The IMF’s new managing director is using her inaugural speech to warn that the global economy is now in a synchronised slowdown, and to urge politicians to act.

Speaking in Washington, Kristalina Georgieva is warning that the Fund expects around 90% of the world to slow this year.

She also warns that trade concludes could knock 0.8% of global GDP, or $700bn, by 2020.

Georgieva, who has just succeeded Christine Lagarde, says:

“In 2019, we expect slower growth in nearly 90 percent of the world. The global economy is now in a synchronized slowdown.

This means that growth this year will fall to its lowest rate since the beginning of the decade.

Here’s the full story:

Over in New York, stocks have dropped at the start of trading as fears over the US-China trade war flare up again.

The Dow Jones industrial average has lost 257 points, or almost 1% at 26,220, while the broader S&P 500 index has shed 1.1%.

Financial stocks (-1.6%) and industrial firms (-1.5%) are leading the selloff, after the White House added another 28 Chinese companies to its trade blacklist.

Hints from Beijing that this week’s trade negotiations might wrap up early are also hitting stocks.

The pound is continuing to drop on the currency exchanges, as hopes of a Brexit breakthrough this month wither.

Sterling just dropped below $1.22 for the first time since early September, and has now lost 0.7% against the euro to €1.112 (also a five-week low).

The pound remains under pressures, after an anonymous No 10 source said German chancellor Angela Merkel had “made clear a deal is overwhelmingly unlikely”.

Losses intensified after outgoing European Council chief Donald Tusk accused Boris Johnson of trying to win a “stupid blame game”, rather than negotiating seriously.

Andy Scott, associate director at financial risk advisor JCRA, says City traders expect a lot more volatility, as Britain heads towards a general election:

“Sterling’s decline following reports of the imminent collapse of Brexit talks is not a surprise, since it all but confirms that a withdrawal agreement will not be reached before the current Brexit date. The drop in Sterling indicates that the small amount of optimism which existed for a deal by next week’s EU summit among some investors, has faded.

“Today’s reports presumably mean the government will have to request an extension – to which the EU have said they will agree. An extension would allow for a general election and a new government to decide the next steps. More telling is Sterling’s implied volatility in the FX options market, which acts as a market gauge of expected movement in a currency’s price, has fallen for one month’s time, but increased for both three and six months. This suggests that traders expect less movement in Sterling over the current Brexit date, and more in three and six months’ time.”

Even cartoons are fair game in the ongoing battle between Washington and Beijing.

South Park has been hit, after taking aim at the practice of toning down American culture to avoid upsetting Chinese censors.

In an episode called “Band in China”, the cartoon’s creators also referenced memes comparing president Xi Jinping to Winnie the Pooh, and threw in a plot line about the mass internment, or re-education, camps inflicted on Uighurs and other Muslim minorities.

Beijing has responded by purging South Park from Chinese streaming and social media platforms!

My colleagues Stephanie Convery and Yang Tian explain:

Chinese social media platform Weibo shows no results for the search term “South Park” in English or Chinese at the time of writing, though it does show truncated results if the search term is mixed language. Searching for the show on Reddit-like forum Baidu Tieba results in the notice: “Sorry, the results will not be displayed in accordance with relevant laws, regulations and policies.”

Video platform Youku also returns no results, though some clips still appear on Tudou, another video hosting platform. The Band in China episode is not one of them.

Brexit isn’t the only crisis taking a turn for the worst today.

The US-China trade war also appears to be escalating, sending European stock markets falling deeper into the red.

Overnight, the White House blacklisted 28 Chinese companies from buying American products, over human rights violations.

The Commerce Department said these firms had all been implicated in a campaign against Muslim minorities such as the Uighur people in the autonomous region of Xinjiang.

China has responded by urging the US to correct their mistake, and hinting that it will retaliate.

A delegation of Chinese officials, led by vice-premier Liu He, is due in Washington to restart trade talks on Thursday

But in a worrying development, the South China Morning Post is reporting that the delegation could return home a day early - on Friday, rather than Saturday. That suggests some pessimism over the prospects for a breakthrough.

European market are selling off in response:

This chart shows how the pound has fallen steadily against the euro in recent weeks, to today’s one-month low.

Neil Wilson of Markets.com fears sterling could fall further:

“Sterling is under the cosh again as hopes of a deal between the UK and EU fade. The last flicker of hope was snuffed out this morning after a call between the PM and chancellor Merkel of Germany left the process at an impasse. The news across the wires is that Merkel said a deal will only work if NI stays in the customs union. No 10 said this demand is impossible and that the EU is not engaging seriously. It’s become clear a deal cannot be done, with the wording from Number 10 that a deal is ‘essentially impossible not just now, but ever’.

Stalemate. We are now heading towards the Revoke versus No Deal showdown.

The pound does not like the tone of all this. GBPUSD has slipped to session lows on the Oct 2^nd lows at $1.22260, opening up a move back to the Oct 1^st low at 1.220. If this goes then one senses the stops are out and we face a retest of the multi-year nadir on $1.19.

Ouch! Sterling has dropped to a one-month low against the euro, as the Brexit crisis escalated.

The pound shed half a eurocent to €1.115, the lowest since early September. It’s also down half a cent against the US dollar, to $1.224.

