WeeklyWatch – UK inflation woes return

W.24822 Wellesley WeeklyWatch 13.05.25_1420 x 474

28^th May 2025

Stock Take

Inflation is on the rise again

Inflation makes an unwelcome return… In April, UK headline inflation increased to 3.5% – the highest level seen in over a year and which surpassed the expectations of both analysts and the Bank of England.

With higher inflation figures, costs of some goods and services will increase for consumers, which will come as disappointing news when it was widely believed that the economic tide was turning in their favour. Increased inflation figures aren’t usually welcomed by investors either, as they erode the real value of investment returns.

For bond investors, the picture is more mixed. A rise in inflation usually results in lower bond prices. Additionally, inflation reduces the purchasing power of the yield on bonds (the interest payments) which makes them less attractive. Consequently, yields on bonds usually go up to try and draw in investors.

The recent inflation figures have diluted hopes of further cuts to the Bank of England base rate. But the Director of Advice at St. James’s Place, Alexandra Loydon, says:

“The higher-than-expected rise in inflation has likely brought this optimism to a halt.”

The Head of Economic Research at St James’s Place, Hetal Mehta, agrees that interest rate cut prospects have ‘receded’. In addition to the recent inflation figures, she highlights the meeting of the Bank of England’s Monetary Policy Committee (MPC) that’s taking place in May, describing it as “hawkish”.

“While the rate cut announced by the MPC in May was expected, the fact that two members voted for no reduction at all was a surprise. In fact, Huw Pill, the BoE’s chief economist, has since been hawkish in his view and last week talked down the need for further aggressive interest rate cuts.”

Markets are now factoring in one to two further rate cuts by the BoE by the year’s end. Mehta identifies that earlier this month, before the MPC meeting, there had been an expectation for three rate cuts in the second half of 2025.

Many moving parts

Rising UK inflation has resulted in concerns in some quarters about an economic slowdown, whereas others say this is too soon to tell. There are many moving parts that have an impact on UK inflation which include the energy element as the energy cap was increased in April, which has fed the higher inflation. Additionally, firms have indicated that the higher costs of national insurance will be passed onto consumers.

Mehta says the largely anaemic UK growth will likely have the opposite effect on inflation figures longer-term.

“It may just be a case of sequencing and timing. When we look at what the market is expecting, UK inflation is expected to pick up a bit as we head into the next few months and then start falling slowly.

“In the near-term, the commodity price increases from a few months ago will continue to exert more upward pressure on inflation.”

Mehta adds that while UK inflation is moving upwards, to date it hasn’t been substantial and is unlikely to be.

“Inflation had fallen back significantly after the initial Russia/Ukraine shock but there are signs that it’s sticky and it’s unclear how quickly inflation can get back to the 2% target.

“It would take a huge, unpredictable shock to see double-digit inflation again.”

For a more positive outlook, the UK economy is resilient and can withstand a fair amount of volatility. The independent central bank is able to adjust interest rates when necessary to respond to the economic changes. And unlike the US commentaries, it’s not under huge government pressure to move fast when it comes to cutting interest rates.

The impact of inflation is felt in everybody’s lives, but the likelihood of returning to a higher inflationary environment that caused widespread issues a few years ago is highly unlikely as it stands.

Inflation elsewhere

Is current inflation an upward trend? Or simply swings and roundabouts? In 2024, we saw the largest global increase in inflation since 1996 (Statista) at 5.76%, even though across wealthier Western economies, inflation spiked at 11% in 2022.

Across the pond, the inflation outlook for consumers doesn’t look much better than in the UK, as Trump’s tariff policies are likely to increase inflation and future rate expectations. The University of Michigan recently published their figures which showed that consumers predict that inflation will rise by an annual rate of 7.3% over the next 12 months.

US–EU trade discussions

There was another injection of volatility to the markets last week following some quick-fire announcements from President Trump in regard to the potential EU tariffs. On Friday, he announced that from 1^st June, there will be a 50% tariff on EU imports – driving markets down across both continents.

Thankfully, the volatility was short-lived. Trump agreed to delay the introduction until 9^th July which will give the regions more time to negotiate a trade deal. Even though markets have responded well to the delay, the rapid and unpredictable changing events exemplify the mantra: ‘Time in the markets, not timing the markets.’

Wealth Check

Numerous factors can impact the growth or restriction of a small or medium-sized enterprise (SME), ranging from limited internal capabilities to external elements like supply and demand.

The Business Growth Advisor at Elephants Child, Kevin Petley, identifies four key areas for SMEs to strengthen their market position and increase growth that’s sustainable…

Market access – In order to gain a foothold in any market, you have to look beyond just offering a product or service. Essential to your success will be elements such as brand recognition, optimal distribution channels and compliance with regulatory requirements.
Competition – Businesses rarely have no competition. For SMEs, their competitors tend to be larger companies with more significant economies of scale. This is where your unique value needs to be leveraged in order to boost your growth.
Networking and partnerships – Many business owners often express little confidence in this avenue, saying that they don’t see the benefit or simply don’t have the time to put aside for networking. It can mean that you miss out on impactful insights and isolation can limit growth. Laying the groundwork now is important to reap future benefits.
Customer demand – When businesses have spent time analysing their potential for growth they’re in a better position to enter a market and experience growth. As part of the analysis, businesses should determine the size of opportunity, monitor competitor activity, decide on pricing and consider possible volatility including seasonal movement.

Going beyond enthusiasm

A successful business will have innovation, enthusiasm and commitment at its heart, and to accomplish this requires effective planning, researching and good financial management.

In order to grow, it’s essential that businesses take all available options into consideration, understand the levels of risk involved and put clear measurements in place in order to track progress. This allows business owners to quickly validate success or anticipate and identify where change is needed in a timely manner. This will put your business on a stronger growth trajectory.

We work in conjunction with an extensive network of external growth advisers and SME specialists, such as Elephants Child, who have been carefully selected by St. James’s Place. The services provided by these specialists are separate and distinct to the services carried out by St. James’s Place and include advice on how to grow your business and prepare your business for sale. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

In The Picture

As soon as stocks start to fall, the temptation is usually to sell and sell fast!

But if economic history has taught us anything, it’s that when markets are down, panic selling does your long-term finances no good.

Not long ago, American indices rapidly fell following the Liberation Day tariff announcements. Giving into temptation and selling in the subsequent days would have locked in the losses.

Following this, the S&P 500 has recovered well and is now higher than it was pre-Liberation Day. By panic selling holdings before the recovery, the losses will have been locked in, and you’ll have missed out on the benefits that came from the recovery. Patience is a virtue.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Past performance is not indicative of future performance.

The information contained is correct as at the date of the article. The information contained does not constitute investment advice and is not intended to state, indicate or imply that current or past results are indicative of future results or expectations. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies.

“FTSE Russell®” is a trademark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

SJP Approved 27/05/2025

WeeklyWatch – Positive UK growth

W.24822 Wellesley WeeklyWatch 20.05.25_1420 x 474_HR

20^th May 2025

Stock Take

It was revealed last week there had been a strong growth spurt for the UK in the first quarter of 2025. It seems hard to reconcile this with the fact that just weeks ago there were concerns that the nation was headed towards a recession. While expectations seem to change almost every day, it can make people question whether it’s worth keeping an eye on the economic news…

The latest UK lowdown

Leading with the good news, in the three months leading up to March, the economy grew by 0.7%. This was up from 0.1% at the end of 2024, making the UK the fastest-growing G7 economy over that time period. The country’s growth outpaced the US, Canada, Germany and others. And it gets better: just last week the blue-chip FTSE 100 climbed 1.52% and the mid-cap FTSE 250 rose by 2.28%.

