Westminster is gripped by the game of thrones around Labour's slow-mo leadership drama, which could deliver the UK's seventh prime minister in ten years. But for markets and the economy, the stakes are very real. Chief UK Economist Paul Dales tells David Wilder why.

He says all the leading contenders to replace Starmer would, to varying degrees, open the spending taps but also explains why the bond market is likely to push back hard. Paul also makes the case for the UK's medium-term outlook looking brighter than many assume, though not because of who's in charge of the country.

Also on the show, Group Chief Economist Neil Shearing discusses why the latest activity data suggest the global economy has so far proved surprisingly resilient in the face of the Iran conflict – and why that resilience could soon be tested.

Donald Trump travels to Beijing next week for a long-awaited summit with Xi Jinping that carries huge geopolitical significance, but one where investors should keep expectations firmly in check.

Group Chief Economist Neil Shearing and Head of China Economics Julian Evans-Pritchard join David Wilder to assess the state of the US-China relationship and why any apparent thaw in tensions may prove superficial. They discuss issues including:

• Why Beijing increasingly sees the US as a power in relative decline, and how that is shaping Chinese strategy;
• Why the structural forces pushing the US and China apart are likely to outlast any short-term diplomatic reset;
• What’s driving the recent improvement in China’s economy, and how that could exacerbate global tensions.

Also on the show, Chief Europe Economist Andrew Kenningham returns from client meetings in Germany to explain why those who had been expecting an economic turnaround last year have been left disappointed, but to also argue that the prevailing gloom around both the German economy and its politics has become excessive.

Related content:

Read: What would a new PM mean for the UK economy and markets?
https://www.capitaleconomics.com/publications/uk-economics-update/what-would-new-pm-mean-uk-economy-and-markets

Register: Drop-In: Is the energy shock supercharging the Chinese export boom?
https://www.capitaleconomics.com/events/drop-energy-shock-supercharging-chinese-export-boom

Read: Taking stock of the German fiscal stimulus
https://www.capitaleconomics.com/publications/europe-economics-update/taking-stock-german-fiscal-stimulus

Read: Fiscal stimulus won’t fix Germany’s economy
https://www.capitaleconomics.com/publications/europe-economics-focus/fiscal-stimulus-wont-fix-germanys-economy

A day after Brent crude surged above $120 per barrel, Group Chief Economist Neil Shearing and Deputy Chief Emerging Markets Economist Jason Tuvey discuss how long the conflict in the Middle East could continue and why Iran’s collapsing economy is not a reliable guide to when the regime might capitulate.

Speaking with David Wilder, they also explore how central bankers are navigating the inflation risks posed by a prolonged disruption to energy supply, as well as what the UAE’s departure from OPEC could mean for oil markets and what it signals in a world of intensifying US–China competition.

And in a packed week for equities investors, Chief Markets Economist Jonas Goltermann assesses how key Big Tech earnings reports have landed and explains why bonds have not been performing nearly as well as equities.

Related content

Read: How long can Iran hold out?
https://www.capitaleconomics.com/publications/middle-east-north-africa-economics-update/how-long-can-iran-hold-out

Read: Forecasting through the fog of war
https://www.capitaleconomics.com/publications/global-economic-outlook/forecasting-through-fog-war-1