# Roundup of the week: 18 July 2025

_In this week’s update: Trump’s tariff moves on the EU and China, Powell under pressure, and a brewing energy crisis in Germany. Plus: encouraging signs from China’s economy, data centre mega-investments in the US, UK inflation and regulation, and reactions to company updates from BMW, Barratt, ASML, and Ashmore and others._

Neil Woodford · 18 July 2025 · 13 min read

![Meta CEO Mark Zuckerberg has announced $70 billion in AI infrastructure spending this year, with the first multi-gigawatt data centre — ‘Prometheus’ — set to come online in 2026.

Image credit: Frederic Legrand - COMEO](https://cdn.sanity.io/images/v3acfbvo/production/0b9d4cc10dc6d5df6b2e2604f3e102124d0c8de1-4000x2669.jpg?w=1600&fit=max&auto=format)

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**This week’s update was covered live during the first members-only Q&A.**

It’s been an exceptionally busy week for markets, policy, and geopolitics — and we opened the Q&A with a full roundup of what’s been happening, including Neil’s take on the latest labour market data, central bank outlooks, and developments in the US and Europe.

If you missed it, the replay is now available — and you can watch it below.

_[Embedded media](https://www.youtube.com/watch?v=KagxBFWUGQU)_

## Politics

### EU tariffs

It is becoming increasingly clear that, despite his age, President Trump maintains a relentless work ethic, if nothing else. The stream of tariff announcements is difficult to keep track of, but so far, the chronology is that on Sunday, the President stated that he will impose tariffs of 30% on the European Union and Mexico from 1st August, but quickly followed this with another announcement that he is open to further dialogue with the EU.

It seems that the driving force behind this intermittent tariff dispute is President Trump combining his trade agreement aims with his desire for the EU to increase procurement of US weapons to support Ukraine’s defence. It appears he has now achieved this, so there is now more optimism that a trade deal between the US and the EU may be possible.

### US/China trade discussions

It seems that the heat and light between China and the US regarding trade is gradually easing. Talks in Malaysia between the two countries’ top diplomats (Marco Rubio and Wang Yi) last Friday not only continued the process of de-escalating the trade situation but also introduced the possibility of a summit between President Xi and Donald Trump later in the year. The discussions were described as “very constructive”.

They were swiftly followed by Nvidia’s announcement that it had received permission to resume sales of its H20 chips to China, a key demand from the Chinese in exchange for loosening restrictions on its rare earth exports. (AMD had the go-ahead, too.)

### US customs duties

Although I do not have all the necessary information to pass judgement on these data, I would like to highlight the following. Apparently, in June, US customs duties reached $27.2bn, and for the first nine months of this fiscal year (1st October 24 to 30th September 25) reached a gross figure of $113.3bn. The June figure was so unexpectedly high that it helped turn what was supposed to be a deficit month of $30bn into a surplus of $27bn. In just a few months, tariffs as a share of total Federal revenues have more than doubled to just under 5%.

![Roundup of the week: 18 July 2025](https://cdn.sanity.io/images/v3acfbvo/production/acab3c65371e9c516e7923ad1d2ecb74b4e39ea7-2268x1374.png?w=1600&fit=max&auto=format)

Of possibly greater interest is the fact that the tariffs are clearly affecting Federal revenues, but, according to the Central Bank, have yet to impact inflation. Indeed, today’s June US CPI data (see below) came in below expectations, with ex-food and energy at 0.2% MOM instead of the anticipated 0.3%.

### Pressure on Powell

Although President Trump has stated that he isn’t planning to remove FED Chair Jerome Powell, his administration continues to exert pressure on the Governor, whose term ends in May next year. However, a coordinated effort by the Trump administration could backfire, given the respect markets have for Powell. Today’s better-than-expected inflation figures may alleviate the situation in that it may be good enough to persuade the FED committee to cut rates at the July meeting, and if not, then at the August meeting, which would significantly reduce pressure on the FED Governor.

### German energy price crisis

Since I recently wrote about the crisis facing the UK economy due to the political decision to pursue a unilateral and extreme net-zero target by 2035, I wanted to include this commentary reflecting the concerns German industrialists have expressed this week about their less extreme version of this policy. This is a translation of part of the German industrialists’ letter to Chancellor Friedrich Merz.