Yesterday, reports came in to say that the UK had signed a trade deal with the EU. Although details haven’t yet been confirmed, the government has said that economic growth should be further boosted.

However, in the week before, the Office for National Statistics revealed that job vacancies had fallen to 761,000 in April. This comes as less of a surprise due to the employer’s National Insurance increase and a rise in minimum wage taking effect in the same month.

US reveals mixed results

At the beginning of the month, there were growing concerns that the US was on the verge of entering a recession. The US economy had somewhat shrunk, mostly because of the ongoing disputes with China over tariffs. Additionally, the price of US government bonds (Treasuries) fell and the US dollar’s value was down.

Additionally, US credit rating agency Moody’s downgraded the US from an AAA rating to Aa1 last week, following concerns surrounding the government debt. As Moody’s was the last of a few credit rating agencies that still rated the US as AAA – S&P downgraded the US in 2011 and Fitch Ratings in 2023 – the downgrading is seen as mostly symbolic.

As mentioned above, economic behaviour repeatedly swings back and forth, and last week was no different. The de-escalation in the US–China trade war saw significant reductions in tariffs for both American and Chinese companies for a 90-day period, which consequently boosted global stock markets.

The Head of Economic Research at St. James’s Place, Hetal Mehta, says:

“We have seen financial conditions unwind because of the de-escalation. As they have loosened, some forecasters have brought their recession probabilities back down and revised up their growth forecasts.”

However, she also adds that this doesn’t mean that a continued positive direction is guaranteed; it will depend on what decisions are made next:

“We believe that from here, there’s still some two-sided risk. There might be further reductions in tariff rates, but it’s also possible that a proper deal between the US and China takes more than the 90 days to thrash out. So, you could actually see tariffs go up. And there could still be some more tariff volatility ahead either at the end of the 90-day period, or if negotiations aren’t going well.”

Expect the unexpected

Economic volatility. Political uncertainty. Tariff wars. Significant swings in the markets. It’s almost become the new norm! But if this is the new status quo, then how will our investment habits be impacted?

Although it’s worth keeping up to date with the events that can shape an investor’s financial situation, as demonstrated over recent months, sometimes choosing to do nothing can be a positive path to take during market volatility. It’s difficult to time the markets even when the environment is calmer, so an investment strategy that embraces diversification is essential, particularly when times are uncertain. As highlighted in previous editions by the Investment Research Director at St. James’s Place, Joe Wiggins, blocking out the noise rather than the markets is a wise approach:

“Periods of heightened uncertainty and market noise are incredibly challenging for long-term investors often not because of the issue that is the focus of attention but rather our behavioural response to it. When under stress, investors tend to make decisions that relieve short-term anxiety often at the expense of their long-run objectives.”

He adds that, at the risk of sounding like a broken record, taking a long-term approach when planning for the future has never been as valuable.

De-escalation remains at the forefront

Markets continue to respond well to the 90-day pause on sky-high tariffs coming into place between the US and China and continued to climb from their April lows.

Last week, the S&P 500 came close to where it started the year after rallying 5.3%. But with the dollar’s value being down, the market is still a wary area for sterling investors.

Asia

By the end of last week, the Shanghai Stock Exchange Composite was up 0.76% (1.66% in sterling terms). Hong Kong’s Hang Seng also saw a rise of 2.09% (2.15% in GBP).

There were also small gains in the Japanese market: the Nikkei 225 increased by 0.32% in sterling terms.

Europe

It was also a positive week for European markets as they also responded well to the de-escalation of tensions between the US and China. Across continental Europe, the MSCI ex UK also gained 1.53% in sterling terms.

Wealth Check

Money and mental health

There’s a close correlation between our finances and our mental health, as St James’s Place’s Financial Health Report highlights:¹

One in four people said they felt anxious about the year ahead
28% said their concern relates to rising energy bills
20% are worried they’re not saving enough for future financial security

Money is a key part of our day-to-day lives, so it’s understandable that it weighs heavily on our minds, whether we unintentionally spend more on a grocery shop, become anxious over an unexpected bill or feel alarm if we edge into the red at the month’s end. Putting things off, including checking your bank balance or avoiding bills, is common but can make the situation more difficult.

Tackling the issues head on is the best solution – creating a plan to get things back on track will help prevent the situation getting worse. Plus, being open about this with a family member or close friend can be extremely helpful.

It’s easy to feel overwhelmed when considering the bigger decisions, such as purchasing a house, changing jobs or preparing for retirement. Many of us acquire financial knowledge and habits as life goes on and often without formal training or education – learning as we go. As a result, we may feel unprepared to manage investments or effectively plan for retirement funds without putting in a lot of time and effort into conducting research. It may even be seen as boring or difficult to comprehend, which is where a financial adviser can be a real asset.

Financial advice supporting mental health

The Head of the St. James’s Place Charitable Foundation, Catherine Ind, identifies that one in four of us will experience a mental health disorder each year. She adds:

“Providing timely support is essential to reduce crisis situations and enable people to move forward in a more positive and hopeful way.”

No-one is born automatically knowing how to manage money. But acquiring more knowledge will help you feel calmer and more in control of your finances.

Financial advisers will help you make sense of your personal financial situation and guide you through practical steps to achieve your financial goals. They form lifelong relationships with clients and their families and are there to offer support with the big life decisions and challenging moments.

If you’re feeling any anxiety surrounding money, please get in touch with a Wellesley Financial Adviser today – we’d love to help!

Source:

¹SJP Financial Health Report 2025 conducted by Opinium who surveyed 6,000 UK adults nationwide in two polls between 23^rd December 2024 and 17^th February 2025. Quotas and post-weighting were applied to the sample to make the dataset representative of the UK adult population.

Previous years’ research was also conducted by Opinium – among 6,000 UK adults between 16^th and 25^th October 2023.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

In The Picture

The Bank of England makes another rate cut – its fourth in the space of a year, with signs of cooling inflation and increased concerns surrounding weak economic growth. This is what the cut potentially means for investors, savers and homeowners:

For the stock market, possibly good news! Cheaper borrowing allows companies to invest and grow more easily.
For savings, it’s not so great. Lower rates mean less interest paid out by the banks. This could be a good time to check what your cash is earning.
Looking for a mortgage? Two-year fixed rates are at their lowest since 2022 (Moneyfacts, 12^th May 2025). Now may be a good time to start your search!

What about the wider world? Mehta explains that it moves at different speeds:

“The European Central Bank has been the most aggressive of the major central banks in cutting rates this year, reflecting deeper concerns about growth in the euro area as well as more progress on bringing inflation down. The Bank of England is following suit, but more cautiously. Meanwhile, the US Federal Reserve is holding steady, awaiting clearer economic signals given all the tariff uncertainty.

“We may see this divergence shape global markets in the months ahead, but we think it’s unlikely any of the central banks will take rates as low as they did after the Global Financial Crisis.”

Your home may be repossessed if you do not keep up repayments on your mortgage.

Investing does not provide the security of capital associated with a deposit account with a bank or building society.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 19/05/2025

WeeklyWatch – Caught a break? Positivity for UK equities

W.24822 Wellesley WeeklyWatch 13.05.25_1420 x 474_HR

13^th May 2025

Stock Take

The nation celebrates

There’s been a lot of doom and gloom surrounding the UK and its companies as of late, but is there a plot twist in this narrative?

