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In its semiannual Global Financial Stability Report, the International Monetary Fund has said that global financial stability risks have increased significantly since the fall amid heightened economic uncertainty around trade policy and other geopolitical factors. "The overall level of policy uncertainty has increased . . . the forecast of economic activity going forward is slightly lower," observed Tobias Adrian, director of the IMF's monetary and capital markets department.  The IMF identified three vulnerabilities that could affect financial stability going forward: valuations are still high in some equity and corporate debt markets despite recent selloffs, leaving room for further declines; some highly leveraged financial institutions could come under strain in volatile markets and exacerbate any selloffs; and further turmoil could weigh on sovereign debt markets.

 

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Rick Haythornthwaite, the chair of NatWest, has described the bank's exit from state ownership as an "inflection point" for the bank and expressed gratitude for the £46bn bailout during the 2008 financial crisis. Haythornthwaite acknowledged the government's "bold decision" to stabilise the banking system, saying: "We remain incredibly grateful to the government, and to UK taxpayers, for their intervention and support." Haythornthwaite assured shareholders that the bank has "fixed the issues of the past" and is now a "much simpler, safer, customer-focused bank." He also noted that there are no plans for new international ventures or significant risk-taking, despite government pressure for increased risk in the banking sector. Elsewhere, almost 98% of NatWest shareholder votes have backed plans to hand CEO Paul Thwaite a remuneration package that could be worth up to £7.8m a year.

 

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Reckitt Benckiser has warned that uncertain market conditions stemming from the new tariffs being imposed on imports into the US could delay the planned separation of some of its homecare brands, including Air Wick, Calgon, and Cillit Bang. Nevertheless, the group said it is confident of managing higher costs due to the tariffs, adding: “From what we know today, our latest modeling identifies an immaterial annualised impact on our [cost of goods sold] base which we are confident in mitigating over the short to medium term through a number of levers". First-quarter like-for-like net sales rose 1.1%, below the 1.4% analysts had expected in a company-supplied poll.

 

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Online retailer THG has rejected a £400m-£600m bid for its Myprotein business from Selkirk, a firm established by two of its early backers, including Iain McDonald, previously a non-executive director. The majority of the approach was funded by newly issued shares in Aim-listed Selkirk, but THG said the remainder "would have been payable in cash from a new equity and debt issuance, which was largely unfunded and without appropriate detail on its source."

 

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Concerns over a trade war in the wake of new US tariffs have hit UK business sentiment and will slow economic growth, according to a Reuters poll of economists. All of the respondents said the tariffs have negatively impacted business sentiment in the UK, while more than 40% have cut their growth forecasts

 

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Office for National Statistics data shows that UK government borrowing - the difference between spending and income from taxes - hit £151.9bn in the year to March. This was up £20.7bn from the year before and exceeds the £137.3bn that had been forecast by the Office for Budget Responsibility. Meanwhile, the debt interest paid by the government increased by £1.3bn to £4.3bn last month. Professor Joe Nellis, an economic adviser at MHA, said: "These economic developments will make it very difficult for the government to balance the books," while Matt Swannell, chief economic adviser to the EY Item Club, noted that the Chancellor's recent Spring Statement "only left a slim margin for error" against her fiscal rules.

 

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Private sector output fell in April, with S&P Global's composite PMI seeing the first decline since October 2023. Output fell to 48.2 on an index where a reading above 50 points to growth, marking a decline on the 51.5 recorded in March. The manufacturing PMI fell from 45.3 to just 44, while the service sector hit a 27-month low. S&P Global's chief economist, Chris Williamson, said: "Businesses are reporting more of a struggle to keep their heads above water," adding: "Job cutting remains aggressive." Williamson noted that business optimism about the year ahead has fallen to a two-and-a-half-year low, "one of the lowest levels yet recorded by the survey." He also highlighted a slump in exports driven by weaker global demand and rising fears over global trade as the "biggest concern." Thomas Pugh, an economist at RSM UK, said: "It looks like the budding spurt of growth in Q1 has already been cut short."

