UK Politics

Tech firms are vulnerable to the risk that soaring valuations will drop sharply amid potentially “disappointing” progress around artificial intelligence (AI), the Bank of England has warned.The risk of a “sharp correction” in the financial markets has increased, the Bank’s Financial Policy Committee (FPC) said.The minutes of the FPC’s latest meeting read: “On a number of measures, equity market valuations appear stretched, particularly for technology companies focused on artificial intelligence.“This, when combined with increasing concentration within market indices, leaves equity markets particularly exposed should expectations around the impact of AI become less optimistic.”It said there was a risk that “disappointing” progress on AI capability or adoption, or increased competition could drive valuations lower across the sector.“Material bottlenecks to AI progress” including across power, data, or commodity supply chains could also harm valuations, particularly for firms who are expected to benefit from greater AI investment, the FPC said.It comes at a time that valuations for tech firms have boomed amid expectations that the adoption of AI technology will ramp up around the world.Huge technology companies like Nvidia, Google and Microsoft have all seen their share prices soar over the past year.Meanwhile, the Bank’s FPC flagged concerns about the independence of the US’s Federal Reserve coming under pressure from US President Donald Trump.It said central bank independence “underpins monetary and financial stability”.“A sudden or significant change in perceptions of Federal Reserve credibility could result in a sharp repricing of US dollar assets, including in US sovereign debt markets, with the potential for increased volatility … and global spillovers,” the Bank added.Mr Trump has sought to oust the Federal Reserve’s governor Lisa Cook over allegations she committed mortgage fraud when purchasing a home in 2021, but a judge ruled that the firing was illegal.He has also repeatedly demanded that the Fed, led by chairman Jerome Powell, reduce its key interest rate.The Fed, like the Bank of England, operates independently of government – meaning it sets interest rate policy without political interference.In the meeting, the FPC also cautioned the impact of Mr Trump’s trade war had “not yet been fully realised”.Uncertainty over tariffs pose a risk to the global economic outlook, it said.It said geopolitical risks remained “elevated” while global conflicts had raised energy supply fears, but added that oil and shipping prices had eased back since its last meeting earlier this year.Despite the increased risks, the experts assured the UK banking system was equipped to support households and businesses even if economic conditions were to get much worse than expected.Households face continued pressure from higher borrowing costs and the cost of living, but the outlook was generally improving, it said. More

NHS drug prices look set to rise as Sir Keir Starmer is close to bowing to Donald Trump’s demands to pay pharmaceutical companies more money.It comes as officials briefed the Trump administration on new proposals to adjust how the NHS prices medicines earlier this week, including raising the National Institute for Health and Care Excellence (NICE) threshold by 25 per cent.The revelation, first reported by Politico, is the government’s attempt to avoid a wave of new tariffs threatened by President Trump over what he believes to be anti-competitive practices by the UK.Trump and Starmer together at the signing of a tech prosperity deal in September More

Vegan sausage rolls will have to be renamed in Northern Ireland as the European Union could be set to vote to ban plant-based food sold under “meaty terms”.Meat-free products in Northern Ireland will have to be sold under new terms, such as “tubes” or “discs”, if Wednesday’s vote in the European Parliament passes. It is backed by a majority of conservative EU lawmakers, as well as some liberal members, to appease farmers. The possible EU ban will apply because of the Windsor Framework, which ensures that Northern Ireland must follow some of the bloc’s rules that Britain does not, including on food labelling.The treaty created the Irish Sea border, which kept the land border with the Republic of Ireland invisible after Brexit while introducing checks on British goods. Unionist politicians in Northern Ireland have complained that the latest vote is evidence of the country being forced to adhere to rules it never backed. Timothy Gaston, the member of the Northern Ireland Assembly for the Traditional Unionist Voice, told The Telegraph: “Once again, Northern Ireland finds itself bound by rules it did not make, subject to decisions in which no Northern Ireland representative has a vote.“While the European Parliament debates what a sausage roll can be called, businesses here must brace for yet another layer of regulation that applies in Belfast but not in Birmingham.”The Northern Ireland Assembly can delay the application of EU law by using the “Stormont brake”, designed to block, at least temporarily, the application of a rule if it has a “significant impact specific to everyday life in Northern Ireland in a way that is liable to persist”. On the two previous occasions that this brake has been tested, however, the UK government has denied its use, claiming it did not meet the threshold. It is also unclear whether there is sufficient opposition to this new rule within the assembly. The name of one vegan sausage roll will nevertheless remain unchanged in Northern Ireland despite the potential ruling: a loophole in the Brexit treaty means that Greggs’ product will escape the possible order. The loophole allows for certain products made in Britain to be sold under their original name. The pastries are made in Britain before being shipped to two dozen bakeries in Northern Ireland. They cross the Irish Sea border using the “green lane”, which means they are deemed not at risk of crossing into Ireland. More

