Bank of England policymaker Alan Taylor has warned that the UK economy is at a growing risk of “a bumpy landing”.Speaking at King’s College, Cambridge (Taylor’s alma mater) today, he sticks to his reputation as a dovish member of the Bank’s monetary policy committee.He predicts that wage settlements will be pushed down in “an economy with rising unemployment and weak demand”, meaning little risk of an upward spiral in wage-led domestic inflation.Taylor argues that there are now three plausible scenarios in 2026, of varying pain for consumers and businesses:The first scenario is the “soft landing”, which Taylor fears is receding in terms of probability.He says:By maintaining what I think is a too restrictive path of interest rates, we may have braked too hard, such that inflation cannot smoothly return to target with the economy close to potential, as my votes have indicated.

The second scenario is the “bumpy landing”, which Taylor thinks is increasingly likely,This, he says, is:… a downside scenario, where inflation undershoots, and goes below target in late 2026, and the economy moves into a weakened state for a sustained period, with output and employment below potential, leading to undue damage to economic activity,The third scenario is the “hard landing”, which Taylor calls “a deeper worry”,He says:This was a remote and low probability event a year ago, but the risk is rising,In this scenario, weak demand at home can lead to a more forceful downturn, where recession dynamics start to kick in that can be very difficult to contain or even reverse.

The economy has been flirting with zero growth, and the realisation of negative readings could easily change the future path for the worse.The probability of this outcome is now not trivial.This would be the ‘downside to the downside’ scenario and it would lead to an even more dramatic inflation undershoot than the second scenario.To end up here would be a mistake.Taylor also outlines in his speech how the UK could find itself on the end of a “double diversion phenomenon” as Donald Trump’s tariff war diverts trade flowsHe explains how this could lead to more goods from China arriving in the UK, unless London takes protectionist trade measures, making the “bumpy landing” more likely, saying:First, the US raises barriers on imports from low-cost producers, who then redirect their goods to third countries, like the EU, who in turn respond with further barriers to those low-cost producers, who then move on again to direct their large flows of exports to an ever-smaller target group of open export markets.

Naturally, the UK comes to mind as one of those potential targets.Time to wrap up…The US-China trade war has continued to bubble away, worrying investors and economists.The day began with the news that US treasury secretary Scott Bessent had accused China of trying to hurt the world’s economy, following its recent clampdown on rare earth exports.He told the Financial Times:“This is a sign of how weak their economy is, and they want to pull everybody else down with them.Maybe there is some Leninist business model where hurting your customers is a good idea, but they are the largest supplier to the world.

If they want to slow down the global economy, they will be hurt the most.”China struck a slightly more conciliatory tone; its Ministry of Commerce has urged the US to work with Beijing.A spokesperson for the ministry said today:“The U.S.side cannot seek talks on one hand while threatening to introduce new restrictive measures on the other.

This is not the right way to get along with China,“China’s position concerning tariff or trade wars has been consistent -- if forced to fight, China will fight to the end, and for talks, the door is open,China and the US began charging additional port fees on ocean shipping firms today too,The International Monetary Fund has said the global economy has shown “unexpected resilience” in the face of Donald Trump’s tariffs, as it lifted its forecasts for world growth in 2025 and 2026,The IMF also said:The UK will have higher inflation than other advanced economies in 2025 and 2026……meaning the Bank of England should be careful about lowering interest ratesIt has concerns about the boom in technology valuationsIt believes US stock markets which have rallied during the AI boom are at risk of a “sudden, sharp correction” while government bond markets are under mounting pressure.

Elsewhere….Bank of England policymaker Alan Taylor has warned that the UK economy is at a growing risk of “a bumpy landing”.He told an event at Cambridge there is an increased danger of:….a downside scenario, where inflation undershoots, and goes below target in late 2026, and the economy moves into a weakened state for a sustained period, with output and employment below potential, leading to undue damage to economic activity.JP Morgan CEO Jamie Dimon has hinted there may be further private credit losses following the collapse of subprime lender Tricolor and auto parts supplier First Brands.

Profits have jumped at JP Morgan, and at Goldman Sachs.Silver has hit a record high.US stock markets which have rallied during the AI boom are at risk of a “sudden, sharp correction” while government bond markets are under mounting pressure, the International Monetary Fund has warned.In its Global Financial Stability Report, just published as policymakers gather in Washington for the IMF’s annual meetings, the Fund said that markets appear “complacent”.It highlighted “increasing vulnerabilities in the financial system,” including in stock and bond markets, and among “non-bank financial intermediaries” (NBFIs) or “shadow banks”, which it warned are now closely bound to the banking sector.

US stock markets have repeatedly roared to record highs in recent months.The IMF said stocks do not appear as overvalued as they did during the dotcom bubble at the turn of the millennium.But it said the gains are worryingly concentrated among the “magnificent seven” tech firms, which include Apple, Nvidia and Meta.“Concentration risk within the S&P 500 is at a historic high, with a narrow group of stocks spanning mega-cap IT and AI-related firms driving the broader index,” it said, adding that the magnificent seven account for 33% of the index.More here:(a timely warning, as Wall Street slides today….

)After a resilient start to the year, the global economy is showing signs of a moderate slowdown.Our latest World Economic Outlook projects global growth to slow from 3.3 percent in 2024 to 3.2 percent in 2025 and 3.1 percent in 2026.

Here are the IMF’s latest forecasts for growth this year:IMF Growth Projections for 2025 🇺🇸 US: 2,0% 🇩🇪 Germany: 0,2% 🇫🇷 France: 0,7% 🇪🇸 Spain: 2,9% 🇬🇧 UK: 1.

3% 🇨🇳 China: 4.8% 🇯🇵 Japan: 1.1% 🇮🇳 India: 6.6% 🇷🇺 Russia: 0.6% 🇧🇷 Brazil: 2.

