Developing countries are often vulnerable to fuel price shocks caused by global geopolitical tensions. As well as raising the costs of key items such as petrol and food, conflicts like the Iran war can force affected governments into expensive subsidies, further damaging already weak economies.
More often than not, the political answer to the North of England’s economic challenges is more trains. Yet while fresh investment in rail infrastructure may boost prosperity in certain places, it isn’t the catch-all solution that some politicians present it to be. 👇
JUST PUBLISHED – How is the conflict in the Middle East affecting developing economies? By Lotanna E. Emediegwu 👇 buff.ly/wN1kNsw
NEW on the Economics Observatory – Are more trains the answer to economic struggles in the North of England?
By @paulswinney.bsky.social
JUST PUBLISHED – Are more trains the answer to economic struggles in the North of England?
By @paulswinney.bsky.social
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IEA projects that data centres could more than double their energy use by 2030 due to AI demand. Hyperscalers like AWS and Google are projected to lead growth, but colocation and service providers that rent server space and single-firm enterprise servers will still play a large role.
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AI usage among students has exploded over the past few years. Currently, approximately two-thirds of university students in the United Kingdom use generative AI for their studies, compared to fewer than one in five in 2023.
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Poland is the standout: its real defence budget has nearly doubled since Russia's full-scale invasion of Ukraine, rising from $18B to $34.5B (constant 2024 USD) in just two years.
Since 2014, the post-communist NATO members — Poland, the Baltic states, Czechia, Slovakia, Romania, and Bulgaria — have more than doubled their combined share of alliance defence spending, from 1.8% to 4.1% in 2024.
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The history of British defence policy has been one of constant imbalance between resources, capability and commitments, interspersed with reviews that fail to solve the fundamental problems. These appraisals are typically done at times of economic crisis when public expenditure must be controlled.
TODAY on the Economics Observatory – UK national security: what have we learned from strategic defence reviews?
🔎 Revisiting Ron Smith's 2025 analysis.
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UK-India trade has grown significantly, with services now dominating both sides. Services exports to India have nearly tripled since 2014, while services imports from India have surged even more, reaching roughly £25 billion by 2024, widening the UK's trade deficit with India.
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The UK lags the US significantly in venture capital investment across all maturity stages. US later-stage VC investment represents 0.29% of GDP compared to the UK's 0.09%, while early-stage investment is 0.19% in the US versus 0.07% in the UK.
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The UK has the highest industrial electricity prices among IEA countries at 26.6 pence per kWh in 2024. This is 75% above the IEA median and more than four times higher than the US and Norway.
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Sterling net lending to PNFCs reached £457bn in 2025. As a share of GDP, it has declined from a peak of 31% in 2009 to 15% in 2025, suggesting businesses are increasingly relying on internal funding or non-bank capital sources.
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Risk aversion is the primary barrier preventing UK SMEs from seeking external finance, cited by 63% of businesses that needed but did not apply for funding. Cost concerns (60%) and unfavorable economic conditions (59%) were also major deterrents.
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Industrial electricity prices in the UK surged after Q4 2020. Prices peaked at 28.4 pence per kWh (including CCL) in Q4 2023, more than seven times 2004 levels. Prices have since declined to 23.5 pence per kWh by Q3 2025.
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One in three UK workers uses generative AI on the job (36%). That's ahead of Germany (32%), France (28%), and Italy (26%), but behind the US, where 43% of workers have adopted it.
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The benefits of distinctive urban architecture extend far beyond the buildings themselves, but the costs are borne by the developers. This can lead to underinvestment in high-quality design – and it raises the question of whether policy should encourage better architecture. 👇
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The FT 1000 fastest-growing European companies list shows the UK still punches above its weight in Fintech, Financial Services and Insurance compared to European peers, while France and Germany perform better in Construction and Engineering.
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