I suggested yesterday that one reason why Rachel Reeves might have made her speech yesterday was that she wanted to speak before a market crash hit the economy, setting the scene as a result of a Budget she knew she might never be able to deliver, as everything might have changed by November 26.
The Telegraph has reported in an email this morning that:
More than $500bn (£384bn) was wiped off the value of AI chipmakers overnight, fueling concern for global stock markets.
They added:
The global rout in stock markets deepened overnight as more than $500bn was wiped off the value of artificial intelligence (AI) chip makers.
Japan's benchmark stock index tumbled nearly 7pc from a record high while South Korean shares sank by as much as 6.2pc. MSCI's main index of Asia-Pacific shares outside Japan was down as much as 2.3pc, which was the most since Donald Trump's “liberation day” tariff onslaught in April.
Nvidia supplier Advantest dropped as much as 10pc, while Taiwan Semiconductor Manufacturing Co (TSMC) fell more than 3pc.
Markets in the UK wobbled yesterday. They also did in New York.
Is the telegraph right to call this a rout? Not yet, I suggest. A rout is usually signalled by a 10 per cent one-day fall, and that has not happened yet. But the nervousness is very real.
Everyone knows what is coming, Rachel Reeves included. Sometime soon, she is going to face a very different economy from the one for which her Budget has been written. Will she know what to do? I wish I had the confidence that she does, but I very much doubt it. And that might be the most worrying part of all this.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
“Will she know what to do? ”
when times get hard, there is only one thing that the overpaid mob @ the top do: austerity – tighten yer belts etc – after all it has always worked for households, so why not for countries?
She will be out soon, replaced with somebody that looks marginally more competent but who will be equally compliant/pliable wrt to “following orders” from the city.
Possibly not the time for a light-hearted response when we have the budget and a market fall-out ahead of us. However, I thought John Crace’s politics sketch in the Guardian today was spot on. His sub-heading was “It must be tough overseeing Schrödinger’s economy, fixing the foundations while also failing to fix them”.
The rest of the article was good / funny as well. His article header just about sums up the situation “ Reeves wants to talk about the budget, but she’s taken a vow of white noise”. https://www.theguardian.com/politics/2025/nov/04/rachel-reeves-talk-budget-vow-of-white-noise?CMP=Share_iOSApp_Other
Are there 80 Labour MPs out there, who will call out this economic BS for what it is?
Who will say NO to the wrong analysis leading to the wrong actions, AGAIN?
Or will they troop through the lobby supporting Starmer/Reeves, “obeying orders” from the whips, while innocent people suffer?
Am I missing something here?
If Rachel Robot knows her budget isn’t going to work and knows there’s a crash coming, then why not just do a different budget?
She hasn’t presented the budget yet, so just change it.
Is she so wedded to ideology that she’d continue with something that she knows shall fail and that she’ll get the blame for and lose her position over? It doesn’t make any sense.
Is Wall Street so powerful in the U.K. now, that although technically Westminster runs the country, in the real world it doesn’t?
I’m fed up to the back teeth with useless, self-serving politicians in Westminster, useless media and fascism waiting in the wings. The sooner the U.K. is broken up the better.
She did the Budget weeks ago – it’s with the OBR now.
Katie Martin in the FT says the bond markets are controlling Reeves. I expect you disagree!
https://www.ft.com/content/ae58fbcf-605f-4e97-b0f7-50bf7af4ff9b
Not really
She suggests that they really are in charge
This re-invokes a question I posed a couple of weeks ago Richard….how do bond vigilantes exert such leverage and can cause so much mayhem and what could Reeves do to protect the government? How does she, in effect, call their bluff and re-establish control of fiscal policy?
See muy glossary entries on thsoe issues.
My apologies…. I should have checked there first.
It really does beg the question… how can RR be so ignorant of these dynamics. It can only be wilful or grossly incompetent, either way it is hugely worrying and damaging.
She has choices.
but it reminds me of the story of the Scorpion and the frog.
There is a forest fire , and the frog is about to swim across the river to safety, when a scorpion calls out to him to carry him across with him.
The frog says to the scorpion, ” but you will sting me and I will drown. ”
The scorpion replies, ” why would I do that to you, as if I did we would both drown, it would be sabotaging myself.” The frog considers,and relents, allowing the scorpion to climb on his back. Half way across the scorpion stings the frog, before the venom takes hold the frog says to the scorpion ” why have you done this, now both of us will die. ” The scorpion responds, ” I am a scorpion, it is in my nature to do this ”
The ball is in her court now. She can move forward as the grim reaper, her legacy over not only the carnage inflicted on the people, but on the system that are the foundations that keep this country running.