Sir Keir Starmer will resist growing demands from British business leaders to provide more UK visas for highly skilled workers from India.While flying to Mumbai for a two-day trade visit with more than 100 business chiefs, the prime minister said opening up visas for Indian workers to come to the UK “isn’t part of the plan”, he added.India reportedly pushed for far more visa access to the UK when the two countries were finalising their trade deal earlier this year. But while heading on his first major trade mission to India, which comes after a UK-India trade deal was struck earlier this year, the prime minister told journalists: “The issue is not about visas. It’s about … engagement and investment and jobs and prosperity coming into the United Kingdom.”Sir Keir also reiterated that, when it comes to visas, ministers were considering whether to punish countries who refuse to take back people deported from the UK. The government is “looking at whether there should be a link between visas and returns agreements,” he said, though he added this would not apply to India, with which the UK has a successful returns agreement.The PM has pledged to cut net migration to the UK and has come under intense pressure to cut both legal and illegal immigration from Nigel Farage’s Reform UK party and Kemi Badenoch’s Conservatives. But he is also under pressure to find some economic good news on his whirlwind trade visit, following warnings of a £50bn black hole in the government’s finances and widespread forecasts Rachel Reeves will have to raise taxes in November’s Budget. Keir Starmer with the huge trade delegation at Heathrow More

Kemi Badenoch is set to announce a “golden rule” for the economy in her conference speech on Wednesday as she desperately tries to restore the Conservative Party’s credibility on the nation’s finances.With millions of Britons still reeling from the impact of Liz Truss’ disastrous mini-Budget, the Tory leader will attempt to restore voters’ trust in the party’s handling of the economy by pledging that half of all money saved from cuts must be put towards shrinking the deficit.The other half would go on spending or cutting taxes to boost the economy, under the move that she will pledge to introduce if the Tories are re-elected to government.The announcement in her keynote speech for the Tory conference in Manchester on Wednesday comes as shadow cabinet members admit that the party is “struggling to even get a hearing with the public”.With the party consistently polling in the mid teens with around half the support of Nigel Farage’s Reform UK, the conference has been noticeable for how few have attended and the low level of interest in policy announcements.Mrs Badenoch reflected on her party’s difficult journey (Peter Byrne/PA) More

The British steel industry has been plunged into crisis after the European Union announced plans to slap 50 per cent tariffs on UK imports. In what is a major blow to Sir Keir Starmer’s mission to reset relations with the bloc after Brexit, the European Commission revealed plans to double the current level of 25 per cent, while reducing tariff-free import volumes to 18.3 million tonnes a year – a 47 per cent reduction.The director general of UK Steel said the fresh tariffs would be “devastating” to the industry, which currently exports 78 per cent of its steel to the EU. The increase comes after the industry is still dealing with the impact of 25 per cent tariffs on imports to the US, imposed by Donald Trump.The prime minister has said he is in discussions with both the US and EU about the tariffs, saying the government is strongly supportive of the steel industry. European Commission president Ursula von der Leyen More

Gender critical campaigners have been accused of making “hateful” and “extremist” remarks at an event at the Conservative Party conference in Manchester after suggesting those who support trans rights have “broken brains” and that so-called gender ideology is “an evil”. Speaking on a panel event on the fringes of the conference, titled ‘After the Supreme Court Ruling: what next for sex-based rights’, Fiona McAnena, director of campaigns at Sex Matters, referred to trans women as “a man in a dress”. Meanwhile, Kate Barker, CEO of the LGB Alliance, claimed the medical establishment has been captured by “fanciful and malign ideology that tells gay people that they can be cured by making grotesque and permanent changes to their body”. Speakers on a panel titled ‘After the Supreme Court Ruling: what next for sex-based rights?’ More

Tory grandee Lord Heseltine has warned Kemi Badenoch that the party’s attacks on migrants are “not the Conservative way to rebuild power”.In a damning attack on her leadership, the former deputy prime minister has used a speech at the conference in Manchester to blast the rhetoric of the current leadership, warning that the inflammatory language “encourages the worst sort of prejudice”.In his speech at a European Movement event at the Conservative Party conference, Lord Heseltine suggested taking such a hard right approach to politics is unconservative.His comments comes amid a growing row over comments made by shadow justice secretary Robert Jenrick, who said he had not seen “another white face” while filming a video in the Handsworth area of Birmingham. He later doubled down on his remarks, saying the UK’s second city “did look like a slum”.Lord Heseltine warned that instead of aping Reform UK, the Tories “must make clear that we will never have any part in the populist extremism of Nigel Farage”.Lord Michael Heseltine has been a strong critic of the Tories’ lurch to the right in recent years More