4% 🇸🇦 Saudi Arabia: 4,0% 🇳🇬 Nigeria: 3,9% https://t,co/bbUb7LaE1v pic,twitter.

com/pmeQ51geOWBack in the banking sector, JP Morgan CEO Jamie Dimon has hinted there may be further private credit losses following the collapse of subprime lender Tricolor and auto parts supplier First Brands.JP Morgan revealed on Thursday that, while it had no exposure to First Brands, it had taken a $170m hit on its exposure to Tricolor.Speaking to analysts today on an earnings call, Dimon said:“My antenna goes up when things like that happen.I probably shouldn’t say this but when you see one cockroach, there’s probably more.And so everyone should be forewarned at this point.

”When asked whether there were inherent risks in lending to non-bank financial institutions, like private credit firms, Dimon said that it was a broad category and there were likely to be weak links:“It’s a very broad category, non-bank financial institutions….Yes, there will be additional risk in the category that we will see when we have a downturn.I expect it to be a little bit worse than other people expect it to be…These are very smart players, they know what they’re doing, they’ve been around a long time.But they’re not all very smart.And we don’t even know the standards of other banks [that] are underwriting to some of these entities.

And I would suspect that some of those won’t be as good as you think.”He suggested this would shake out as part of the normal credit cycle.“We’ve had a benign credit environment for so long, I think you may see credit in other places deteriorate more than other people think when in fact it’s a downturn.And you know, hopefully it’ll be a fairly normal credit cycle…but we think we’re quite careful and obviously we scour the world for things we should be worried about”.Stocks are falling sharply at the start of trading in New York, as traders are gripped by trade war worries.

The Dow Jones industrial average, which tracks 30 large UK companies, has shed 501 points or 1,1%, to 45,566 points,The broader S&P 500 index is down 1,25%, while the tech-focused Nasdaq has shed 1,8%.

The selloff comes after US treasury secretary Scott Bessent accused China of trying to hurt the world’s economy, telling the FT:“This is a sign of how weak their economy is, and they want to pull everybody else down with them.Maybe there is some Leninist business model where hurting your customers is a good idea, but they are the largest supplier to the world,” he added.“If they want to slow down the global economy, they will be hurt the most.”The tit-for-tat port fees rolled out by the US and China on each other’s vessels today are another sign that tensions are high, days after Trump threatened to impose new 100% tariffs on China.The IMF then fends several questions about the UK economy, including today’s forecast that it will have the higher inflation in the G7.

Q: Does the UK have an inflation problem?Pierre-Olivier Gourinchas points out that the UK is also forecast to enjoy above average growth in the G7, “so it is doing something right”, he tells today’s press conference about its World Economic Outlook.On inflation, the Fund believes that many of the drivers of inflation are temporary factors, including regulated prices, while falls in energy prices have dropped out of the window for inflation calculations.But… the IMF does see an upside risk on UK inflation, he adds.He points to increase in labour costs, and increase in inflation expectations – which have been nudging up at the three and five-year level as well as at the shorter, one-year end.He warns:“Households and firms in the UK are becoming maybe a bit less certain that inflation is coming down quickly.

”As such, the Bank of England should be “very cautious in its easing trajectory”, he adds – meaning policymakers should not rush to cut interest rates..Gourinchas says global factors are in play too – we are in an environment where bond investors are becoming more prudent about buying government debt.He adds that the UK is still a solid economy, and the Fund is “not seeing risks there at all.”Q: Are you saying that the tech bubble is about to burst?No-one can know for sure, IMF chief economist Pierre-Olivier Gourinchas replies.

He then cites the very robust investment in the tech sector sector, among companies who are developing AI systems and also those who are adopting it.This is sustaining activity in the US right now, he explains.Gourinchas then points to the boom on Wall Street, saying that “the valuations in stock markets now reflect the prospects of profits in future”.Those valuations are “quite elevated”, he explains, which is feeding into strong consumpion as people see their portfolio doing well.So while the Fund can’t say whether this tech boom is going to correct, part of its job is to watch out for potential risks, and it is one of the risks.

Q: What impact will the weaker dollar have on emerging markets?IMF chief economist Pierre-Olivier Gourinchas says the US dollar has been weakening since January,That helps financial conditions in many emerging markets (as they often borrow in dollars) and also helps on the inflation front, as it means import prices don’t rise as much,Asked about Egypt’s economic prospects, the IMF’s deputy chief economist, Petya Koeva-Brooks, says the Fund expects stabilization in its Suez canal and mining activities,Inflation is expected to decline further, she adds,The IMF are now taking questions about their World Economic Outlook:Q: How much economic impact could the latest US-China trade tensions have?Pierre-Olivier Gourinchas, the Fund’s chief economist, says the latest announcements show that trade uncertainty is still with us.

He points out that the situation is very fluid, and isn’t factored into the IMF’s baseline scenarios.This sort of downside risk illustrates the potential that the global economy could take a turn for the worst if trade tensions become more elevated, Gourinchas says.The IMF are now presenting their latest World Economic Outlook at a press conference in Washington DC now.The Fund’s chief economist, Pierre-Olivier Gourinchas, is explaining that the econonomic outlook is fragile and very sensitive to developments in trade outlook.He points out that global trade developments continue to shape the economic outlook, warning that the tariff shock is dimming “already weak growth prospects”.

Gourinchas then cites four concerns1) The technology boom, which he says has echoes of the dot-com boom of the late 1990s,There is a risk, he says, that stronger investment and consumption could lead to tighter monetary policy,There is also a risk that markets sharply reprice tech investments,2) Concerns about China’s growth model,Gourinchas points to weakness in its property sector, adding that it is hard to see how exports can continue to drive growth in the current trade climate