As economies are made of people.
The numbers are just a measure, but not the story. Not the life and hussle and bussel.
Or she can be the person that made the stand against the idiocracy, immorality and how unethical it all and been.
If they can print money for banks ..
They can print money for the infastruture and support system and services, and start taking the mortgages and savings in house.
You could not make this up. They accuse parents of FII at records numbers that make a mockery of it all, to attempt to terrify and deter people seeking support that needed, to save budget, no ones been diagnosed with FII. They can’t as it’s not I the diagnostic manual. yet they stay engaged in Stockholm syndrome with the city and large corporations in perpetuity.
Do the ” greeds ” not know the point where they are sabotaging themselves. The rest of us can do poor, as we periodically have to due to them. They can’t.
Very disappointing to hear Claer Barrett on Lorraine programme this morning tell us viewers that the biggest problem for Britain is that “as a nation we have maxed out our credit card” and that “£1 in every £10 collected in tax at the moment is going towards just servicing the intertest on Government debt.” Also that Government debt has ballooned since Covid and that Reeves cannot borrow more. To me it translates as increases in income tax, frozen tax thresholds and cuts to welfare benefits. Austerity yet again? https://business.leeds.ac.uk/research-aire/dir-record/research-blog/2393/in-the-struggle-to-get-britain-working-the-long-shadow-of-austerity-could-be-part-of-the-problem
I have always questioned her judgement.
This woman said yesterday – quoting that great Labour philosopher, one Darren Jones (sic), that she ‘had to accept the world as she found it’.
The world that she ‘found’ (really – it sounds as though it found her!!) is corrupt, weak, lying, dishonest, cruel, and undemocratic. It makes people go without food and proper housing and decently priced goods – children as well.
And to my mind, she has accepted all that. That is her choice. And as a result, our reality.
Why would someone go into politics to not change anything? Well, all you can say is that it must pay well to be like that. Stymied? Reeves? Lammy? They will not die poor.
I briefly saw a headline reporting that the trader from the Big Short has bet against the AI companies – he was correct before the GFC in 2007, so will he be correct this time?!
Cory Doctorow has it right about big tech companies etc.
The UK suffering from 40 years of neoliberal wrecking is now in what may be a permanent state of enshittification.
Id like to get my hands on that book, just to read what solutions he offers.
I have ventured into mainstream MediaNews outlets
Those that do not have a paywall.
The only one with any detail beyond the 2p ( which some stated was the advise of a left wing think tank, which means now I need to go and research , who funds it to verify how left wing it really is, and look at their report. As though that makes it okay. Even hen lefties think this is a good idea. Are there any actual newspapers as all I see are vacuous gossip rags ) on income tax was surprisingly the Sun. However, reliably, it seemed to be more interested in the impact on mansions, pension relief being restrict ed. And another article hammered those on benefits and promoted hard working people .. when many on benefits are working.
If only the ” journalists ” that works for these “news” papers, did actually do some hard work.
The guardian and associated papers, little detail.
The canary references Richard Murphy , but not the options that could be considered.
So none were informative and just feel like a soft push cloaked as mild indignation, of laying the burden on those with the last through raises in income tax at the lower level, and cutting benefits.
There are a few weeks to get ready fro this.
And despite Reeves claim re not creating division.
The division plan is , it seems, being laid out.
Expectation this disinformation will be levied at MPs to try to pressure them.
Mine is about to get the full list send to her and the links to check out for herself.
We need MPs there are better informed.
The 2p figure is the work of the NIESR
There is no reason to think it reliable.
I have been reading up on the Labour Party of the 1920’s and 1930’s and I fear we are seeing a reply of the Ramsey McDonald and Phillip Snowdon disaster, resulting in the Labour Party splitting and a recession caused by cutting government spending to balance the books at a time when we needed to spend on social and physical fabric of the country.
At times I think we need a historian rather than a banker to run the economy!
I came across it accidentally, but I watched a Warren Buffett blog tonight (out of curiosity more than anything else). He was predicting a burst in the AI bubble quite soon.
A fine example of someone who gets rich because he’s rich – also a very shrewd operator and an interesting person to listen to, whatever one thinks of the system that allows him to operate..
Has Rachel Reeves spoken to him, I wonder.
Watched Mohamed El-Arian and Robert Peston talk about the AI bubble bursting. Mohamed used the dot.com bubble as a comparator.
I guess we shall see.
On govt debt they both waxed lyrical with the usual views uttered.
On the issue of Capital available to drive growth Mohamed thought the UK was poorly placed.
I thought at this point he might give govt led investment the thumbs up but instead talked about the UK being stuck ie borrowing difficult.
Slightly depressing to put it mildly.