15/11/2025 by Tony Redondo
The Dunning-Kruger effect occurs when a person’s lack of knowledge and skill in a certain area causes them to overestimate their own competence. By contrast, this effect also drives those who excel in a given area to think the task is simple for everyone, leading them to underestimate their abilities.
Currency Exchange Rates Update
The Pound ended the week another 0.3% down against the Euro. It’s now fallen 1.6% over the last month and by 5.75% over the last year to hit its lowest levels against the single currency since April 2023.
The Pound ended last week little changed against the US Dollar but remains barely above its lowest level (registered on 4 November) since April.
Against the Australian Dollar, the Pound has slid nearly 2.5% in the last month to hit its lowest levels since February.
The 26 November budget remains a high-risk event for the Pound. Its reaction will hinge not on whether taxes rise, but on whether markets believe the Chancellor’s plan restores fiscal credibility without suffocating growth. If Reeves can convince the markets that Labour is serious about fiscal repair, the Pound could finally find its footing. If not, the slide may just be getting started.
This week, the key economic data releases include:
Monday Canada CPI Inflation
Tuesday US Industrial Production
Wednesday UK CPI Inflation
EU CPI Inflation
Thursday EU Consumer Confidence
US Existing Home Sales
Friday UK Nationwide House Prices & Retail Sales
US Consumer Sentiment
What’s in the news?
Labour continues to trail in fourth place in an opinion poll for the second week running in the latest blow to Sir Keir Starmer. The survey by Find Out Now puts the Prime Minister’s party on 15%, unchanged from the week before. Reform UK leads the poll with 33%, also unchanged from the previous week. The Greens are second on 17%, down one, while the Tories are third on 16% and the Lib Dems are fifth on 11%, both unchanged. Labour’s poll ratings have plummeted since Sir Keir’s landslide general election victory in July 2024. Labour MPs fear there could be a bloodbath in elections next May in English councils and the Scottish and Welsh parliaments.
In a separate opinion poll by YouGov, only 27% said the Prime Minister should stay on with 51% saying Sir Keir should stand down as Labour leader and let someone else take over. 23% were unsure.
UK
Government fiascos are the story of the week, each one market moving. At the start of last week, we saw a Westminster briefing war with No. 10 Downing Street appearing to turn on its own out of alleged leadership threats, then No. 11 took over with Rachel Reeves now understood to have scrapped plans for a manifesto-breaking income tax rise, despite concerns into how she will fill her fiscal black hole in the 26 November Budget. It got the bond markets on edge with the yield on the benchmark 10-year UK gilts climbing to 4.583%, its highest level since 14 October. The FTSE100 index in London had hit a record closing high of 9,911 on 11 and 12 November but saw a 109-point sell-off on Friday with banking stocks (e.g., Barclays, Lloyds down 2.7–3.6%), wiping approximately £27 billion off the combined value of FTSE 100 companies.
It was another difficult week for Chancellor Rachel Reeves. There were jeers and boos when the Chancellor’s pre-recorded speech was played at the Lloyds British Business Excellence Awards in London. Event director Sarah Austin said, “Whilst I was saddened by the fact that our first ever female Chancellor was booed by some members of the audience, I understand the depth of feeling behind the sentiment. The business community is facing a challenging environment, and it’s clear there are strong emotions and differing views about current economic policy. We hope moments like this encourage honest reflection and more open communication between the government and the entrepreneurs powering Britain’s future. These awards exist to recognise the achievements of businesses and individuals who drive our economy forward.” There were 1,100 attendees at the ceremony at the Grosvenor House Hotel on London’s Park Lane.
Analysis from Quilter revealed that lowering and freezing income tax thresholds would make a worker earning £44,000 as much as £3,000 worse off. An extension would deepen the ‘fiscal drag’, with thresholds for income tax drifting further from rates of inflation. The current freeze on income tax thresholds has been in place since 2021, back when Rishi Sunak was Chancellor and inflation sat around 2.5%.