 

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A European Central Bank survey has said companies in the euro zone were reporting improved business momentum in the weeks leading up to the Trump administration's tariff announcement earlier this month - mainly indicative of an incipient recovery in the industrial sector. The ECB survey of 79 leading non-financial companies showed that while uncertainty remained high, there were indications of recovering demand for machinery and equipment, and also signals that construction activity was turning a corner, Reuters reports.

 

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Around 68,000 jobs are at risk in Italy due to US President Donald Trump's tariffs, according to the Parliamentary Budget Office (UPB). "The US tariffs will have an impact on almost every sector of the Italian economy, taking into account the induced effects too, with a loss at the aggregate level of added value of around three-tenths of a percentage point," UPB President Lilia Cavallari told a joint hearing of the Lower House and Senate budget committees on the government's economic blueprint, the public finance document (DFP). "In terms of employment, the effect is quantifiable in about 68,000 fewer jobs in total."

 

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Bank of England governor Andrew Bailey says the UK must take the risk of the US tariff regime hitting global growth "very seriously." Speaking about concerns over a trade war stemming from the tariffs, Bailey told an Institute of International Finance: "Trade does support growth. Fragmenting the world economy will be bad for growth."

 

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The International Monetary Fund has said that the economic gains from artificial intelligence - global output is expected to be boosted by around 0.5% a year between 2025 and 2030 - will outweigh the costs of rising carbon emissions by the data centres that are needed to run AI models. "Despite challenges related to higher electricity prices and greenhouse gas emissions, the gains to global GDP from AI are likely to outweigh the cost of the additional emissions," the IMF said. "The social cost of these extra emissions is minor compared with the expected economic gains from AI, yet it still adds to the worrisome build-up of emissions," the group said in its report titled "Power Hungry: How AI Will Drive Energy Demand."

 

Reuters

The Financial Conduct Authority (FCA) says trust is "crucial" in the adoption of artificial intelligence by financial services. Colin Payne, the City watchdog's head of innovation services, said: "Trust in AI is like trying to build a house from the roof down - you need solid foundations first." Payne said: "Neither the FCA nor firms can establish this trust alone, but together we can create the environment needed for AI to flourish." Noting that firms are "eager to innovate but need to understand how current frameworks apply to AI," Payne said the FCA is not looking to create new regulations, but instead wants to "make the ones we already have work for this burgeoning sector."

 

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The EU has ordered Apple and Meta to pay a combined €700m in fines. The penalties are the first under legislation designed to limit the power of tech giants. Apple was handed a €500m fine to Apple over its App Store, while Meta must pay €200m over issues related to consent for data collection. Meta hit out at the penalty, accusing the EU of "attempting to handicap successful American businesses," while Apple said it was being "unfairly targeted." Henna Virkkunen, an EU Commissioner, said officials "have a duty to protect the rights of citizens and innovative businesses in Europe."

 

BBC News

Citigroup is closing its beachside office in the southern Spanish city of Málaga less than three years after opening the hub to offer junior investment bankers a better work-life balance. Some of the Malaga-based workers may end up being reassigned to Paris or London. Meanwhile, “our primary Spanish location is Madrid, where we employ more than 220 people who are not impacted by this action,” Citi said. “Citi continues our strategic growth in Spain with a strong presence in our core business lines, which include investment banking, wealth and markets.”

 

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The government is set to ban sim farm devices, which allow scammers to send thousands of fraudulent messages simultaneously. This legislation, the first of its kind in Europe, will impose unlimited fines in England and Wales and a £5,000 fine in Scotland and Northern Ireland for possession or supply without justification. Fraud has surged by 19% in the past year, and now constitutes over 40% of reported crime in England and Wales. Lord Hanson, the Fraud Minister, said: "Fraud devastates lives, and I am determined to take the decisive action necessary to protect the public from these shameful criminals." The ban will take effect six months after the Crime and Policing Bill receives royal assent.

 

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