The Labour government saw some welcome headlines last week, when trade deals were struck with both India and the US. What’s more, the tariffs introduced in March by President Trump have now been removed completely on UK steel and aluminium exports. UK car export tariffs have also been reduced (up to a limit of 100,000 vehicles) from 27.5% to 10% with immediate effect. The UK government says this deal will save up to 150,000 jobs and also claims that the India trade deal will boost the UK economy by around £5 billion by 2040.

Additionally, the Bank of England announced a 0.25% reduction to the Base Rate, which is great news for borrowers. It’s hoped that this will increase consumer confidence and restore much-needed momentum to the UK economy.

On the back of this good news, UK equities rose towards the end of the week. This positive sentiment suggests that investors might be hoping the US–UK trade deal is a firm step towards more concessions and lighter tariffs.

Is the UK back on the hotlist?

At the start of May, the FTSE 100 enjoyed 15 consecutive days of gains, its longest ‘winning’ streak in five years. And it gets better: there are further indications to show that investors are feeling more bullish about the UK.

For several years, UK equities have been considered undervalued. This has particularly been the case when compared to US equities, especially technology stocks such as the Magnificent 7, which includes the giants Nvidia, Amazon and Apple.

But in the first quarter of the year, these big companies in the US tech sector have underperformed, likely exacerbated by the volatility caused by the tariffs.

The Investment Research Director at St James’s Place, Joe Wiggins, says:

“UK equities have been trading at historically depressed relative valuations but there is now some indication of rising corporate activity.

“Although it has been difficult investing in UK equity markets in recent times – particularly relative to the US – low valuations are often a strong indicator of higher returns in the future.”

Even more cause for optimism?

The optimism trend continued with the government-backed plans to ensure more UK investment by pension funds. In 2023, then-Chancellor Jeremy Hunt announced that 11 pension providers had agreed to allocate at least 5% of their assets to unlisted UK equities by 2030. But a ‘landmark’ agreement that would have seen this increased to 10% – this was due to be announced last week – has been postponed. While it still may be announced over the next few weeks, it’s not certain.

The Head of Economic Research at St James’s Place, Hetal Mehta, welcomed the more positive economic news but warns against any widespread expectation of an economic miracle or more significant falls in interest rates. She says:

“While a base rate cut is welcome, the Bank of England (BoE) continues to be hesitant about accelerating the pace of easing, given its persistent concerns about inflation. Growth and inflation forecasts were both revised down by the BoE, and wage growth is expected to moderate, so quarterly cuts are most likely.

“While the UK–US trade deal is a start – and good news for car and steel sectors – there are still quite limited details, with the overall 10% baseline tariff in place leaving tariffs higher than before the US’ so-called ‘Liberation Day’. Negotiations are set to continue but scope and timing is not clear, and the overall impact is limited so far.”

Stepping down the tariffs

News of more progress between China and the US regarding tariffs has been welcomed. Chinese imports have been temporarily reduced to 30% (from 145%) for 90 days, and China will cut tariffs on US goods from 125% to 10%, with further trade talks still to come.

US equities remain expensive in comparison to other developed equity markets. But it’s noteworthy that a large amount of US earnings growth is down to the Magnificent 7.

Positive outlook for Asia

Following the progressive outcomes of the China–US trade talks, there was a lift in Asian stock markets. Plus, the decision by China’s central bank to cut interest rates from 1.5% to 1.4% last week also helped provide a boost. The decision was made with the purpose of stimulating lending and investment and decreasing the negative impact of the ongoing US tariff war. The Shanghai Composite Index ended the week 1.92% higher in local currency.

Additionally, Japan’s Nikkei 225 ended the week 1.83% higher in local currency after the finance minister had to backtrack from the comments made concerning the country’s $1 trillion-plus of US treasuries potentially being used as a bargaining ploy in trade talks with the US.

Benefits felt and reaped across Europe

Further stock market boosts were recorded across Europe following the temporary slash in tariffs between the US and China. On Monday morning, the Stoxx Europe 600 was up 1% and the main stock market indexes in France and Germany rose.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Wealth Check

Taking time off without taking a hit: smart summer planning for small business owners

As a small business owner, one of the biggest challenges you’ll face is deciding when to take time off. With summer on the way, it’s important that you set aside time to take a break and create the best conditions to ensure that everyone is able to enjoy time off and come back to work feeling refreshed.

HR Consultant at business advisory firm Elephants Child Chloe Carey shares her 10 tips to ensure that your business continues to run smoothly over the summer period.

1. Actively encourage booking time off – As the business owner, you’re required to keep your company running at optimal levels. And you want your workforce to be rested, happy and productive. Make sure you remind them to effectively plan their leave and not leave it all until the end of the year.

2. Make sure that absence policies are clear – Whether it’s extreme weather or travel delays which can lead to unauthorised absences, you need to ensure that your policies are clearly communicated to your workforce.

3. Approach holiday clashes fairly – If several people wish to take time off at the same time, a consistent and fair process must be in place to deal with this.

4. Review your summer dress code – Comfort makes for a happier workforce. In the warmer months, it’s recommended that you relax your dress code.

5. Host a summer team event – Build engagement and bring your team together by organising something fun for you all to get involved with. Consider sharing your photos and comments on social media to give your business a boost at the same time.

6. Offer flexible summer working – When adjusting schedules, consider early starts and finishes or building up extra hours to allow early finishes on Fridays.

7. Discourage work being done during annual leave – Remind both yourself and your colleagues to leave a clear handover so that they switch off properly before going away.

8. Switch off notifications – Encourage people to avoid checking work emails and messaging apps during their time off – lead by example.

9. Set a professional out-of-office message – Agree on a standard format that reflects your business’s tone of voice.

10. Take a break yourself – Stress and burnout are no use to your loved ones or team, so take a well-deserved rest!

Putting preparations in place for summer, and as your business grows, ensures that the right policies and processes are in place to ensure success in the years to come. By implementing good delegation habits and being able to step away every now and then will benefit your business morale hugely. Longer-term, if you wish to exit the business, ensuring you leave behind a company that runs smoothly without you is more attractive to buyers.

Fostering an environment of trust and flexibility creates a culture that values hard work and the importance of rest.

Don’t let it all build up

Ready to embrace a balanced work life? Contact us to find out more about how we can help you empower your business, prepare for the summer season and create and promote a healthy work environment.

We work in conjunction with an extensive network of external growth advisers and SME specialists, such as Elephants Child, who have been carefully selected by St. James’s Place. The services provided by these specialists are separate and distinct to the services carried out by St. James’s Place and include advice on how to grow your business and prepare your business for sale. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

In The Picture

More charts, similar message, but still important!

Last week, we took a zoomed-out perspective of the FTSE 100. This week, we’re widening the lens to address global equities over the past 20 years.

The navy bars show the largest market drops within a given year – the worst-moment headlines, most notably 2008 and 2020!

Spot the turquoise line? That’s the long-term trend emerging upwards.

Expect setbacks, be patient with progress and remember that perspective goes a long way.

Past performance is not indicative of future performance. It is not possible to invest directly into the MSCI World Index. The figures shown do not take into account any relevant tax or investment wrapper charges.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 12/05/2025

WeeklyWatch – Is the US on the brink of a recession?

W.24822 Wellesley WeeklyWatch 07.05.25_1420 x 474_HR

7^th May 2025

Stock Take

A strike of US economic woe

Is there a storm brewing in the US economy? Some commentators are voicing concerns that a recession is closer than previously thought – but is the panic valid?