UK firms were forced to stomach much of the £40bn of tax hikes at Labour’s maiden Budget last November. In an unusual, combined intervention, bosses from five of the UK’s largest business lobby groups have told Rachel Reeves that any attempt to plug the widening fiscal shortfall with levies on business would be the “wrong choice” and see rock-bottom business confidence levels plumb new depths. Tina McKenzie, policy chair of the FSB (Federation of Small Business) said, “One week we hear firm statements that something is definitely on the way, the next we’re told with the same certainty that it’s not. Enough is enough. Small firms are not cash cows to be milked whenever the Treasury runs dry. At the Budget, the Chancellor must make clear there are no further tax raids on the people keeping the country working.” UK Hospitality chair Kate Nicholls joined the calls, warning Reeves not to row back from previous commitments to cut business rates on high-street firms in a bid to make the Treasury’s sums in the wake of the income tax U-turn. Shevaun Haviland, the director general of the BCC (British Chambers of Commerce) says a third of firms have made people redundant or are considering it in recent months, and that this month’s intervention must be one that “backs business and delivers growth”. Helen Dickinson, the chief executive of the BRC (British Retail Consortium), said, “Retailers were hit disproportionately hard by last year’s Budget, with £7bn of additional costs this year as a result of changes to employer National Insurance. The consequence of further tax rises on the industry will be to amplify these effects – meaning more job losses and higher shop prices for households.” Anna Leach, chief economist at the IoD (Institute of Directors), said, “In some ways it is perfectly normal for these policy choices to move up and down the scorecard rankings in the run-up to a Budget being locked down. But the public airing of the Treasury’s workings is deeply damaging to business confidence and the ability of business leaders to plan and invest.”
Michael Situ, Labour’s housing committee chairperson in the London borough of Southwark, the council where Rachel Reeves owns her rental property has resigned, because he too failed to licence his own buy to lets. Like Chancellor Reeves weeks ago, Situ has blamed a local letting agent who manages his homes for the error. Southwark’s administration claims to have a zero-tolerance policy for landlords breaking the rules but at a meeting this week refused to take further action over Reeves’ failure to get a license.
A City AM/Freshwater Strategy poll has shown that 76% of voters are pessimistic about the future of the country, the highest level of pessimism ever recorded with just 19% think the UK was heading in the “right direction”.
Not so good news
Britain’s economic output unexpectedly shrank in September, dragging down third-quarter GDP growth and highlighting the country’s economic fragility ahead of Rachel Reeves’ second Budget. UK GDP contracted by 0.1% in September compared to the previous month, down from 0.3% during the previous three months. Quarterly growth is now well down from 0.7% during the first three months of 2025, according to data from the ONS (Office for National Statistics) and is the slowest since the end of 2023.
UK Economy Shows Sluggish Growth of 0.1% | Newspage News
The UK is on track for its worst decade of growth in 100 years with average GDP growth projected at just 1.1% annually. The analysis by Andrew Sentance, a former Bank of England rate-setter, indicates that GDP per head will rise by only 0.4% each year. Mr Sentance warned, “Raising taxes will just weaken growth further. Reining in spending is the only long-term solution. “Mainstream politicians in this country seem to have lost the plot in terms of the policies that we need to get the economy back on track.”
News of slower growth comes after figures released earlier this week showing that UK unemployment rose sharply to 5% during the third quarter, up from 4.8% during the previous three months and its highest level since 2021. Since Labour took office in July 2024, the jobless rate has risen significantly from 4.2%. This is in contrast to the US, Germany and France, where jobless totals have been steadier since the summer.
Government Policies Impacting Unemployment Rates | Newspage News
The ONS data also shows that average wage growth was 4.6% in the third quarter, down from 4.7% over the three months to August. The rate of private sector wage growth stood at 4.2% compared to 6.6% for the public sector.
UK Industrial Production dropped 2% in September, far worse than the 0.2% decline expected and reversing a 0.3% increase in August. Manufacturing output also disappointed, falling 1.7% MoM compared with a forecast of a 0.3% decline. The broad-based softness in the data reinforced concerns that UK growth momentum remains fragile heading into the final quarter of the year.
UK Finance figures show home repossessions rose sharply in the third quarter with 1,390 homeowner repossessions, up 51% annually, and 900 buy-to-let repossessions, up 29%.
USA
President Trump ended the longest-ever US government shutdown on Wednesday when he signed a Senate-crafted deal. The economic fallout from the shutdown is still coming into focus but the CBO (Congressional Budget Office) estimate that at least $11 billion in real GDP will be gone for good and key economic data, including employment and inflation numbers for October, will likely never be released.
