Key events
Pound slides on worries about UK’s public finances
The pound has been sliding since news broke yesterday of the government’s official forecaster’s productivity downgrade over the next five years, expected on Friday.
Worries over the state of the UK’s public finances are driving sterling lower, as Rachel Reeves, the chancellor, faces an increasingly difficult balancing act.
The pound tumbled to a two-and-a-half year low against the euro and a three-month low against the dollar this morning. It fell by 0.4% against the euro and the dollar earlier, to €1.13 and $1.32, following steep falls on Tuesday.
This comes after it emerged that the Office for Budget Responsibility (OBR) is planning to cut its trend productivity growth prediction by 0.3 percentage points, after a downgrade of the UK’s economic momentum since the 2008 financial crash.
This means the UK chancellor will have to account for a bigger-than-expected £20bn hit to the UK public finances in next month’s budget, increasing the likelihood that she will breach a key Labour’s manifesto pledge not to raise income tax.
Each percentage point downgrade would translate into £7bn of extra borrowing.
GSK boss says UK will struggle to be a ‘life sciences superpower’ without pricing reform
As ministers are drawing up proposals to increase the amount the NHS spends on new medicines, potentially by up to 25%, with an announcement expected as soon as the end of this week, GSK boss Emma Walmsley said she was “hopeful and ambitious” that the standoff with the pharma industry can be resolved.
Without pricing reform, the UK will struggle to be a life sciences superpower, she warned. She told reporters:
We are great supporters of the life sciences industrial strategy in the UK. And I’ve been very consistent on our view that it’s key to execute against that in terms of the opportunity for clinical trials and the opportunity for having translational facilities, all of the work that can be done with the data, but it is absolutely key that we have a competitive, commercial environment that recognises the value of innovation.
Obviously we’re engaging, watching, contributing as we can. And, I would say: hopeful and ambitious.
She added:
What everyone is putting the energy into, hopefully resolving, is how we make sure this country creates the right commercial environment. And without that, I think it’s going to be very difficult to be able to be a leading life sciences superpower… and without that, we are not going to secure something else we all want, which is patient access to innovation. You have to remember that the cost of drugs as a share of the total cost of health care is less than 10% in this country.
Donald Trump has put pressure on pharmaceutical companies to lower their drug prices in the US and sell directly to American patients – or face trade tariffs. (Historically, drug prices in the US have been much higher elsewhere, partly because of a complicated system involving middlemen.) In response, Pfizer and AstraZeneca have done deals with the US government in recent weeks.
Asked whether GSK is going to do a pricing deal with the Trump administration, Walmsley said GSK is “engaging very constructively” with the US government.
We absolutely agree we should be working towards constructive reform in the US system that we want to have affordable, accessible drugs in a sustainable way.
GSK is investing $30bn in US manufacturing and research, but has also affirmed its commitment to the UK. Its bigger UK rival AstraZeneca has paused a planned £200m investment at a Cambridge research site.
GSK upgrades 2025 sales and profit forecasts as CEO Emma Walmsley bows out
As GSK’s chief executive Emma Walmsley prepares to bow out after eight years, the drugmaker raised its 2025 sales and profit forecasts driven by double-digit growth in respiratory, inflammation & immunology, oncology and HIV.
The company reported a pretax profit of £2.5bn for the third quarter, compared with £64m a year earlier which reflected its Zantac settlement.
The GSK share price jumped by nearly 3% on the news, to its highest level since mid-2024.
Vaccine sales rose by 2% to 2.7bn in the quarter to 30 September, beating analysts’ forecasts. Growth was driven mainly by sales outside the US, where GSK reported a 15% drop in sales of its shingles vaccine, Shingrix.
US health secretary Robert F. Kennedy Jr, an anti-vaxxer, has slashed funding for research and ousted the head of the Centers for Disease Control and Prevention.
Speaking to reporters, Walmsley said:
We remain very cautious about the environment in the US, although we did reassert today, we expect to be at the top end of our current vaccines guidance, and that’s really because we’re seeing great momentum ex US, particularly in Europe this quarter.
Trump settles for golden gifts instead of investment deal in South Korea
Donald Trump wants South Korea to invest $350bn in the American economy – but so far he has had to settle for a gold medal and a crown.
