There’s a lot of risk out there and yet asset prices are at all-time highs. We expect there will be an adjustment at some point.”
This chimes with the latest assessment from the Bank’s financial policy committee, which pointed to the risks from high AI valuations, AI disruption, and the private credit market.
As she explains, the big fear is that several risk crystallise at the same time – such as an econonomic shock that leads to a rapid readjustment of AI valuations, and hurts confidence in private credit.
Breeden is clear that she’s not predicting a correction imminently… but is focused on making the UK financial system strong enough to cope.
“What we are watching for: is how might those prices fall? Will there be a sharp adjustment downwards? And if there is such an adjustment, how will that affect the economy?
I’m not saying it will happen today, tomorrow, in 12 months’ time. It’s ensuring that if it happens the system is resilient.”
The agenda
-
7am BST: UK retail sales report for March
-
9am BST: IFO survey of German business confidence
-
10.30am BST: Russia interest rate decision