The BBC apologized to US President Donald Trump for misleadingly editing one of his speeches but refused to pay compensation after he threatened to sue for $1 billion. Tim Davie, the BBC’s director-general and Deborah Turness, the chief executive of news both resigned over a 2024 documentary featuring Trump’s remarks ahead of the 6 January 2021 Capitol riots. The scandal may see the end of the BBC in its current form.
The US and Switzerland agreed a trade deal to lower tariffs to 15%. The deal means the country-specific tariff imposed on Swiss goods will match the rate levied on those brought to the US from the European Union.
Anthropic announced a plan to invest $50 billion in American computing infrastructure, building data centres with Fluidstack in Texas and New York, with more sites to come. The project will create approximately 800 permanent jobs and 2,400 construction jobs, with sites coming online throughout 2026.
According to a Gallup poll, one in five Americans say they want to leave the US permanently, a figure that’s on par with last year’s record regardless of the shift of power in Washington from the Biden administration to President Trump’s.
The EU
Eurozone Industrial Production for September rose by only 0.2% MoM, well below the 0.7% consensus but still an improvement from the -1.1% decline in August. On a yearly basis, Industrial Production increased by 1.2%, falling short of the 2.1% forecast and edging only slightly above the 1.1% recorded in the previous month.
EU ministers have agreed to crack down on low-value parcels arriving from China, likely hitting retail behemoths Shein and Temu.
European authorities are said to be preparing a new investigation into Google’s parent company, potentially throwing a wrench into efforts to ease transatlantic trade tensions. European regulation of US Big Tech is a bugbear of Washington’s, so the timing of the inquiry is tricky for Brussels, which is looking to propose the next phase of its trade truce with Washington.
The latest ZEW survey in Germany showed investor sentiment slipping from 39.3 to 38.5, well below expectations of 40+.
Others
Concerns about the state of health of China’s economy have deepened after the latest investment, manufacturing, and consumption figures all fell short of expectations, while a long-running property market downturn appeared to deepen, amplifying worries that the world’s second-biggest economy may miss its annual growth target of 5% this year. China is grappling with huge domestic economic challenges, including the risk of deflation, persistently high unemployment, and a mountain of debt.
Wealthy Chinese people are shunning Singapore and relocating to Dubai and Abu Dhabi. For years, moving to Singapore was a status symbol, as government incentives in the Southeast Asian city-state made it easier to establish offices. But its immigration laws are restrictive in contrast to the United Arab Emirates’ golden visa, which allows investors to gain long-term residency.
Prime Minister Narendra Modi and his allies are close to a massive victory in the state elections in Bihar, a key farm state and one of the largest producers of maize that could give Modi room to agree to farm-related concessions to secure a trade deal with the US. Indian exports to the US currently face some of the highest tariffs (50%) but the two sides have been engaged in negotiations for a “fair trade deal.”
Australia’s job market reversed the recent rise in unemployment with headline employment surging by 42.2k, more than double the expected figure of 20k. Full-time roles led the charge with a 55.3k gain, while part-time jobs fell by 13.1k. The unemployment rate dropped to 4.3%, beating forecasts of 4.4% and improving on last month’s 4.5%. RBA (Reserve Bank of Australia) Governor Bullock previously noted that the RBA would focus on employment trends rather than single data points. These strong results are likely to keep the RBA on pause through to the first quarter of 2026, barring a sharp downturn in 2026.
Amazon announced its first wholly owned transatlantic cable. The Fastnet cable, set to begin operation in 2028, will run from the US state of Maryland to Ireland’s west coast. Google is now the world’s largest owner of submarine cable networks, while between them, Amazon, Google, Meta, and Microsoft own or lease around half of all undersea bandwidth worldwide.
Stranger than fiction
In its latest annual World Energy Outlook, the IEA (International Energy Agency) reports that global oil and gas consumption will rise into the 2050s under current government policies, putting the world on track for a significant overshoot of the Paris Agreement warming target.
Iran’s president warned that Tehran may have to be evacuated because of an unprecedented nationwide drought. Reservoirs supplying Mashhad, the second-biggest city, are at 3% capacity, while those serving Tehran are below 5%. The capital has seen no rainfall in autumn for the first time in 100 years and groundwater levels are sinking, thanks to illegal well drilling, unsustainable agriculture, and rising temperatures.
Quote
American economist, economic historian, and social theorist, Thomas Sowell, “There are no solutions. There are only trade-offs.”
