14 March 2025: Starmer announces a radical shakeup for the NHS

The Prime Minister continues to be prepared to do Donald Trump’s bidding in the forlorn hope that the U.S. President will acquiesce to Keir Starmer’s hopes for a far-reaching trade deal.

Trump has told reporters that the peace deal agreed with Ukraine is almost “ready to go,” but Vladimir Putin wants clarification on several points.

Starmer told Putin yesterday that if he doesn’t agree to the deal, his economy would be in tatters quickly.

Starmer’s faith in Donald Trump is touching. However, it is hard to consider that he has returned to Washington’s fold with several European nations still unsure if they want to join the coalition of the willing that he and Emmanuel Macron are trying to create.

Starmer also announced a significant policy shift yesterday in which he has decided to do away with NHS England, the administrative arm of the health service with the loss of around nine thousand jobs, bringing the quango under the umbrella of the Department of Health.

The NHS certainly faces severe issues with waiting lists of more than five million patients waiting for surgery, while more than five hundred thousand waited more than twenty-four hours to be seen in A&E departments countrywide.

However, the folding of NHS England into the Department of Health was immediately criticized by Health Service Unions which believe that it will lead to further inefficiencies in health provision while “only” producing savings of £500million.

The Opposition welcomed the change but wants to receive more details of how it will work, while the Liberal Democrats believe that the overhaul will not work unless a similar process is conducted for social care.

Business groups representing the UK Iron and Steel industry believe that the tariffs facing their industry will lead to a fall in growth, while they won’t necessarily lead to higher inflation.

The Confederation of British Industry warned against “protectionism” as the UK Government seeks to boost domestic business confidence and economic growth.

John Foster, chief policy officer at the CBI, said: “At a moment in the economic cycle when boosting business confidence and unlocking firms’ capacity for investment holds the key to kick-starting economic growth, the escalating tariff situation in the US remains deeply concerning.

Next week is shaping up to be an important watershed for the economy. First, the Bank of England will publish its quarterly review, in which it provides the market with where it sees inflation and growth over the rest of the year.

Then employment data will be published, which will either bolster or diminish hopes for further rate cuts, then the MPC will meet on the 20th March to vote on interest rates.

It will be interesting to note if Catherine Mann receives any further support from her colleagues for her radical change of heart over the pace and size of rate cuts.

The pound showed signs of having peaked as it lost ground yesterday, falling to a low of 1.2920 and closing at 1.2948.

The latest inflation data, which showed that consumer prices fell in February, has placed the Federal Reserve in a difficult spot. As the FOMC prepares to meet to discuss the path of interest rates, those fearing a recession want it to be more proactive and “get ahead of the curve” and make a pre-emptive twenty-five-point cut.

This will be as much a boost for the economy as the Central Bank acknowledging that President Trump’s economic policies will see growth tumble.

Every time a Wall Street selloff snowballs, fear of an avalanche revives talk of the “Fed put”. The correction underway now is no different, but the bar for the Central Bank to provide the market with a backstop is now likely a high one.

The notion of the Fed, the idea that the Federal Reserve will prop up falling asset prices with monetary easing or other tools, took root in the Alan Greenspan era (1987-2006) and has been embedded in the investor psyche ever since.

Greenspan was a far more pragmatic Chairman than Jerome Powell. The current Chairman has a clear idea of the direction he wishes to take monetary policy in. It’s just that the President’s eccentricity won’t allow him to formulate policy for the longer term.

After President Trump’s global tariffs on steel and aluminium took effect, the European Union and Canada announced billions of dollars in levies on American goods. The stock market recovered some recent losses as investors weighed positive news on inflation against continued uncertainty.

The market got as much notice as it was ever going to get of Trump’s latest policy initiative as he conducts meetings with foreign politicians and diplomats in front of the White House Press Corps, often answering “planted” questions that have no bearing on the meeting which he is hosting.

Yesterday, he took the opportunity of a meeting with the Dutch PM to comment on Vladimir Putin’s prevarication over the nascent peace deal for Ukraine, which Trump insists is almost complete, to the surprise of even the most loyal Ukrainian soldier fighting on the front line in the disputed Kursk region of their country.

Along with next week’s rate decision from the FOMC, the committee will also publish their economic projection for this year and the following two years. They are expected to predict that rates will fall to 3% eventually, but a lot will depend on the future path of inflation.

Manufacturing output and retail sales numbers will be published as the market hopes that they can concentrate on “hard data” to provide some solid evidence of the true state of the economy.

The dollar index has recovered since its near rout on Monday. It rallied to a high of 104.08 and closed at 103.84 as the market began to realize that the adoption and implementation of Trump’s economic plan would not happen overnight.

According to ECB President Christine Lagarde, it is a trade war in which several G20 nations become embroiled, that is far more dangerous than the tariffs that have been enforced by President Trump this week.

Lagarde sees a future where Trump’s isolationist policies create a global recession where the nation is set against the nation to win a share of a smaller “trade pie.”

Lagarde warned of “exceptionally high” uncertainty as Europe retaliated against US President Donald Trump’s tariffs.

She said it was “impossible” to guarantee that policymakers would meet a 2pc inflation target in the short term given global volatility.

Her comments came after Europe said it would impose tariffs on up to €26bn of American goods from next month in retaliation to Trump’s 25% levy on steel and aluminium imports from the bloc.

Trump threatened to escalate the trade war by imposing further levies on the EU, saying: “Whatever they charge us, we’re charging them.”

Two of the biggest Wall Street bosses said they still backed Trump after he met them on Tuesday. Trump donor Stephen Schwarzman, chief executive of asset manager Blackstone, said tariffs would increase US manufacturing, telling the Financial Times: “That tends to be a good thing for the world.” Goldman Sachs chief David Solomon said business leaders “understand what the President is trying to do with tariffs.”

Wall Street analysts said sentiment towards the US had been “drained by Trump’s scattergun approach to tariff policy, retaliatory actions by the EU and Canada and the prospect of what a global trade war will mean for the world economy and financial markets.”

Germany’s IfW economic institute raised its 2026 growth estimate for Europe’s largest economy on Thursday, anticipating tailwinds from a public spending boost that conservative election winner Friedrich Merz is pushing for. IfW one of Germany’s main economic forecasters, said next year’s gross domestic product would likely increase by 1.5%, up from IfW’s December forecast of 0.9%.

It also confirmed its previous projection for Germany’s economy to stagnate in 2025, saying its structural problems would not let up in the short term amid international competition and the threat of tariffs.

The Euro again failed to breach the 1,10 level as it fell to a low of 1.0822 yesterday. The recent rally for the common currency may be over for now, but there is a much more level playing field for G7 currencies now following the dramatic events of the past two weeks.

The Euro eventually closed at 1.0852 as the market prepares for next week’s flurry of monetary policy decisions.

Have a great day!