The US-led critical minerals summit on Wednesday involving 50 countries has unleashed a slew of agreements aimed at loosening the grip of China on more than 25 key elements, both in their raw form, and processed.

The EU and the US have announced joint intentions to work closer together, committing to a memorandum of understanding in the next 30 days.

The two will also work with Japan on building additional supplies, following a separate US Japan arrangement signed in October.

The US state department said it had signed 11 bilateral deals on critical minerals at the summit, convened by state secretary Marco Rubio.

Patrick Schroeder, senior research fellow at Chatham House’s Environment and Society Centre said the opening speeches by Rubio and vice president JD Vance made it clear the driving interest was that the US wanted to secure supplies for AI development.

Schroeder said:

“Although they didn’t say it explicitly, it is still America first. It was framed as ‘America needs your help’. There was no mention of renewables.”

Separately Germany is closing in on a deal with Australia after separate talks in Canberra between foreign minister Johann Wadephul and Penny Wong.

And South Korea, which was also at the summit involving around 50 countries, announced it would also cooperate with other countries including the US, Vietnam and Laos while allocating about $172.35m (£127m) of state funds to support local companies developing overseas mines.

Picking up on Canada prime minister Mark Carney’s much quoted speech at Davos about the need for “middle powers” such as Canada and Europe to work together, Wong said: “As middle powers, we want to contribute to a world where no country dominates and no country is dominated,” she said.

“We must diversify our supply chains, and we must cooperate as closely as possible,” said Wadephul on Thursday.

“We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers,” Vance told a gathering of visiting ministers in Washington without mentioning China.

Back in the financial markets, the pound has dropped by almost a cent against the US dollar now.

Sterling has slipped to $1.3555, still its lowest in almost two weeks, as City traders anticipate the Bank of England’s interest rate decision… and watch pressure build on Keir Starmer.

Michael Saunders, a former Bank of England interest rate setter and current senior economic advisor with Oxford Economics, suggested yesterday that a change in leadership would have implications for the markets.

It could lead to a further shift to ‘tax and spend’ (under Angela Raynor), increased borrowing for the nationalisation of utilities (Andy Burnham), persistent low inward migration (Shabana Mahmood) or a more pro-EU stance (Wes Streeting).

Saunders says:

“We doubt any of these alternatives would significantly lift potential economic growth in the next few years.

“Indeed, tax and spend or persistent low net migration would probably damage potential growth. But a major shift to closer EU trade links could boost potential growth in the medium term.”

Britain’s construction sector continued to contract last month, but the worst of the downturn may be over.

Data firm S&P Global has reported that the decline in UK construction activity slowed in January, to the smallest drop in seven months. But, housebuilding, civil engineering and commercial building activity all continued to drop.

House building was the weakest-performing segment in January, S&P Global’s poll of purchasing managers has found, though the pace of contraction eased to its slowest for three months.

Survey respondents cited a lack of new residential development projects and subdued demand conditions, a sign that the government is struggling to hit its home building targets.

Overall, the construction PMI index rose to 46.4 in January, up from December’s five-and-a-half year low of 40.1, but still below the 50-point mark showing stagnation.

Tim Moore, economics director at S&P Global Market Intelligence, said:

“January data provided encouraging signs that the UK construction sector has exited its tailspin, and firms are becoming more hopeful that new projects will get back on track in 2026.

The latest reduction in total industry activity was the slowest since last June. Commercial work outperformed, with activity moving close to stabilisation amid a postBudget boost to contract awards. House building weakness persisted, although even here the rate of decline eased considerably since December and was the least marked for three months.

Construction companies noted subdued underlying demand due to fragile client confidence and elevated risk aversion, but there were some reports of improving investment sentiment and greater sales enquiries at the start of the year. As a result, business activity expectations rebounded to an eight-month high, while the pace of job losses moderated.

Britain’s car market has recorded its strongest start to a year since 2020, despite a slowdown in demand for electric cars.

The Society of Motor Manufacturers and Traders (SMMT) has reported that the UK new car market grew by 3.4% in January to reach 144,127 units.

But uptake of battery electric vehicles rose just 0.1% to 29,654 units. As a result, BEV’s share of the market dipped to 20.6%, the lowest since April 2025.

Mike Hawes, SMMT chief executive, says:

Britain’s new car market is building back momentum after a challenging start to the decade. It is also decarbonising more rapidly than ever and, despite a January dip in EV market share, the signs point to growth by the end of the year. The pace of the transition, however, may be slowing and is certainly behind mandated targets.

With sales of new pure petrol and diesel cars planned to end in less than four years, there needs to be a comprehensive review of the transition now, to ensure ambition can match reality.

The SMMT has also lifted its forecast for growth in the UK car market this year to 1.4%, with the EV share expected to rise to 28.5%.