Between January and March – the first full quarter of Donald Trump’s presidency – the US economy shrank by 0.3% (on an annualised basis). Last week’s numbers reveal that it’s the first decline since 2022. While this was not dissimilar to analysts’ expectations of a 0.2% fall, it’s a significant slowdown when compared to the 2.4% growth in the last quarter of 2024.

Additionally, markets have been forced to adapt and change as tariff uncertainty continues to cause high volatility. Last week, WeeklyWatch focused on the impact on the US treasuries, where prices have fallen and yields have risen, as the perceived risk for investors increased.

The dollar’s value has also suffered a fall as a result of investors turning away from US assets. The dollar index compares the relative value of the US dollar to a basket of other countries’ currencies, and it suffered its worst two-month performance since June 2002. For a second consecutive month, the US dollar weakened against every other G10 currency.

Trade talk

As the end of the week drew to a close, global equity markets, which included the main US markets, were able to rally as there were indications of China and the US restarting negotiations on trade and tariffs.

But despite these seemingly positive signs, it’s not certain whether there will be a resolution when it comes to the core issues. Some of these issues include the US’s trade deficit with China and provocative trade practices like suspected intellectual property theft and significant subsidies provided by the Chinese government to their national companies.

The Head of Economic Research at St James’s Place, Hetal Mehta, doesn’t think investors should give too much weight to the US’s most recent economic growth figures despite the ‘noise’ that surrounds them. She says:

“We continue to believe there is a roughly 35% probability of a US recession and we haven’t changed that in light of the recent economic data. Too much is being made of the negative surprise on US growth because it was not that much of a miss.”

She highlights the fact that this US data is annualised, meaning figures are scaled up for a full year. The significant move in US imports was also hugely influential on the numbers; imports soared by more than 40% which was down to people trying to get ahead of the tariff changes that are due to come into effect on 9^th July.

Whether the current pause is extended or not, what happens with the tariffs will dictate how much more volatility the markets will face and whether a recession occurs sooner rather than later.

Mehta also says:

“If the tariffs do take effect in full then it’s likely to have quite a notable impact. It could even move the US to a stagflationary environment, where inflation is high, and growth is much weaker. However, given the uncertainty, we have a level of humility when it comes to predicting these things.”

A decline in consumer confidence will also likely play an influential role in determining the economic outcome. A driving force for economic growth for some time, US consumers now look like they’re being far more cautious when it comes to spending, with big companies like Starbucks and Chipotle seeing sales fall.

Furthermore, shipping from China into the US has slowed dramatically as we draw closer to the planned implementation of Trump’s tariffs. There have even been warnings of possible empty shelves in US shops in just a matter of weeks.

The savings ‘buffer’ that was built up by consumers during the pandemic period has been chipped away as time’s gone on. This can also impact consumer spending, especially within a volatile market.

But there are still some silver linings to the storm clouds! An important reason why a recession may not be an obvious outcome is the fact that the US economy starts from a strong footing. Up until the end of 2024, growth was strong – around 3% a year – which could provide a protective cushion before the technical definition of recession is met (two consecutive months of negative economic growth). But, as Mehta highlights:

“A dramatic slowdown can feel like a recession if you have had strong growth for some time.”

Might there be a contagion impact?

In part, yes. If there’s a deterioration in the world’s largest economy, the likelihood of other global economies being impacted is high, which is why investors pay so much attention to US economic data.

For the UK, the selling-off of US treasuries and confidence loss in bonds as a safe haven could impact gilts (UK government bonds). UK economic growth has also been slow for several years and doesn’t have as big a buffer as the US, meaning that it wouldn’t take as much of a shock to place the UK into recession.

In recent years, the euro area has also had slow economic growth, impacted by Covid, falling exports and increased imports, particularly energy imports where there’s been heavy reliance on countries like Russia for supplies.

Having said this, the fiscal changes that are happening Germany – where they’ve pledged to spend €500 billion on infrastructure investment – will go some way to supporting Europe but will also take time to filter through to the economy.

As far-reaching as Asia?

No nation is exempt from the fallout of the US’s deterioration. Due to the wide-reaching nature of the tariffs, most nations are susceptible, but this varies in extent.

China is the most obvious nation that will be affected, due to the scale of tariffs that have been proposed. Chinese consumer demand has declined over the last year or so – retail sales have fallen. But unlike some nations, China has more fiscal firepower to push back on the tariffs and support its own economy to decrease their dependency on exports.

Time for a moment of calm?

Volatility has defined the markets over the last few weeks, but according to Mehta, April has been unusually volatile for both markets and economists; bond and stock markets soared to new highs and dropped to new lows before returning to more normal levels. Predictions concerning a US recession have gone down many different avenues.

Mehta says:

“We have seen a lot of volatility in the way that economists are assessing the state of the economy. I can’t remember a time in recent history when in the space of 48 hours so many economists changed their view.

“Usually economists are slower to move, they wait for the data and for a critical threshold to be reached but recently it has been very noisy. Taking the long-term view and not reacting quickly always has to be the better option.”

Wealth Check

The retirement roadmap – what to save in your 20s, 30s, 40s and beyond

Two common questions that arise around the topic of retirement:

How much money will I need?
Have I left it too late?

Important questions, and ones that most of us don’t carefully consider until we reach middle age.

Good news! By spreading your savings over decades – and starting early – you’re far more likely to secure a great retirement.

Many of us believe we’re too old or too young to begin saving for retirement. But a comfortable retirement needs long-term practical planning. Let’s break down the retirement saving process, decade by decade.

“How much money will I need?”

A pension pot worth about 10 times your annual salary by the time you retire is well advised. To help you define this figure, a financial adviser is extremely useful, plus they can help you create a personalised plan for your long-term saving.

These plans incorporate everything you want to have in your retirement and will consider inflation and possible medical or social care costs in the future.

Starting young – saving in your 20s

Aim to have saved the equivalent of a year’s salary by the time you turn 30 – this can be in personal savings or in your workplace pension.

Basic-rate taxpayers receive an extra £20 for every £100 they save into their pension! By starting early, earning power can literally translate into getting money in the bank, and there are many years ahead for you to benefit from compounding.

Saving in your 30s

You should be aiming to have retirement savings equal to three times your annual salary.

Starting small is fine if needed. You can gradually build on your retirement savings as time goes on. Affordable means sustainable. Making an increase in your contribution year on year in line with inflation or a wage rise is a tax-smart plan also.

Saving in your 40s

Aiming to have savings that total six times your annual salary by the time you turn 50. This is the time where you usually see earnings peak – it’s the decade to optimise!

Saving in your 50s

By 60, you should aim to have saved eight to 10 times your salary and this is when you should consider putting specific plans for your retirement income in place.

Is 60 too late to start saving?

Definitely not! But we do recommend that you start earlier, and seeking out the help of a financial adviser can help you get started.

50s to 60s – getting prepped and ready for retirement

It’s only half the story to build your assets. Having a financial plan in place to help you get ahead is key. It’s never too early to start thinking about how you want to utilise the income you’ve saved in the most sustainable, tax-efficient way.

Get in touch with one of our advisers today and achieve your retirement dreams.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are dependent on individual circumstances.

In The Picture

One month, two sides, same index – April has been quite the rollercoaster!

The Times, 4^th April 2025 – “FTSE suffers biggest drop since pandemic amid tariff turmoil.”

The Standard, 28^th April 2025 – “FTSE 100 matches longest run of consecutive gains in eight years.”

