James Smith

London

Market Economist and Contributor at ING Think

Economist at @ING_economics

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Articles

THINK Ahead: The IMF’s high wire act

1 week ago | think.ing.com | James Smith |James Knightley |Bert Colijn |Adam Antoniak

THINK Ahead It’s been six months since the great and the good of the finance world last met in Washington to chew on lukewarm canapes and sip decidedly average Champagne. I’m talking about the IMF’s annual meetings and, yes, maybe I’m still slightly bitter that I didn’t get the invite…Back then, the talk of the town was Donald Trump, whether he would win November’s election, and if he did, what would come first: tax cuts or tariffs? Well, I think we have our answer.
UK inflation set to rise this year despite lower-than-expected March data

1 week ago | think.ing.com | James Smith

At 2.6%, March’s headline UK inflation reading is likely to be the lowest we’ll see for some time. Household energy bills have generally been a net drag on overall inflation, a legacy of the steep falls in natural gas prices we saw after the 2022 spike. But as of April, that will no longer be the case. Those energy bills will be contributing 0.8ppt more towards April’s annual CPI figure than they did in March. Water bills have risen sharply this month, too.
UK jobs market stays solid despite big tax hikes

1 week ago | think.ing.com | James Smith

More importantly, separate weekly data on redundancies from the government haven’t increased at all. That could change, though we would have expected to see some pressure emerge ahead of the employer national insurance hike earlier in April. Our working assumption, for now, is that the jobs market continues to cool this year, but that we don’t see a material spike in joblessness. And for the Bank of England, that keeps all the focus on wage growth.
The renewed pressure on global central banks

1 week ago | think.ing.com | James Knightley |Carsten Brzeski |James Smith

President Trump’s tariffs will undoubtedly put up prices of imported goods, and there will be higher service prices too, such as repair and insurance of those goods. However, the hit to growth from tariffs via business uncertainty and the squeeze on consumer spending power, at a time when the government is implementing sweeping spending cuts, means that unemployment is likely to rise by more than the Fed had previously expected.
Tariffs are just the latest reason to expect UK tax rises this year

1 week ago | think.ing.com | James Smith

Tariffs aren't a big problem in isolation, but a weaker global economy is a bigger challenge Two things can be true at once: the UK economy is less susceptible to US President Donald Trump’s tariffs than the eurozone, and tariffs also make it harder for the UK Chancellor to avoid further tax rises later this year. On the former, Britain’s exports to the US account for a little over 2% of GDP, compared to roughly 3% in the eurozone and almost 4% in Germany.
THINK Ahead: That was the week that was…

1 week ago | think.ing.com | James Smith |James Knightley |Adam Antoniak |David Havrlant

The week where everything - and nothing - changed Here are just a few things that changed in financial markets this week: US 10-year Treasury yields are up more than 40 basis points. That sort of week-on-week increase hasn’t happened since the early 2000s. The dollar is almost 4% weaker against the euro. More than a percentage point of that has happened since I started typing this earlier today. The S&P 500 is almost 4% higher, too.
UK growth surges in February despite tariff uncertainty

1 week ago | think.ing.com | James Smith

Finally, some good news to end the week: the UK economy grew substantially faster than expected in February. Monthly GDP was 0.5% higher than in January. Admittedly, when you look into the details, it’s a bit of a head-scratcher. Manufacturing accounted for about half of the overall growth, rising by 2.2% across the month. But that’s massively at odds with the purchasing managers indices (PMIs), which have been consistently downbeat. Is this surprise bounce related to frontloading tariffs?
What US tariffs mean for the UK economy, rate cuts, taxes and trade

2 weeks ago | think.ing.com | James Smith

Financial markets have ramped up rate cut expectations UK Prime Minister Keir Starmer has put a brave face on the US tariffs announcement this week. Financial markets, by contrast, seem much less sanguine. Britain may have seen a more modest 10% tariff imposed compared to the EU’s 20%. But markets have staged a more dramatic repricing of Bank of England rate cuts than we’ve seen for the ECB. An extra 40-basis points worth of easing is priced over the next year, compared to ten days ago.
THINK Ahead: Wanted! A superhero to save the markets

2 weeks ago | think.ing.com | James Smith |James Knightley |Adam Antoniak |Peter Virovacz

Wanted! A superhero to save the markets Who is going to save the US stock market? I’ll admit, it’s not exactly the making of a Hollywood blockbuster. And if it was, the theme tune would presumably be played by a single, very tiny violin. Anyway, markets think they know the answer: Jerome Powell. As is so often the case when stocks wobble, investors are shining the proverbial bat signal at the night sky and waiting for their superhero to calm things down.
THINK Ahead: 10 answers to Trump’s tariffs in our cut-out-and-keep guide

3 weeks ago | think.ing.com | James Smith |James Knightley |Bert Colijn |Adam Antoniak

THINK Ahead: Trump's tariffs in ten questions Heading to a dinner party this weekend and dreading the small talk? I get it. At some point, people will realise you work in finance. Once they’ve stifled their yawns and mumbled something about “having an early start the next day,” they might be forced to engage you on the least boring topic that springs to mind. And that topic is inevitably going to be President Trump’s tariffs. Don’t panic! We’ve got you covered.