> “We are in the worst economic crisis since World War II”, with more jobs than ever before at risk due to the renewable energy policy. “If the energy transition is an operation on the open heart of our economy, as is sometimes said, then it has so far been thoroughly botched. We have to acknowledge: the patient is at risk of dying on the operating table”.
“For 35 years, PV and wind have been legally privileged and subsidized. However, they still do not contribute significantly more to security of supply than they did three decades ago. Instead, they are causing grid costs in the triple-digit billion range”.
“These high electricity prices are not only socially unjust, but they now also threaten our economy, our prosperity, and our social peace”.
“We demand electricity prices must become internationally competitive again for the economy, especially for the industry. We need an industrial electricity price of 5 ct/kWh. This industrial electricity price must not be further increased by political CO2 costs or over loaded with other requirements”.
“Dear Federal Chancellor, the German energy transition threatens to overwhelm Germany as a business location – and with it all our colleagues”.
“The actions of this federal government will not only abstractly determine the future of Germany as an industrial location. Your actions will concretely determine the future of millions of good industrial jobs. The time for empty words is over. Our colleagues will measure this government by its actions!”

> “We are in the worst economic crisis since World War II”, with more jobs than ever before at risk due to the renewable energy policy. “If the energy transition is an operation on the open heart of our economy, as is sometimes said, then it has so far been thoroughly botched. We have to acknowledge: the patient is at risk of dying on the operating table”.
“For 35 years, PV and wind have been legally privileged and subsidized. However, they still do not contribute significantly more to security of supply than they did three decades ago. Instead, they are causing grid costs in the triple-digit billion range”.
“These high electricity prices are not only socially unjust, but they now also threaten our economy, our prosperity, and our social peace”.
“We demand electricity prices must become internationally competitive again for the economy, especially for the industry. We need an industrial electricity price of 5 ct/kWh. This industrial electricity price must not be further increased by political CO2 costs or over loaded with other requirements”.
“Dear Federal Chancellor, the German energy transition threatens to overwhelm Germany as a business location – and with it all our colleagues”.
“The actions of this federal government will not only abstractly determine the future of Germany as an industrial location. Your actions will concretely determine the future of millions of good industrial jobs. The time for empty words is over. Our colleagues will measure this government by its actions!”

Keep in mind that this crisis in Germany has been caused by an industrial electricity price that is 42% lower than in the UK, where the price is nearly 30p per kWh or 34 ct /kWh.

### US data centre and AI investments

The scale of US investment in AI infrastructure continues to expand with a new announcement at a Trump-attended AI gathering in Pittsburgh. On this occasion, a $70bn investment was announced in new data centres and grid infrastructure upgrades. An additional announcement from Blackstone of a $25bn investment in a data centre and energy infrastructure project is also expected soon, alongside comments from Meta’s CEO (Mark Zuckerberg) stating that it will invest $70bn in AI data centres this year, doubling last year’s spend with a further promise “to invest hundreds of billions of dollars into compute to build super intelligence”.

The US is embarking on a huge investment programme to secure its lead in this burgeoning technology. I find it hard to believe that the scale of this investment won’t have a profound impact on US growth in the coming years, but it remains uncertain what returns these massive investments will generate. Strategically, however, it is clear that the US economy has understandably decided it cannot afford to come second in this race to lead the AI industrial revolution.

## Economics

### China

China has released trade figures and Q2 GDP data in the last few days. In both cases, the figures were surprisingly strong. In June, Chinese exporters took advantage of the lull in the trade dispute with the US, shipping 5.8% more than in the same month last year, although total exports to the US in the first half of this year remain significantly lower than in 2024. (See below) The hope is that a more comprehensive trade deal can be secured in the coming weeks, given the encouraging comments referenced earlier in this update between Marco Rubio and Wang Yi.

![Roundup of the week: 18 July 2025](https://cdn.sanity.io/images/v3acfbvo/production/2eafd7b9c1622cb1fbff0bb21b99090bbb3b5721-2268x1374.png?w=1600&fit=max&auto=format)

China’s Q2 GDP data was also better than expected, at 5.2%, exceeding the consensus expectation of 5.1%. Although the challenges in the second half of the year are expected to increase, this is a good start to 2025 for the Chinese economy.

