Commercial Awareness Digest - 17th October 2025

By Esme Glover

This week’s article will analyse some of the wider commercial news that is impacting

businesses, consumers and the legal industry.

1. A Shift Towards Safer Bonds?

Geopolitical tensions have had a notable ripple effect on global markets, particularly within the realm of bonds. Bonds function as instruments through which governments or corporations raise finances by borrowing funds from investors. This is typically done at a fixed interest rate and duration. At the end of the lending period, the issuer will repay the principal amount alongside accumulated interest. Fundamentally, the purpose of a bond is for issuers to raise money to finance a range of projects and strategic objectives.

Recently, businesses in particular, have become increasingly cautious when purchasing U.S. bonds which are viewed as higher risk. This is due to instability and uncertainty in the global markets and resultantly, a narrowing of the U.S. credit spreads. Credit spreads are the difference in yield or income generated from two different securities, limiting the reward purchasers will gain from taking greater risks in the bond market. Consequently, this narrowing of the credit spreads has meant that asset managers, key clients of city law firms, have resorted to purchasing safer corporate or government bonds.

This shift carries several implications for the legal sector. Most notably, it may lead to a

reduction in capital markets activity as fewer risks are being taken. Additionally, law firms may experience a transition from more transactional work to more advisory, focusing on risk management. Lastly, law firms will be expected to advise clients on navigating geopolitical tensions, particularly as these have impacts on a multitude of business functions.

2. The Economy and Geopolitical Tensions

In the realm of the economy and geopolitical tensions, recent export controls that China has announced have resulted in an outcry, particularly from the United States. These export controls are in relation to a variety of aspects of the rare earth and critical minerals industry, including the minerals themselves, rare earth technologies, and rare earth production equipment. Some examples of these materials include samarium, dysprosium and scandium.

The U.S. response is illustrative of the ongoing and intensifying geopolitical tensions between China and the United States. The U.S. Treasury Secretary, Scott Bessent, has threatened that a variety of countries might seek to “decouple from China” if these restrictions take effect, further labeling China an ‘unreliable partner to the world’. Additionally, President Trump responded by threatening an additional 100% tariff on Chinese goods on top of previous tariffs enforced earlier in the year.

This is reflective of the impact of geopolitical tensions on the economy, and resultantly on law firms, who will face changes in the type of advisory work and volume of work in different practice areas. Law firms may increasingly be required to advise clients on supply chain disruptions, compliance with evolving trade regulations, and the strategic management of geopolitical risk.

3. The Current UK Economy

A central focus of the UK government at present is the efforts to initiate sustained economic growth in the near future. Despite the economy expanding by 0.1% in August, the government is eager to curb economists’ expectations of slower growth in the next few months. One of the main drivers of economic growth in the UK has been in the manufacturing sector, more specifically in pharmaceuticals, which has experienced growth of 0.7%.

Rachel Reeves, UK Chancellor, is particularly focused on tax as a mechanism for stimulating growth. The government is facing a considerable budget deficit of approximately £22 billion, prompting debate around Reeves’ potential new tax measures and their broader implications.However, questions have been raised with regards to how this may impact the current cost of living crisis, which continues to have profound impacts on both households and businesses.

For the legal sector, these developments signal a likely increase in demand for tax advisory work, particularly as businesses navigate changing legislation and unpredictability of government decisions. Furthermore, considering the manufacturing sector has been crucial for economic growth, law firms may expect greater activity in this sector, particularly in relation to investment, regulatory compliance, and strategic expansion.

Edited by Artyom Timofeev

Image 1 Source: https://dailypost.ng/2025/10/14/trump-xi-to-meet-as-us-china-trade-tensions-reignite/

Image 2 Source: https://www.bbc.co.uk/news/articles/cz6jw0d2d02o