This serves as a good reminder that:

Framing matters. When in isolation, each headline feels like a turning point. But step back – as the chart reveals – and April’s highs and lows hardly register for long-term investors.
Timing shapes perception. Whatever time we check the news, we could see panic or positivity, but we rarely see the full picture.
Power is perspective. Without dips, we probably wouldn’t see the rally. Volatility often prepares the way for recovery; it’s just the nature of markets!

These headlines won’t disappear, and this won’t be the last drop (or rally) we’ll see happen this year.

So, what’s the way forward? Keeping focused on what matters is key: long-term goals.

Please note it is not possible to invest directly into the FTSE and the figures shown do not take into account any charges applicable to the appropriate investment wrapper or any relevant tax charges.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 06/05/2025

WeeklyWatch – The US–China trade war escalates

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29^th April 2025

Stock Take

Stock Take usually provides a comprehensive overview and analysis of equity markets, but with the backdrop of escalations between the US and China, this week we’re exploring what impact the ongoing tariff war between the two nations could have on bond markets and investors.

US bond market faces turbulence

Political tensions are mounting and the trade war between China and the US is deepening. As a result, fluctuations in the bond market have investors feeling concerned.

Bonds are debt securities issued by governments and companies to raise money. Bondholders are effectively providing a loan to the government or company issuing a bond, on which they earn interest, known as the yield.

US treasuries (US government bonds) have typically been viewed as a safe investment. However, with all the volatility that’s been playing out over the last few weeks – the threat of huge tariffs on all Chinese goods entering the US and consequential reciprocation on American goods exported to China – investors are now left scratching their heads when it comes to predicting what’s to come next, both in the short and longer term.

Several investors have opted to vote with their feet, reducing their exposure to US dollar assets, treasuries and equities – resulting in sharp falls in these markets and the value of the dollar. Many of these losses have been recovered by equity markets, but there are major concerns that foreign investors are losing confidence in the stability of the US economy, casting a shadow over the bond market.

The International Monetary Fund (IMF), an organisation made up of 190 countries, monitors global economic stability. Last week, they opted to downgrade their forecast for global economic growth in 2025 to 2.8% – down from 3.3% in January. They also reduced their forecast growth in the US in 2025 by 0.9 percentage points to 1.8%.

All the market turmoil has resulted in a fall in US treasury prices and, therefore, yields have risen. As of Friday 25^th April, the yield on the 2-year US treasury was 3.79%, while 10-year US treasuries stood at 4.28%, although the latter was down from a peak of 4.79% in mid-January.

The reputation of US treasuries as a safe haven is due to the low chance of the government defaulting on its debt. Although highly unlikely, it has happened in the past – the last time being in April–May 1979 when the then US government was unable to repay bondholders for a short period. With the US looking increasingly uncertain now, and the possibility of a recession, the higher yields are indicative of higher risks for investors (even if yields are meant to decline in a recession). However, this may appeal to those prepared to take on more risk for potentially higher rewards.

Are China playing a risky game?

After Japan, China is the next largest holder of US treasuries. If the nation decides to retaliate against Trump’s threatened tariffs by no longer buying bonds – or even trying to sell US bonds – it could have economic repercussions for both nations, as well as on a wider global scale.

Having said this, a sell-off from US treasuries by China would also push up their currency value, making Chinese exports more expensive and further heightening already volatile tensions with the US.

In the latter stages of the previous week, there were indications that President Trump could be reconsidering the size of the levies imposed on China. It has been reported that tariffs on Chinese goods could be around 50% to 65%, but there’s been no confirmation of this.

The Head of Economic Research at St. James’s Place, Hetal Mehta, says:

“From the Chinese government’s perspective, you have to ask what would they gain from selling US treasuries? It could be used as a bargaining chip for a better trade deal.

“Economically, this is an inflation shock for the US if we see tariffs pick up materially and that’s bad for growth. It’s the combination of higher inflation and weaker growth that makes it difficult for the central banks to know how to deal with it.”

Fixed Income Strategist at St. James’s Place Greg Venizelos draws attention to a reduction in appeal for US treasuries. He states:

“From recent auctions of treasury debt, it seems that the non-domestic appetite has decreased and the domestic audience including banks had to increase to take up the slack. And, as assets such as equities have come off in the US, the dollar has also weakened, which is rare as usually when there is a global risk-off there is a flight to the dollar.”

He also highlights that if US growth decreases, tax receipts are also likely to decrease and with planned tax cuts by the US administration coming up, the fiscal risks increase for holders of US treasuries.

“You have seen this reflected in the risk premium that investors should expect, to compensate for this added uncertainty.”

Can Europe reap any benefits from the tensions?

As it stands, the IMF has predicted that growth in the eurozone will slow to 0.8% in 2025, down 0.2%. But the current volatility of the US treasury market has resulted in some positive movements for European bonds.

Venizelos continues, saying:

“Bonds still have a role to play, and we have seen over the past few weeks occasions where yields were rising in the US and retreating in Europe, so there is that divergence. The main issue for investors is market size. The European bond markets are still quite small relative to the US.”

The US treasury index benchmark is close to $17 trillion in face value and the German bond market is around a tenth of this. However, the Italian bond market is the fifth biggest in the world because of the large amount of debt relative to the size of its economy.

What’s the economic outlook across Asia?

It’s an IMF fiscal forecast downgrade for Asia too. Predictions for Japan’s economic growth was reduced to 0.6% from January’s 1.1%.

There’s expected to be a 4% growth for China in 2025, but this is still down by around 0.5% from the forecast in January. Much will depend on the size of the tariffs imposed by the US if/when they arrive, and China’s government has brought in stronger fiscal measures in order to weather the impact.

Are investment opportunities still possible?

Despite the volatility, there are still plenty of opportunities for investors. Mehta goes on to say:

“We shouldn’t be afraid of volatility, it can bring opportunities. However, in order to have resilience you need to be well diversified and this is the focus.”

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

Wealth Check

Securing the lifestyle you want – now and in the future

A successful career often equates to a high standard of living during your working life – but is it possible to sustain this lifestyle when you retire?

Thanks to continuous discoveries and advancements in medicine, healthcare and better living conditions, life expectancy is increasing. Around one in three children born in the UK today are expected to live to 100.¹

While this is something to be celebrated, have you thought about how you will financially support yourself if you live to 100? Savings may need to stretch over 40 years or more after you stop working, particularly if you wish to maintain the lifestyle you’re accustomed to.

Although no one can know what the future entails, it’s still important to plan for a long retirement that includes considerations for possible care and leaving money to your children or grandchildren.

Using working life to save

Making provisions during your working life is essential in funding your later retirement. It may be tempting just to focus on the present and short term, but this is where a financial adviser can really help.

A financial adviser will help you tailor a comprehensive personalised savings plan that considers how much you earn and how much you can afford to save. The sooner you start, the more time you give your money to grow.

Not only that, but your adviser will help assess your risk profile, giving your invested money the best chance of long-term growth. We’ll balance risk depending on your age and retirement goals.

It’s advisable for everyone to put as much money as possible into a pension. Remember, if you’re employed, your employer will pay in too. Even if you set aside just 4% to 5% of earnings, you can significantly build this up over time through compound growth.

One of the biggest benefits of pensions is the tax relief. Another form of tax-efficient growth can be found in ISAs; our financial advisers will discuss the best options for your situation.

An ideal retirement

One of the most common questions asked once you’ve retired is: “How do I make my money last?”

This will be dependent on the type of pension you have. Defined benefit pensions guarantee an income for life, but most people today will have defined contribution pensions, where income depends on investment performance.

The timing of your pension access is crucial, where you can decide to take your 25% tax-free cash as a lump sum or gradually.

