World Economics:

The International Monetary Fund (IMF) has issued a warning that increased global protectionism and tariff hikes will threaten world economic growth, highlighting that if tariffs hit a ‘sizeable swath’ of world trade by mid-2025, it would wipe 0.8% from economic output in 2025 and 1.3% in 2026. IMF’s top economist Pierre-Olivier Gourinchas has argued that increased tariffs are ‘harming basically everyone…including the US.’

Japan’s core consumer inflation hit 3.2% in January, the highest in 19 months, reinforcing expectations that the central bank will continue raising interest rates from their still low levels (0.25%–0.5%). Consequently, bond yields have risen as markets anticipate more aggressive rate hikes from the BOJ in response to mounting inflationary pressures, with Governor Kazuo Ueda signalling his readiness to act if wage growth persists.

China’s government spends only 6% of GDP on what is known as individual consumption—services ranging from healthcare to social security that directly benefit citizens—while households spend 38%, lagging behind other members of the BRICS group, including Brazil and Russia, and also lower than that of many other emerging and developing countries. Economists expect Beijing to increase the planned central government budget deficit from 3% of GDP to 4% next month and to announce additional government bond issuance to help boost growth.

‘The humble egg has scrambled America’s nerves.’ The price of a dozen eggs has more than doubled this past year, now reaching $7.75. Driven by avian influenza, which has affected over 50 million chickens since November (one in seven), the price inelasticity of eggs has kept demand stable despite rising costs. This mirrors a broader trend in the stock market, where ‘passive investors’ like index trackers have made stocks 11% less elastic. A key example is Nvidia, who, despite rising chip supply, demand in Silicon Valley remains, in CEO Jensen Huang’s words, ‘insane.’ However, eggflation may soon ease, with states like Nevada relaxing restrictions on caged eggs.

UK Economics:

In response to President Trump’s announcement of 25% tariffs on steel and aluminium imports, the UK government has accelerated plans for a £2.5 billion investment in its steel industry. Business Secretary Jonathan Reynolds will unveil the “Plan for Steel” to boost competitiveness and mitigate tariff impacts. The strategy includes co-financing innovative projects and promoting British steel usage in infrastructure projects. Additionally, the government aims to address high energy costs and explore sustainable production methods like electric arc furnaces.

The UK’s inflation rate rose from 1.7% to 2.8% in January, mainly due to gas price surges during Europe’s winter. The Bank of England predicts 3.7% inflation this year, while the NIESR expects a similarly bleak 3.2%. This rise may outpace wage growth, thus eroding living standards and affecting businesses.

Compounding this, unemployment is projected to rise from 4.4% to 4.5%, potentially reaching 4.75% by year-end, raising fears of stagflation.

The UK’s economic growth remains sluggish: GDP grew by only 0.9% in 2024, even with surprise growth in December 2024. Furthermore, the Bank of a England predicts only 0.75% GDP growth in 2025. Meanwhile, the current tax burden is projected to reach 38.3% of GDP by 2027-28. Concerns exist that weak growth may trigger a “doom loop” necessitating further tax hikes. However, some  forecasts remain hopeful, sticking to a 1.5% growth prediction for the UK this year.

UK Politics:

Prime Minister Sir Keir Starmer is seeking to act as a ‘bridge’ between the US and EU, positioning the UK as a mediator against transatlantic tensions over Ukraine, trade, defence, and free speech. Starmer attended a summit hosted by French President Macron to discuss European strategies for ending the war in Ukraine. Following this, he is expected to travel to Washington by the end of February to involve European nations in negotiations about Ukraine and to help prevent the imposition of US tariffs.

Furthermore, the PM reassured Ukrainian President Volodymyr Zelenskyy of UK’s support after US President Donald Trump made a controversial claim that Zelenskyy was a dictator. Additionally, the UK signed a defence agreement with Norway to counter Russia’s perceived threats in the Arctic, with Defence Secretary John Healey stressing the UK’s commitment to supporting Ukraine both on the battlefield and at the negotiating table.

The UK government looks towards potential tariffs on certain US products if it fails to secure exemption from the 25% tariffs that the US may impose on British steel and aluminium imports. The 25% tariffs would likely be ‘devastating’ for the UK as in 2023, the US was Britain’s second-largest export market for steel, and accounted for about 8% of total UK steel exports by value, which accounts for almost £400 million. Consequently, Business Secretary Jonathan Reynolds indicated that products such as whisky, jeans and motorcycles could all be targeted if Trump goes through with these tariffs, and whilst Reynolds hopes for a constructive resolution, he continues to emphasise the specialised nature of British steel and its irreplaceability. 

On the 10th of February, Labour MP Oliver Ryan was suspended from the party due to his involvement in a WhatsApp group containing offensive messages. This follows the earlier sacking of Andrew Gwynne as public health minister for similar involvement.

The Labour government has toughened its stance on immigration by releasing footage of deportation flights and immigration raids in an effort to discourage prospective irregular migrants. This approach mirrors tactics previously employed by Conservative governments and appears to clap back at political rivals who criticised Labour’s policy on illegal immigration. Furthermore, any immigrant that arrive into the UK through illegal means now automatically void any chance for citizenship.

World Politics:

The US, along with the UK, refused to sign the international agreement on Artificial Intelligence at the global summit in Paris. The agreement, signed by 60 countries, sought to promote the accessibility of artificial intelligence by ensuring transparency and safety. US Vice President JD Vance cautioned the potential ramifications of strict regulation on innovation which could “kill a transformative industry as it is taking off”. He also insisted that “pro-growth AI policies” should be favoured over safety under the Trump administration.

On Tuesday, the 18th of February, face-to-face talks took place in Riyadh between Russian Foreign Minister Sergei Lavrov and US Secretary of State Marco Rubio about the prospects of the Russian-Ukraine War. This was the first high-level interaction between the two countries since the invasion. Both parties agreed to begin peace negotiations forthwith.

Ukrainian President Volodymyr Zelensky, who was not invited to the bilateral talk in Saudi Arabia to end the war, commented that this was a “surprise” and accused delegates of Russia of being disingenuous, adding that it should be pressured through coercive means. In response to this, Trump cast the blame on Ukraine that they “should have never started it” and commented on Zelensky’s approval rating at present.

In an attempt to boost defence spending, European Commission President Ursula Von der Leyen called for an emergency clause to discount military investment for countries as part of the budget deficit threshold to “substantially increase their defence expenditure”. This policy was contentious, with countries advocating for the opportunity to increase spending while other indebted and fiscally conservative countries dismissed this effort as insufficient to achieve the desired result.