London, Jan 20, 2026, 11:05 GMT — Regular session
- London’s FTSE 100 slipped roughly 1.2% in late morning trading, dragged down by concerns over tariffs and disappointing UK labour data
- UK wage growth slows while payroll numbers fall, intensifying scrutiny on Bank of England’s rate strategy
- Beazley and DFS remain in the spotlight with deal and trading updates, despite a drop in overall risk appetite
London shares dipped on Tuesday. By 11:05 GMT, the FTSE 100, tracking the UK’s largest 100 firms, was down 1.2% at 10,073.59. The FTSE 250, which leans more heavily on domestic companies, dropped 1.0% to 22,877.83. 1
The decline counts because the market is grappling with two simultaneous pressures: renewed trade-war fears and evidence the domestic economy is slowing. Neither risk hedges neatly, and they rattle different parts of the London market in a tangled fashion.
Investors have been betting on interest rates easing this year. But fresh tariff threats and shaky hiring data are muddying that narrative. The result? Sharp sector rotations instead of a straightforward “risk-on/risk-off” shift.
U.S. President Donald Trump has warned of a 10% tariff starting Feb. 1 on imports from Britain and seven other European nations, which would jump to 25% on June 1 if no agreement on Greenland is reached. 2
“There’s no playbook for this,” TD Cowen analysts noted, as investors entered a Davos week brimming with geopolitical drama. Trade Nation’s David Morrison called the tariff threat “a tricky time” for policymakers and investors meeting now. AJ Bell’s Danni Hewson flagged easing wage pressure as a rare positive for those setting rates. 3
British labour-market figures offered the Bank of England some easing on wage inflation, but the overall picture remained weak. Payrolls dropped by 43,000 in December, and private-sector pay growth—excluding bonuses—dipped to 3.6%. Regular wage growth slowed to 4.5%, while unemployment stayed steady at 5.1%, according to the Office for National Statistics. “The UK jobs market is in a more problematic phase,” said Suren Thiru of the ICAEW. Jack Kennedy from Indeed added that a clearer improvement in the outlook is needed before hiring accelerates. Attention now turns to Wednesday’s UK inflation figures, with economists polled by Reuters forecasting a 3.3% reading for December. 4
Bank of England Governor Andrew Bailey highlighted trade tensions as a current threat, telling lawmakers that geopolitical uncertainty and “trade issues” significantly contribute to rising financial stability risks. 5
On the FTSE 100, few stocks managed to climb. Informa gained 2.0%, and gold miner Endeavour Mining advanced 1.8%. Sage edged up 0.9%, with lighter buying activity overall. 6
Losers dominated the session. Ashtead slipped 3.1%, AstraZeneca dropped 2.8%, and Mondi declined 2.7%. St James’s Place, the wealth manager, and retailer Burberry also saw share prices weaken. 7
Talk of a deal lingered after Zurich Insurance revealed a sweetened bid for specialist insurer Beazley, pegging the company at roughly 7.67 billion pounds ($10.3 billion). Zurich’s offer of 1,280 pence per share represents a 56% premium over Beazley’s last close. The insurer has until Feb. 16 under UK takeover rules to either declare a firm intention to proceed or walk away. 8
DFS Furniture climbed in the mid-cap index after projecting full-year profits above current market expectations, citing a stronger first half and reduced net bank debt. CEO Tim Stacey highlighted “good progress” on gross margins and cost controls. 9
The path ahead remains uncertain. Should Trump ease his tariff threat or face pushback, risk appetite might bounce back swiftly. But if the threat turns into actual policy, exporters and consumer stocks could slide further, dragging banks and cyclicals into the crosshairs again.
Wednesday brings the UK CPI release for January 21, while signals from Davos continue to roll in. Markets are now zeroing in on February 1 as the first firm deadline for the proposed tariffs.
