Having missed out on the Nobel Peace Prize, again, Donald Trump is unlikely to trouble the scorers in Stockholm today when the economics equivalent is handed out.
Instead, Trump’s Middle Eastern conflict is proving – to no one’s surprise – that high energy prices fuel inflation, and that geopolitical instability hurts growth. Just this morning, a new report shows that UK firms are facing the sharpest inflation pressures in three years, all down to rising energy, fuel and raw material costs.
Accountancy and advisory firm BDO has reported that its inflation index rose to 103.65 in September, up from 102.18 in August and its highest reading since June 2023. These elevated costs and weakening demand are putting renewed pressure on firms before the autumn budget, BDO warns.
Its report has also found that output fell across UK manufacturing and services last month as domestic demand softened.
Scott Knight, head of growth at BDO, says: “Businesses head into this budget with one clear message: no surprises. Cost pressures continue to squeeze margins, hiring intentions are low and growth is starting to plateau.
“Firms are not looking for grand interventions, but they do need certainty. Right now, concerns about further downside risks outweigh expectations of positive change.”
The biggest prize in economics, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, will be awarded today. Known as the Nobel Prize in Economics (although it’s not one of the original Nobels), the winner(s) will be announced in Stockholm from 10.45am UK time.
The prediction markets can give some indications about who is under consideration. Leading the betting on Polymarket, at 30%, is David Autor, professor of economics at the Massachusetts Institute of Technology. Autor is a labour economist, who has examined how technology changes the world of work, and shown how computerisation has increased skill-based wage premia in the US.
Another potential winner is Ariél Pakes, the Thomas Professor of Economics at Harvard University, with a 19% chance on Polymarket. Pakes has focused on developing methods to analyse market responses to environmental and policy changes, such as mergers and deregulation.
Third, at 12%, is Susan Athey, the Economics of Technology Professor at Stanford Graduate School of Business. Athey – whose work has focused on auctions, by developing the empirical models which underpin them – is the former consulting chief economist for Microsoft.
There’s also interest in American macroeconomist and monetary theorist Michael Woodford (10%) – he’s one of the architects of modern forward guidance, the idea that central banks can control the economy through influencing public expectations about inflation, rather than just through interest rates.
Today’s key events
• All day: the Paris Motor Show
• From 10.45am BST: Nobel Prize for economics announced
• 2pm BST: Russia’s trade balance for August
We’ll be tracking all the main events throughout the day on our business live blog …
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