UK borrowing costs are rising, slightly, this morning, as investors ponder whether Sir Keir Starmer’s premiership could be ended by the Peter Mandelson scandal.

UK bond prices are dipping, which pushes up the yield (or interest rate) on the bonds.

UK 10-year bond yields are up three basis points (0.03 percentage points) at 4.56%, while 30-year bond yield are up four basis points at 5.363% – the highest level since last November.

These are relatively small moves in bond market terms, though it’s also notable that US government bond yields have dropped slightly and German yields are flat.

Eurasia Group says Starmer is “fighting for his political life”, and now put the probability of a leadership challenge and his removal this year at 80% (up from 65% previously).

City investors may worry that a new administration might be less committed to sticking to the UK’s fiscal rules to please the bond market.

Shares in oil giant Shell are slipping at the start of trading in London, after it reported a 40% drop in earnings.

Shell posted adjusted earnings of $3.25bn for the last three months of 2025, down from $5.43bn in July-September. In response, its shares are down 1% at £28.37 each.

The company blamed falling income on “unfavourable tax movements”, lower energy prices and higher operating expenses.

But despite this, Shell is planing to pump more money back to its shareholders through yet another share buyback plan, worth $3.5bn.

Shell chief executive officer, Wael Sawan:

2025 was a year of accelerated momentum, with strong operational and financial performance across Shell. We generated free cash flow of $26 billion, made significant progress in focusing our portfolio and reached $5 billion of cost savings since 2022, with more to come. In Q4, despite lower earnings in a softer macro, cash delivery remained solid and today we announce a 4% increase in our dividend and $3.5 billion share buyback, making this the 17th consecutive quarter of at least $3 billion of buybacks.”

Analysts at ING have predicted that UK inflation will tumble this spring, allowing the Bank of England to lower interest rates twice by the summer.

ING estimate that headline inflation will fall to 1.8% in April from 3.4% in December – crucially, that would take the consumer prices index below the Bank’s 2% target.

They expect food inflation to slow, and for energy bills to drop in April when regulator Ofgem next sets the price cap. A smaller rise in water bills, and a slowdown in rental growth, should also ease the cost of living squeeze.

As such, James Smith, ING’s developed markets economist, expects rate cuts in March and June. That’s a more aggressive cutting cycle than the City is pricing in.

Smith says:

We forecast inflation will drop to 1.8% in April before hovering at the 2% target through the spring and summer. What’s more, we think roughly 0.8 percentage points of the decline from December’s reading is virtually locked in – an artefact of regulated price changes and tax changes.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Interest rates on both sides of the channel are likely to be left on hold today, but relief may be coming for UK borrowers within months.

Both the Bank of England (BoE) and the European Central Bank (ECB) are expected to maintain their respective interest rates unchanged today.

UK interest rates are currently 3.75%, and the rise in inflation in December to 3.4% makes it implausible that many BoE policymakers will vote to cut interest rates.

The City money markets indicate there is just a 5% chance that the BoE lowers interest rates to 3.5%, and a 95% likelihood that we get ‘no change’ at noon today.

Economists also predict seven policymakers will vote for a hold, with just two dovish members (Swati Dhingra and Alan Taylor) expected to vote for a cut.

But looking further ahead, almost two quarter-point cuts are expected by the end of this year.

Julien Lafargue, chief market strategist at Barclays Private Bank and Wealth Management, says:

“The Bank of England is widely expected to keep interest rates unchanged in February. On the back of the Budget, we could see a more benign outlook on the inflation front, at least in the short-term.

When it comes to forward guidance, the BoE is likely to remain noncommittal about the timing of any future interest rate cuts. That said, the combination of lower inflation ahead and continued softening of the UK labour market should reinforce the central bank’s view that the path for monetary policy is towards a lower Bank rate, potentially as early as next month.”

Interest rates are already lower in the eurozone, at 2%, meaning there’s less pressure on the ECB to ease policy any further.

Eurozone inflation fell to 1.7% in January, data yesterday showed, thanks to lower energy costs and a stronger euro.

Richard Flax, chief investment officer at wealth manager Moneyfarm, says:

For investors, this environment of stable inflation and steady interest rates provides a degree of clarity and reduces the risk of further policy tightening.

We expect the ECB to remain on hold, as markets have already priced in, with a high bar for any policy action in the near term.

That said, we continue to monitor underlying price pressures and external risks, such as geopolitical developments and shifts in global demand, that could influence the outlook.”

The agenda

• 8.30am GMT: eurozone construction PMI report for January

• 9am GMT: UK car sales for January

• 9.30am GMT: UK construction PMI report for January

• Noon: Bank of England interest rates decision

• 12.30pm GMT: BoE press conference

• 1.15pm GMT: European Central Bank interest rate decision.

• 1.45pm GMT: ECB press conference