### US and UK inflation data

US inflation came in better than expected earlier in the week, increasing the likelihood of a rate cut at the July or August FED meetings.

Conversely, UK inflation in June was disappointingly above expectations at 3.6% YOY and 0.3% MOM. Despite being above the Bank of England’s forecast, I don’t think this print will derail the MPC from cutting rates at their August meeting (they don’t meet in July). This is because once again this higher outcome is a product of the government’s mistakes last October when it loaded extra employment costs onto businesses and indeed onto consumers (bus fares, vehicle excise duty, etc), and it is this administered inflation, which is effectively one-off in nature, which is pushing the rate up now. The sorts of things that I think the MPC will be more focused on, and particularly the labour market where wage settlements are continuing to fall, will, I think, persuade the MPC that it should cut despite headline inflation being above forecast. I still expect inflation to trend down in the second half of the year and to be back at the 2% target in the first half of 2026.

### Mansion House speech

In her speech on Tuesday, Rachael Reeves set out plans to cut red tape confronting the financial services industry in the UK, which she said would “attract investment and drive growth.” Reforms to the FCA’s consumer duty rules and the operational creep of the Financial Ombudsman Service will be implemented. This is, I think, good news, but quite how we got here in the first place, where regulation is stifling a once prosperous and thriving industry, is a deeper question that remains unanswered.

The Chancellor also announced a relaxation of the rules in the mortgage market designed to help first-time buyers get access to mortgages and committed to looking further at ISA reforms to encourage more people to invest in something other than cash. I suspect this latter objective will be somewhat harder to deliver than she might think, given the well-publicised, self-inflicted challenges confronting the UK stock market about which I have written on a number of occasions recently.

### UK labour market data

This week's labour market data has continued the trend seen in earlier releases. In summary, tightness in the labour market is easing as more people enter the market looking for work. For example, in the three months to the end of May, the number of people looking for work increased by 100,000. Also, the number of job vacancies has declined quite significantly. In all the moving parts, the net result is higher unemployment, which rose to 4.7%.

Broadly, this is what I expected to happen following the budget back in October, which increased the cost of employing people by raising employers’ NI and significantly increasing the minimum wage.

Overall, these data do not mark a significant deterioration in the labour market. Indeed, the Labour Force Survey data shows employment to have actually increased by around 135,000 in the three months to May compared with the previous three months. What the data do show, however, is that tightness in the labour market is easing, and this is reflected in the consistent fall in wage growth, where settlements are now typically around 4%. Importantly, this will please the MPC, which has remained focused on the potential inflationary implications of high wage settlements. Overall, I think these data will encourage the MPC to cut rates at their August meeting.

### US retail sales and jobless claims

Once again, financial markets have been surprised by yet more good data from the US economy. This time, much better-than-expected retail sales and a drop in jobless claims have once again demonstrated the economy’s resilience, confounding the bearish consensus represented, for example, by the IMF and OECD, which both downgraded their US growth forecasts in the Spring.

Retail sales grew month-on-month by 0.6%, smashing the consensus expectation of 0.1%, and YOY by 2.8% compared with expectations of 1.9%.

### France

France’s fiscal difficulties are often overlooked given its pivotal position within the EU, but they have this week re-emerged following publication of the Prime Minister’s proposals to reduce the huge deficit of 5.8% of GDP. (See below) Amongst other things, Francois Bayrou has proposed cancelling two public holidays and Euros 44bn in tax rises and spending cuts to pensions, unemployment benefits and welfare payments. (France has 11 public holidays a year, the UK has 8)

![Roundup of the week: 18 July 2025](https://cdn.sanity.io/images/v3acfbvo/production/8f46ed2a5f0cb44aee6cf5f47eacb2ed512a92dc-2268x1453.png?w=1600&fit=max&auto=format)

In his press conference, the PM said that France could confront a debt crisis similar to that which Greece had to contend with after the Financial Crisis in 2008. He also added that France had become addicted to public spending. However, despite the need for action, it is far from clear that he will be able to get his budget through the National Assembly, given that his predecessor, Michel Barnier, failed with a similar package last year and had to resign.

## Markets

The results season has yet to start in earnest, but it has been a busy week for corporate announcements from businesses I follow.