Both were gifts from the country’s president, Lee Jae Myung, who dialled up the flattery while Washington and Seoul struggled to finalise details on financial promises during the last stop of Trump’s Asia trip, according to Associated Press and Reuters.
The US president was awarded the “Grand Order of Mugunghwa”, the country’s highest decoration.
On the lunch menu were “mini beef patties with ketchup”, a “Korean Platter of Sincerity” featuring US beef and local rice and soybean paste, and grilled fish with a glaze of ketchup and gochujang, a red chilli paste.
The lunch was capped by a “Peacemaker’s Dessert” consisting of a brownie adorned with gold.
A band played Trump’s campaign anthem of “Y.M.C.A.” when he stepped off Air Force One. Lee told him that “you are indeed making America great again.”
Trump has a soft spot for pomp and pageantry, and he seemed satisfied despite the lack of a trade deal. He was particularly impressed by a choreographed display of colourful flags as he walked along the red carpet.
The US president told Lee during their meeting:
That was some spectacle, and some beautiful scene. It was so perfect, so flawlessly done.
Earlier in the day, Trump even softened his rhetoric on international trade. “The best deals are deals that work for everybody,” he said during a business forum.
Aston Martin cuts £300m from investment plans after Trump tariff impact
Jasper Jolly
Aston Martin has slashed £300m from its investment plans after the British sportscar maker reported a bigger than expected loss in the third quarter because of Donald Trump’s tariffs and weak demand in China.
The carmaker said on Wednesday that losses before tax were £112m in the third quarter of 2025, a ninefold increase from £12m a year earlier.
The brand, whose products are best known for featuring in the James Bond film franchise, has been buffeted by global pressures during a five-year turnaround effort that has been marked by perennial heavy losses.
Aston Martin had already warned earlier this month that this year’s profits would be lower than previously expected because of a decline in sales. It sold 1,430 cars to retailers during the third quarter of 2025, down 13% compared with the period last year.
Revenues over the first nine months of 2025 were down by 26% to £740m compared with almost £1bn a year earlier.
Adrian Hallmark, Aston Martin’s chief executive, said:
This year has been marked by significant macroeconomic headwinds, particularly the sustained impact of US tariffs and weak demand in China.
Work is under way to review our future product cycle plan with the aim of optimising costs and capital investment while continuing to deliver innovative, class-leading products to meet customer demands and regulatory requirements.
The manufacturer, which produces its vehicles in Warwickshire and south Wales, has already delayed the launch of its first electric model, and it cut 5% of its workforce in February. It said it would detail further changes early next year.
Aston delivered the first of its Valhalla supercars this month, which it hopes will improve the financial performance if it can deliver 150 in the last three months of the year. The company will make 999 of the mid-engined, plug-in hybrid cars, priced at £850,000 – or more than $1m a vehicle. Aston Martin said that more than half of the cars were already ordered by customers.
Nvidia shares jump after Trump remarks
Shares in Nvidia jumped after Donld Trump said he will discuss the US chipmaker’s Blackwell artificial intelligence processors with Chinese leader Xi Jingping, calling the chip “super duper”. He said the company’s chief executive Jensen Huang recently brought a version of it to the Oval Office.
Trump already said a few months ago that he would consider allowing Nvidia to export a downgraded version of its Blackwell processor to China. This would be a major win for Nvidia and a significant concession to Beijing – and upend Washington’s campaign to curtail China’s prowess in AI.
Nvidia’s shares extended gains to 8.5% in Asian trading on the alternative platform Blue Ocean, Bloomberg News reported. They are currently up by 3.3% in pre-market trading ahead of the Wall Street open.
In August, Nvidia and fellow chipmaker AMD agreed to give the US government 15% of their revenue from advanced chips sold to China in return for export licences to the key market.
Trump lands in South Korea amid deadlocked trade talks over $350bn deal on tariffs
Donald Trump landed in South Korea on Wednesday to meet president Lee Jae Myung, with deadlocked talks over a $350bn trade deal between the two countries threatening to cast a shadow over the event.