The selloff was triggered by a statement from with Downing Street, which reveals that PM Boris Johnson had a rather difficult conversation on Brexit with German chancellor Angela Merkel.

According to this “government source”, Berlin is insisting that Northern Ireland stays in Customs Union, if not, then a deal is ‘overwhelmingly unlikely’.

That appears to scupper hopes of getting a Brexit deal agreed before 31 October.

Andy Sparrow’s Politics Live blog has all the details:

Today’s data show that Britain has achieved no productivity growth in the last four quarters.

Productivity fell by 0.2% year-on-year in the third quarter of 2018. It then stagnated in Q4 2018 and Q1 2019, followed by the 0.5% slump in April-June.

Tony Danker, chief executive of Be the Business (an organisation created to boost UK productivity) says businesses need to do more, or risk a productivity recession:

“Today’s figures confirm the UK is on the verge of a productivity recession. Since the financial crisis, productivity has been stagnant but now we are seeing a definitive decline, which sets a dangerous precedent in a weakening wider economic context. This will ultimately impact wages, living standards and how competitive the UK’s economy is in relation to other nations.

“It’s time for the entire business community to get match fit to compete for the next decade.”

The ONS has also reported that productivity per job stalled in April-June, ending a recent run of growth.

Newsflash: Britain’s productivity problem remains unsolved, with output per worker falling at its fastest rate in five years.

The Office for National Statistics has reported that productivity fell by 0.5% year-on-year in the April-June quarter, the biggest drop since Q2 2014.

This follows two quarters of flat productivity.

The ONS says that both services and manufacturing saw a fall in labour productivity growth of 0.8% and 1.9% respectively, compared with the same quarter in the previous year.

Non-manufacturing production and construction were the only sectors to improve their productivity, while manufacturing and financial services both became less productive.

Productivity will fall when an industry grows its workforce faster than its output. So, it’s possible that companies are choosing to hire more staff, rather than investing in new machinery and equipment, until they have more clarity on Brexit.

Elsewhere in the City, the London Stock Exchange has successfully batted away its Hong Kong rival.

Hong Kong Exchanges and Clearing abandoned its £32bn takeover offer for the LSE this morning, saying it was “unable to engage” with management on the deal.

In truth, few LSE investors were convinced by HKEX’s pitch. Many questioned whether regulators would allow Britain’s stock market to fall into foreign hands, particularly given the tensions in Hong Kong at present.

The LSE just released a brief statement, saying it “notes” HKEX’s decision, and is pressing on with its own merger with data provider Refinitiv.

Shares in the LSE have slumped 6% to around £70 this morning, roughly their level before their Hong Kong suitor emerged.

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

Recruitment isn’t the most exciting part of the economy - with its job applications, sifting of CVs and interview rounds. But it’s a good indication of how companies are faring, because when bosses get nervous they have a tendency to stop hiring.

So it’s worrying that two UK recruitment firms have both issued downbeat trading statements today, laced with anxiety about geopolitical tensions.

PageGroup, the FTSE 250-listed recruiter, has warned that profits will be weaker than expected this year. It has suffered a 4.1% drop in UK profits in the last quarter, and an 8% tumble across Asia.

CEO Steve Ingham blames “increased macro-economic and political uncertainty” in key markets -- singling out Brexit as one key factor.

“We saw standout performances in Germany, India, and Latin America, as well as a strong performance in the US, despite a slowing Financial Services market in New York. However, we saw increasingly challenging trading conditions in many of our larger markets, including Greater China, the UK and France.

“Looking ahead, the deterioration in trading conditions seen during Q3 across the majority of our regions is anticipated to continue. In the UK, heightened Brexit related uncertainty is expected to remain as we approach and go beyond 31 October.

Ingham adds that the Chinese market is softening, amid the trade war with China and the pro-democracy protest in Hong Kong.

In Greater China, confidence in Mainland China continues to be affected by trade tariff uncertainty and the social unrest in Hong Kong is increasing.

PageGroup now expects 2019 operating profit to be in the range of £140m to £150m -- not the £156.5m to £168m previously aimed for. That’s a chunky reduction.

Smaller rival recruiter Robert Walters has a similar story. Its gross UK profits have slumped by 11%, and blamed “significant political uncertainty in a number of the Group’s markets”.

Those problems include Brexit, US-China trade tensions, and the ongoing problems in Hong Kong.

CEO and founder Robert Walters says the firm is facing a ‘unique’ combination of headwinds:

“The Group delivered net fee income growth of 2% (4% actual) during the third quarter as trading conditions softened across a number of markets.

The ongoing uncertainty surrounding Brexit, the US-China trade tariff standoff and Hong Kong protests, coupled with the significant impact of the gilets-jaunes protests experienced earlier this year have combined to create a unique set of cumulative headwinds.

The firm now expects profits to be flat this year -- previously analysts had expected pre-tax profits to swell to £52m, from £49m.

Reaction to follow....

Also coming up today

The International Monetary Fund’s new managing director is giving a speech on the global economy. It’s Kristalina Georgieva’s first speech since she succeeded Christine Lagarde as its managing director.

The agenda

• All day: European Central Bank conference on Monetary Policy
• 3pm BST: IMF MD Kristalina Georgieva gives ‘curtain raiser’ speech in Washington