Securing a financially beneficial future

Advisers use cash-flow modelling to plan ahead – we consider inflation and help you work out when and how to utilise income or gift money to family tax-efficiently. This is important in covering potential unforeseen costs like care or nursing fees.

There’s no straightforward solution on how to fund a long retirement. Each individual has different needs, savings and family circumstances to consider. Financial advisers can add immense value in these areas, helping you navigate the future and aiming to ensure that you can cover all you need to maintain your lifestyle and living standards.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

Trusts are not regulated by the Financial Conduct Authority.

Source:

¹Office for National Statistics, ‘Past and projected period and cohort life tables: 2020 based, UK, 1981 to 2070’, January 2022

In The Picture

Last week, the US Dollar Index fell to a three-year low. Rising political tensions between the White House and the Federal Reserve are partially responsible for this. Markets had a quick reaction – gold (a traditional safe haven for investors) briefly surged to another new high.

However, this shift was reversed following Trump’s reassurance to markets that he didn’t plan to remove Fed Chair Jerome Powell, subsequently easing concerns surrounding central bank independence. However, the dollar remains down over 8% from the start of the year as concerns surrounding tariffs continue to heavily impact markets.

Mehta explains:

“Movements in the dollar are often about more than economic data – they reflect how investors feel about stability, leadership and risk. Last week’s fluctuations show how quickly confidence can be shaken or restored by political messaging.

“As the world’s reserve currency, the dollar underpins global trade, investment and borrowing. So when its value shifts, it doesn’t just affect the US, it has knock-on effects across international markets.

“Understanding these dynamics helps investors make sense of what can sometimes feel like erratic market behaviour – and reminds us that markets respond not just to numbers, but to the stories behind them too.”

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 28/04/2025

WeeklyWatch – Global markets struggle to find direction

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23^rd April 2025

Stock Take

There was a lot of volatility across the markets last week. The culprits: further escalations in trade tensions, central bank policy moves and renewed concern for investors as they look at the global economy.

Increased pressure for US markets

Political tensions seeped into monetary policy discussions, which caused US equities to struggle. Federal Reserve Chair Jerome Powell faced more public criticism from President Trump who called him a “major loser” as he continued to pressure him into making more cuts to interest rates to give the economy an immediate boost and offset the impact of tariffs on Chinese goods.

On his Truth Social platform, Trump described Powell as “Mr Too Late” in responding to the risks that the US economy currently faces. This also gave rise to new speculation over the Fed’s independence. The President can’t dismiss the Fed Chair, but Trump’s strong language has certainly added to investors’ unease.

Over the week, the S&P 500 fell by 1.5%, the Dow Jones Industrial Average was down 2.7% and the Nasdaq Composite lost 2.6%. Many other sectors also finished the week lower, with healthcare one of the hardest-hit areas. There was a 22% single-day fall for UnitedHealth Group following disappointing earnings – the group’s worst performance since 1998.

Adding to the bad news, the US dollar weakened to a three-year low against major currencies. Investors sought safety, leading to gold prices hitting a record $3,450 per ounce.

And to round it off, economic data revealed that while retail sales remained steadfast, inflation data continued to stay high – this leaves the Fed in a challenging place before its next meeting.

Europe paves its own way

The European Central Bank (ECB) decided to cut their deposit rate by 0.25% to 2.25% after concerns regarding economic growth. As inflation moderated, the policymakers made the decisive move to keep momentum up in the eurozone economy.

ECB President Christine Lagarde revealed next to nothing about the bank’s next plan, only insisting that policymakers would make choices meeting-by-meeting. Some of Lagarde’s colleagues spoke out, saying that the bar for future cuts is low. The new rate cuts provided a much-needed boost, and European markets recovered some ground – the Euro Stoxx 50 finished the week 3.09% higher, overcoming a three-week losing streak.

While Europe celebrated positive market reaction, caution lingers. Despite the upswing, growth remains fragile and vulnerable to further external risks, such as weaker demand from China – this could deepen slowdown, causing investors to keep a close eye on the situation.

Mixed market signals from Asia

Reports released from China fractionally beat expectations as they showed first-quarter GDP growth of 5.4% year-on-year, with March data revealing that retail sales and industrial output were strong. But the MSCI China Index dropped by 1.8% over the course of the week; this, coupled with continued concerns around US–China trade tensions, fuelled investor worry further.

Heading east, Japan’s Nikkei 225 reported modest gains, celebrating its best week in three months. Investors also became more hopeful that Trump will broker trade deals with some of the region’s top trading partners, which includes Japan.

The world looks ahead

Market behaviour and developments across the week reflect the forces that are shaping current markets: geopolitical uncertainty, inflation pressures and changes in monetary policy. Investors will be monitoring US–China trade negotiations carefully.

Central banks are predicted to be a key focus during this time. Europe has opted for action to support growth while the Federal Reserve tries to balance matters under increased political pressure.

During these times, it’s important to remember the core principles of investing. Chief Investment Officer at St. James’s Place, Justin Onuekwusi, says:

“Emotional decisions can lead to poor investment outcomes. Investors typically have long-term plans to meet their overall goals. Sticking to those plans in periods of volatility is incredibly important.”

Wealth Check

Building your business takes time and hard work, but there comes a time when you may step back and consider selling and realising the value that you’ve created. But sadly, for many businesses that go to market, a successful exit isn’t achieved.

Chief Revenue Officer at Elephants Child, Crawfurd Walker, has worked to assist many businesses get ready for sale. Here, he shares his top advice on how owners can best prepare.

When preparing a company for sale, it’s essential to maximise value, ensure a smooth transition and minimise risks. If you don’t fully prepare, you could find significant gaps between your expectations and a buyer’s perspective on fair markets prices, and could run the risk of losing buyers.

Preparing a business for sale can take years and depends on several factors so it’s important to work with a team of financial advisers who will help you prepare and guide you through the sales process.

The importance of the preparation process:

Business valuation maximised

Potential buyers will pay close attention to financials. By preparing your business properly you have time to improve profitability, sort out inefficiencies and boost value.

Once you’ve resolved outstanding debts and clarified asset ownership, your business will be more attractive as potential financial risks will have been taken away.

Attracting potential buyers

Make sure that your business documents are well-organised, processes are clear and your branding is strong. Buyers also seek certainty, so by having your business well-prepared, you present fewer risks and are far more likely to attract serious buyers, who’ll also be willing to pay a premium.

Do your due diligence

Unresolved issues or missing information can disrupt or even collapse sales. By having the correct documents, records and contracts ready, you can help avoid delays. Additionally, having well-organised records shows transparency, making it easier for buyers to build confidence in your company, plus you’ll increase the likelihood of a smooth and successful transition.

Smooth business continuity during transition

By having guides on operations, customer relationships and staff relationships, you’ll enable a smooth handover to the new company owners. As well as preparing your business, you must also take time to prepare your key employees, making sure that they remain motivated; retaining essential staff preserves important business knowledge and value.

Make the most of tax and legal strategies

Reduce your tax liability by structuring the sale strategically so you can minimise tax consequences and maximise financial outcomes. By preparing for this well in advance, you allow yourself time to seek out expert advice to help you along the way.

Furthermore, making sure that you’re addressing all legal compliance criteria (legal and regulatory issues) will reduce the risk of issues arising during the sale.

Getting the most out of your personal and business goals

Clarifying your personal objectives during your preparation will help you understand exactly what you want from the sale of your business – from financial security to preserving company legacy or a combination of goals.

Achieving the legacy that you want for your business long after its sale is all down to your preparation, which will ensure that it continues under the new ownership.