After arriving on a flight from Tokyo, where he signed a rare earths deal with Japan’s new prime minister, Sanae Takaichi, the US president addressed a summit of CEOs ahead of a meeting with Lee in the town of Gyeongju, a historical city playing host to the annual Apec summit.
South Korea says it will award Trump its most prestigious medal for his efforts to stabilise peace on the Korean Peninsula before the meeting.
Lee’s office said Trump will be the first US president to receive the Grand Order of Mugunghwa, South Korea’s highest order, in recognition of his past diplomatic efforts and to emphasise his role as a “peacemaker” between the rival Koreas.
Seoul also plans to present Trump with a replica of a royal gold crown from the ancient Silla Kingdom, whose capital was Gyeongju.
At the top of the agenda for the talks with Lee will be the unresolved trade agreement between the US and South Korea. The two allies announced a deal in August under which Seoul would avoid the worst of the tariffs by agreeing to pump $350bn of new investments into the US.
However, Korean officials say a direct cash injection could destabilise their economy, and they would rather do loans and loan guarantees instead. Officials from both sides have said Trump and Lee are unlikely to finalise an agreement.
For now, South Korea is stuck with a 25% tariff on vehicles, putting manufacturers such as Hyundai and Kia at a disadvantage against Japanese and European competitors, which face a 15% levy.
Trump has also pressed allies including South Korea to pay more for defence, and the two are likely to discuss efforts to engage North Korea, which announced early on Wednesday that it had test-fired a nuclear-capable cruise missile the previous day.
Introduction: Trump says he will cut fentanyl tariff on Chinese goods and expects ‘good deal’ with Xi
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Donald Trump has said he will cut fentanyl-linked US tariffs imposed on China earlier this year, as he arrived in South Korea, a day before his meeting with Chinese president Xi Jinping in the country.
Speaking on Air Force One on Wednesday, the US president said he would reduce the 20% fentanyl levy he imposed in the spring as a way to put pressure on Beijing to curb the export of precursor chemicals used to make the synthetic opioid, which has fuelled the opioid crisis in the US. Trump told reporters:
I expect to be lowering that because I believe they can help us with the fentanyl situation.
We have to get rid of it.
US and Chinese officials have drawn up the framework for a trade deal for Trump and Xi to sign when they meet in the south-eastern city of Gyeongju tomorrow.
“I think we’re going to have a deal,” the US president said, adding that it will be a “great deal for both” nations, speaking at a meeting of corporate leaders at the Asia-Pacific Economic Cooperation summit. He told the summit:
The world is watching, and I think we’ll have something that’s very exciting for everybody.
A US official told the Financial Times that Beijing is willing to take concrete action to stop the flow of fentanyl ingredients which, he said, merits “a little bit of relief” from Washington.
The Wall Street Journal reported yesterday that Trump was considering cutting the 20% tariff on Chinese goods to as low as 10%.
Trump also indicated that he is open to providing China with access to Nvidia’s Blackwell AI processor as part of a trade deal, which would be a major concession. Calling the chip “super duper,” he said:
We’ll be speaking about Blackwells.
It is the last stop of Trump’s Asia tour.
Most Asian stock markets rallied, with Japan’s Nikkei jumping by 2.2% South Korea’s up 1.76%, and the Shanghai and Shenzhen exchanges gaining 0.7% and nearly 2% respectively.
State-owned COFCO has bought three US soybean cargoes ahead of the meeting between the two presidents tomorrow – China’s first purchases from this year’s US harvest, Reuters reported, citing two trade sources.
As the two countries are locked in an uneasy trade truce, the lack of Chinese buying has cost American farmers (who largely voted for Donald Trump) billions of dollars in lost sales.
Later today, the US Federal Reserve is widely expected to cut interest rates by a quarter point to 4%, and traders are waiting for Fed chair Jerome Powell’s press conference to shed further light on the central bank’s next moves.
The Agenda
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8am GMT: Spain GDP flash for Q3, retail sales for September
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9.30am GMT: Bank of England consumer credit for September
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1.45pm GMT: Bank of Canada interest rate decision (quarter point cut to 2.25% forecast)
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2pm GMT: US Pending Home sales for September
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6pm GMT: US Federal Reserve interest rate decision (quarter point cut to 4% forecast)