### BMW

This week, BMW is holding a capital markets meeting over a couple of days in Munich focused on its new model portfolio, or Neue Klasse. Day 1 went very well, especially in relation to discussions about medium-term margin targets, and is followed today with more management presentations.

In the meantime, BMW has announced today that it is partnering with a leading Chinese tech company called Momenta, which is focused on developing autonomous driving technology. Momenta already has partnerships with Honda, Audi, and others. This collaboration is clearly designed to help BMW close the technology gap with Chinese auto manufacturers and with Tesla.

### Barratt Redrow

Barratt’s trading update was not greeted well by the UK stock market, and the shares fell about 8% on the release day. In my judgement, this is yet another example of the market’s tendency to overreact to numbers which missed more bullish expectations, but which understandably reflect the company’s caution about the outlook for the UK new housing market. The trading statement guided to the full year 2025 outcome (to end June) being in line with consensus and highlighted the accelerated delivery of synergies following the acquisition of Redrow. Net cash at year end was guided to over £200mn higher than consensus, and the company also announced a £100mn share buyback.

Planning delays are likely to constrain new outlet openings in the current year, but the industry's backdrop is clearly improving and will continue to do so over the next twelve months as interest rates continue to fall.

### ASML

ASML is a company I follow. On Wednesday, ASML announced its guidance for Q3 net sales, which were lower than consensus expectations. It also announced excellent Q2 numbers, which featured revenues up 23% and net profits up 45% and were well ahead of consensus. However, the share price fell because of the CEO’s cautious comments about the wider outlook. Although he said that ASML’s customers’ fundamentals remained strong, macro-economic uncertainty (tariffs and trade disputes) meant that the business planned for growth in 2026 but could not “confirm” it at this stage.

Frankly, there is nothing surprising about this statement. Given that he and we cannot occupy the minds of Donald Trump or President Xi, expressing uncertainty about the final outcome of all the current discussions on trade is what we should all expect.

Just as in the case of Barratt above, although a completely different business, noisy short-term performance can be very distracting. However, the longer-term fundamentals of both businesses are robust, and in both cases, the valuation is below where I believe it should be.

### Ashmore

Ashmore, the specialist emerging market fund management group, released a trading statement at the beginning of the week. The release focused on assets under management and how these had changed over the period from March to June. In summary, the AUM headline grew by $1.4bn, reflecting good underlying performance and reduced outflows. The current trend of emerging market outperformance, if maintained, will be extremely helpful for this business, which has been through a difficult three-year period.

### EasyJet

EasyJet released its Q3 trading update. The business highlighted a robust underlying performance in Q2, with profits before tax up 21% driven by strong demand for the company's network and holiday offering. Importantly, passenger numbers were up 2% and the load factor increased by 0.2%. Despite the good numbers, the share price fell by just under 5% because, in providing guidance characterised as a positive outlook, the CEO highlighted the extra costs the business would face as a result of another French air traffic control strike in July.

This comment seemed to attract a disproportionate amount of attention, and as a result, the good underlying performance of the business and the excellent cash performance were overlooked. Net cash (at £803mn) increased by nearly £350mn compared to the same quarter last year.

### Sarepta

At the end of June, I provided a reasonably long update on this US biotech business. In that update, I tried to explain why I had chosen the company and gave some background to its controversial history and recent events that had led to a dramatic fall in its share price.

Today, the business is back in the news for a better reason and one that I had hoped we would see. In summary, after consultations with the US FDA, the drug (Elevidys) which had caused the death of two DMD non-ambulatory patients (teenage boys with the condition) will stay on the market for ambulatory patients with appropriate warnings for clinicians and patients, but interestingly not with a black box warning (Black box labels are the most serious safety warnings a drug can have) This is, I hope, good news for patients and indeed for the business given that so many analysts and commentators had expected the drug to be withdrawn. The company remains in discussion with the FDA about what it needs to do with respect to non-ambulatory, older patients, but is proposing studying a new immune suppressant regimen for them that would reduce liver risk.

Alongside this announcement, the business has also said that it will be cutting a third of its workforce and eliminating some drug candidates from its research pipeline. In total, these initiatives will deliver about $400mn in annual cost savings. In response to these announcements, the company's share price has recovered a bit (18% as I write) but still remains significantly below its pre-crisis level.