Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The threat of a global trade war looms over the financial world today, after the US and China hit each other with sweeping tariffs.
Beijing hit back at Washington yesterday, with new levies on $60bn of US goods, just hours after Donald Trump signed off tariffs on $200bn of Chinese products. This latest tit-for-tat action dragged the world economy a little closer to full-blown protectionism.
But…there is also optimism, as China’s retaliation is less severe than it had laid out last month.
And over in Beijing today, China’s deputy leader has called for more support for free trade.
Premier Li Keqiang told a World Economic Forum conference, in the eastern city of Tianjin, that such disputes must be resolved through consultation.
It is essential that we uphold the basic principles of multilateralism and free trade….
No unilateralism will offer a viable solution.”
Li also warned that the world economy now stands at “a crossroads facing a choice between globalization or deglobalization.” China, he pledged, will do its bit by opening up “at a faster pace”.
That will have gone down well with WEF at its “Summer Davos” in Tianjin.
More cynical voices might point out that China does operate plenty of roadblocks to free trade today – second behind Russia, according to one EU report this year.
But still, Li’s words may reassure investors that the two economic powers will reach an agreement on trade policies, rather than descend deeper into a swamp of tariffs, trade barriers and bad-mouthing.
Also coming up today
UK inflation data is out this morning. Economists predict that price rose by 2.4% year-on-year in August, down from July’s 2.5%. That would give workers a small but much-needed real wage boost.
Supermarket chain Tesco is launching its new discount store format, Jack’s, to compete with the success of Lidl and Aldi. It could be a game-changer, if Tesco can get it right…
Plus, traders will be watching for speeches from two central bankers; European Central Bank chief Mario Draghi, and the Bank of England’s chief economist, Andy Haldane.
The agenda
- 9am BST: Bank of England Andy Haldane: Lecture at the Bank of Estonia 100th Anniversary conference, Estonia
- 9.30am BST: UK inflation for August
- 9.30am BST: UK house price data for July
- 3pm BST: ECB president Mario Draghi speech on “Making Europe’s Economic Union work”, in Berlin