Are you considering selling your business?

Making sure your business is well-prepared for sale is a way of investing in its future value. By seeking out the right financial advice, you can boost your chances of a sale, achieve a higher price, get a better deal structure and make the transition as smooth as possible, in order to protect your interests and those of the business.

More opportunities with financial advice

By enlisting the help of a financial adviser, you can access the kind of personalised support that will prepare your business for an exit that’s smooth and successful. Get in touch with Wellesley today to get started on your business transition journey.

St. James’s Place works in conjunction with an extensive network of external growth advisers and SME specialists, such as Elephants Child, who have been carefully selected. The services provided by these specialists are separate and distinct from those carried out by St. James’s Place and include advice on how to grow and prepare your business for sale. Where the opinions of third parties are offered, these may not necessarily reflect those of St. James’s Place.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 22/04/2025

WeeklyWatch – Market behaviour reflects tariff disruption

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15^th April 2025

Stock Take

‘Liberation Day’ and the ongoing repercussions of the US tariffs continued to heavily impact the markets last week. And tariff rumours, pauses and changes didn’t help matters, forcing market behaviour to change on an almost daily basis.

Hitting pause

One such rumour that began to circulate last Monday was that tariffs would be paused for 90 days, but this was quickly quashed by the US administration. By Wednesday, it emerged that President Trump would reduce higher tariffs on a number of countries down to 10% for 90 days, with immediate effect.

With this small window of time in place, it’s likely that many nations will try to negotiate with the US to avoid their initial higher tariff level. But with this pause comes even more uncertainty, and it remains relatively unknown as to what compromises and offers nations will have to put forward in order to satisfy Trump.

Markets try to adapt

The tariff pause did help lift US equities – the S&P 500 and NASDAQ ended Friday noticeably higher than when they started on Monday. But although this sounds like positive news, both indices are still below pre-Liberation Day levels.

One of the big exceptions to the pause in the tariffs was China. Towards the end of the week, the two largest economies gradually increased their protectionist agendas against each other. Tariffs between China and the US are now incredibly high, even though trade volume between them decreased significantly after Trump was elected for his first term as President back in 2016.

Outside of tariff developments

In other economic news, US CPI inflation fell to 2.4% in March – down from 2.8% in February and below the 2.5% that had been anticipated. Included in this data would have been some price changes from the initial US tariff moves, like the 25% import tax on steel and aluminium, but it won’t include any of the more recent and further-reaching tariffs.

This places the Federal Reserve in a tricky situation. As inflation remains relatively low, Trump has encouraged the Fed to reduce interest rates in order to help the economy. However, the ongoing tariff changes and anticipation of higher prices could make cutting interest rates a risky option.

Signs of growth for the UK?

Chancellor Rachel Reeves revealed on Friday that GDP grew more than expected. The UK economy expanded by 0.5% in February, according to the Office for National Statistics (ONS). The news came at the same time that the ONS revised up their January figures from a 0.1% fall to a flat 0.0%.

Monthly GDP figures can be volatile and are often subject to revision, however. And some of the most recent growth may also have been boosted by exporters rushing to beat the US tariffs coming into place.

Despite the positive GDP news, the FTSE 100 index ended the week down 1.13%. There was a spike when Trump announced the temporary tariff reduction, even though the UK are facing a 10% tariff regardless.

Activity across the European continent

The MSCI Europe ex UK Index finished the week up. Shares were boosted after the temporary tariff changes took place on Wednesday.

As this week goes on, the European Central Bank is expected to cut their interest rates as inflation seems to be under a bit more control and growth is threatened by US tariff policy.

Wealth Check

Finish the sentence – “I’ve always wanted to…?”

When you’ve got your mind fully focused on your working life, retirement can seem like a distant dream and difficult to picture…

For the present and the future

When you start thinking about putting money aside, your bucket list should take a valued position in your financial plans – whether it’s taking up new hobbies, visiting friends near and far, going on that big trip or retreating to the countryside.

At the same time, day-to-day lifestyle also needs to be factored into your plans, such as increased healthcare costs as you age. This can feel like a big juggling act, which is why seeking out financial advice can help turn a ‘wish list’ into a realistic, practical and sustainable plan for your retirement.

Putting the retirement plan into action

A good place to start when planning for your retirement is to set aside a regular amount of money in an easily accessible account or Cash ISA for emergencies, acting as an important safety net. Aiming to have enough to cover your outgoings for six months is an advisable practice. You can also set aside further regular monthly amounts into other tax-efficient ISAs or your pension to boost your medium- and long-term financial goals.

There are plenty of options to help you save, including Stocks & Shares ISAs, Cash ISAs, other investments and pensions. Each option has different tax advantages and positive and negative outcomes attached, which makes seeking out financial advice when planning for retirement all the more important in order to find the right plan and solution for you.

Flexibility is key when it comes to stress-free retirement planning. Diversifying your savings options spreads the investment risk and allows you the choice of which pot you take from when you eventually stop working. If one option doesn’t perform so well, you can use another in the short term.

Additionally, turning hobbies or skills into an income during retirement years is a popular choice. Homeowners also may choose to rent out a room in their home before considering downsizing. And many of us will receive a form of State Pension.

The value of a financial adviser

By having regular meetings with your financial adviser, you can make changes to your financial plans as you go and as situations come up. Discussing your aspirations for retirement with someone you trust is highly reassuring, and you know that you won’t be compromising your living standards as you move forward.

An investment in a Stocks and Shares ISA will not provide the same security of capital associated with a Cash ISA.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

Please note Cash ISAs are not available through SJP.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 14/04/2025

WeeklyWatch – Markets in tariff turmoil

8^th April 2025

Stock Take

The markets experienced a highly turbulent week after President Trump’s tariff announcement last Wednesday. In this edition of WeeklyWatch, Justin Onuekwusi, Chief Investment Officer at St. James’s Place, provides his expert assessment of this latest significant global economic development.

A turbulent week in markets

Global markets were left reeling last week, as the US introduced near-blanket tariffs across trading partners.

Speaking on Wednesday, President Trump announced a minimum tariff of 10% on nearly every country, including the UK.

Other countries received substantially harsher terms. For example, imports from EU countries will face 20% tariffs, while those from Japan will face 24%. Chinese imports, meanwhile, will receive an additional 34% tariff on top of the 20% they already face.

These tariffs are due to go live from 9^th April, giving other governments very little time to react. If they go live in their current form, these tariffs will amount to the largest US tax hike in 40 years.

So far, policy responses from other countries have been mixed. Vietnam, for example, offered to remove all tariffs on US imports, according to several sources. On the other hand, China announced that US imports would receive an additional 34% tariff from 10^th April.

The EU is yet to provide its official response, though it is expected to announce new tariffs of its own on various US products.

In the UK, meanwhile, the Prime Minister wrote in the Telegraph that the Government’s position would be to “Keep calm and fight for the best deal.”

Perhaps unsurprisingly, stock markets have taken the threat of a global trade war rather badly. Markets fell on Thursday and Friday, as trillions of dollars were wiped from the stock market. The falls have so far continued (as at the time of writing – Monday 7^th April).

Over the course of the week the FTSE 100 fell 6.97%, with the MSCI Europe excluding UK Index dropping 6.95%. The situation was similar in Asia, where the Japanese Nikkei 225 declined 6.01%. Falls were even worse in the US, where the S&P 500 and NASDAQ ended the week down 9.05% and 10.0%, respectively.

