Hello there,
Donald Trump is going to be a hard act to follow for Britain's finance minister.
Rachel Reeves delivers her first Mansion House speech tonight at the Square Mile's most prestigious annual dinner. It's an opportunity for her to show what she can do for Britain's bankers, who are bracing for supercharged rivalry from Wall Street under Trump 2.0.
Banks in Britain have been hobbled by poor profitability and a weak domestic economy since the 2008-09 global financial crisis, and Trump's re-election is expected to usher in a new era of deregulation for U.S. rivals who are already well out in front.
The City would like a rulebook revamp and Reeves has previously said she would "unashamedly champion" the UK's financial sector. She needs the industry's money. Financial services provide over 100 billion pounds in tax revenue and account for 12% of the UK economy.
On Wednesday, she outlined plans to consolidate the fragmented retirement sector into a slew of megafunds with up to 80 billion pounds in fresh investment firepower. The idea is to help Britain get out of its underinvestment hole and boost economic growth. But Reeves won't compel funds to put their money in the UK.
Speaking of money, that's what this year's U.N. climate talks are all about. The success of COP29 is likely to be judged on whether it can agree a new financial target for how much richer countries and the private sector can provide developing countries to deal with climate change.
This year's summit has been overshadowed by Trump's election win. He is a climate change denier and the likely withdrawal of the United States from any future funding deal is raising pressure on COP delegates.
I look at climate change and economics on this week's Econ World pod. Economist Tim Jackson joins me to talk about consumerism and the environment and what "post growth" might look like. Plus, we hear from the person who compiles Bhutan's Gross National Happiness index. Listen here.
The appointment carousel is in full whirl over in the United States. Personal ties and television chops seem to be prerequisites for getting picked. Billionaire banker Howard Lutnick is emerging as a serious contender alongside investor Scott Bessent for Treasury Secretary.
Whoever gets the Treasury job, inflation is likely to remain a top priority. Wednesday's data showed consumer price pressures remain stubbornly above the Federal Reserve's target rate of 2%. And yet markets rushed to price in an 82% chance that the central bank will cut rates by another quarter point on Dec. 18, up from around 65% two days earlier.
As always, I'd love to hear from you by hitting reply on this email or finding me on LinkedIn.
Carmel
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