What this means for investors

While market falls can be difficult to live through, it is important to remember they are a feature of investing. Market falls of 10% are not rare occurrences compared to the long history of equities. However, decisions you make when these occur can significantly impact your long-term returns.

Making reactive selling decisions when markets are volatile can be very challenging as these become market timing decisions. Markets can fall and/or rebound faster than we can participate in them. Instead, for investors in already resilient well-diversified portfolios, taking little or no action has often led to better long-term outcomes, based on historical data.

Regardless of the current market topics and noise, markets are driven by behaviours. It’s important to be aware of behavioural biases leading to irrational decisions that stray away from process and principles.

For his part, so far Trump has indicated he plans to stay the course. On Sunday he told reporters:

“I don’t want anything to go down, but sometimes you have to take medicine to fix something.”

Outside the immediate market reaction, these tariffs are likely to lead to an increase in inflation in the US. At the same time, they are likely to reduce GDP growth and push unemployment higher, meaning the tariffs could potentially lead to an increase in stagflation fears.

This will also have an impact on the Federal Reserve’s policy on interest rates. As a result, markets are beginning to price in more interest rate cuts of 2025 than they did previously.

The only certain thing right now is we’re facing uncertainty. We still don’t know how several major economies plan to react, nor do we know how the US will respond to these reactions.

At the moment, any decision that we make should reflect the fact that uncertainty is high. We’re not going to be able to predict our way out of it, nor should we try.

There will be narratives around how different things are now, how the world is changing. It was the same in 2008 and during COVID. It’ll be the same now. But history shows that if you’ve got a good process, then you should be sticking with it.

Trying to make sensible decisions in these environments might be really difficult but will be incredibly important for delivering good outcomes over the long run.

Periods of political and economic uncertainty often test investor resolve, but history has repeatedly demonstrated the importance of diversification, discipline, and a long-term perspective. While short-term market volatility can be unsettling, staying calm and avoiding impulsive decisions is essential – this is when behavioural missteps can be most damaging. Investors who stray from their long-term strategy during turbulent times risk locking in losses and missing out on the recovery that often follows. Our portfolios remain grounded in these core principles, and we continue to monitor market developments closely.

Justin Onuekwusi

Chief Investment Officer, St. James’s Place

Wealth Check

What is the impact of the US tariffs?

According to investment experts at St. James’s Place, the US’s move to implement tariffs on trading partners will likely have widespread and unforeseen effects.

The US Census Bureau state that in 2024, the US imported $4,110 billion of goods and services. Most of these imports will now face an additional tariff of at least 10%.¹

The Head of Economic Research at St. James’s Place, Hetal Mehta, points out that while it was common knowledge that President Trump would issue reciprocal tariffs on key trading partners, no-one knew exactly what it would look like or what effect it would have in practice.

The US has large trade deficits with a large number of the affected countries (meaning the US imports more than it exports to them), many were close geopolitical allies with tight-knit, interwoven economies and supply chains.

Mehta mentions that the tariffs are unlikely to cause as much disruption to supply chains as the pandemic, but they’re likely to alter the relationships between nations. It’s not just a matter of switching suppliers or placing a stronger emphasis on buying domestically. It takes time to build supply capacity from other regions and areas to fulfil current demands. There are also non-tariff barriers with other countries, including things like regulation.

She says:

“You can’t just jump to another supplier that easily. So, will these non-tariff barriers get watered down? Where will the trade get re-rerouted to?”

She adds that the US consumer already buys more than the US can supply, which is why more goods are imported than exported.

“One way or another the US consumer will pay for tariffs – they are on the hook. The impact could be, firstly, higher inflation; secondly, higher interest rates to combat that inflation; and, thirdly, higher taxes for households. The latter is because the intention is to funnel the profits of the imposed tariffs to lower US corporate taxes. If the US were to reverse this action in the future, they may find it difficult and have to turn to consumers to pay that bill.”

Source: ¹US Census Bureau: US International Trade in goods and services, December 2024.

In The Picture

Not since the COVID pandemic in 2020 have we seen such levels of economic uncertainty. However, history teaches us that maintaining a steady course and taking little action when big deviations take place between asset classes often produces positive long-term outcomes.

We focus on diversification as a core principle when creating portfolios, and the choices made by the St. James’s Place investment team over the past year demonstrate this strategic focus.

Past performance is not indicative of future performance.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 07/04/2025

WeeklyWatch – Welcome calm following the Spring Statement

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1^st April 2025

Stock Take

UK Chancellor breathes a sigh of relief

It will have been welcome news for UK Chancellor Rachel Reeves that the markets have not had a big reaction to her Spring Statement last week.

Encouraging news preceded the statement: UK inflation unexpectedly fell from 3% in January to 2.8% in February, with clothing prices – particularly women’s – being the biggest factor in the fall, as noted by the Office for National Statistics (ONS).

That said, economic developments since the Autumn Budget back in 2024 had left Reeves feeling somewhat boxed in, meaning spending cuts or increasing taxes were the most likely options. Ultimately, she opted for spending cuts for the time being and we’ll have to see whether these will be enough in the long term.

The Portfolio Manager at TwentyFour Asset Managers, Jonathan Owen, described the market reaction, saying:

“Gilts began Spring Statement day in positive territory on Wednesday as they were buoyed by an encouraging UK inflation print, but the fairly muted gains reflected market caution around the spending adjustments later announced by Chancellor Rachel Reeves.

“We suspect the Bank of England will use its May 8 [Monetary Policy Committee] meeting as a window to push through another rate cut, but beyond that, markets will need stronger evidence of labour market weakening before pricing in any more [interest rate] cuts for 2025. With growth faltering, fiscal headroom tight and the risk of tariffs looming, the UK is at a crossroads.”

Noteworthy details from the Spring Statement

One of the key statistics from the Spring Statement came from the Office for Business Responsibility, who have downgraded the UK’s expected GDP growth from 2% to 1% for the year, putting it just below 2024’s yearly growth.

Towards the end of last week, the ONS released their Q4 GDP statistics, which revealed a 0.1% growth between October and December, meaning that the UK economy was up 1.1% for 2024.

Despite the large amount of economic information that was thrown their way, the markets remained fairly flat. The FTSE 100 was up just 0.1% over the week.

Who wants to address the elephant in the room?

Of course, a huge factor for economic growth projection is trade policy – specifically policies related to the US.

President Donald Trump looks set to reinforce his objective to increase his tariff usage, calling tomorrow (2^nd April) ‘Liberation Day’. It remains unknown as to what exactly will be announced, but investors are expecting Trump to announce some kind of reciprocal tariffs. The UK and Europe will be keenly focused on how Trump treats VAT as he navigates trade barriers. Emerging markets are also vulnerable to this as they often place higher tariffs on imports.

How are Trump’s policies affecting the markets?

While ‘Liberation Day’ has been demanding the most attention this week, there were some significant developments last week for the US. This included Trump’s announcement of a 25% tariff on cars built outside of the US, which drove car manufacturer share prices down.

The US markets continue to struggle with the policy shifts, exemplified by the Nasdaq which dropped 2.4% and the S&P which dropped 1.5%.

How is the rest of the world adjusting to the tariffs?

The Head of Asia and Middle East Investment Advisory, Martin Hennecke, commented on the potential further challenges caused by the tariffs:

“For all the tariff noise emanating from the US, we should take note that the country’s share of global trade represents only 11% at present, as China overtook the US as the world’s largest trading nation long ago, in 2013 to be precise. As long as the rest of the world sticks to more friendly tariff policies amongst each other, there may be hope of potentially less of a Trump fallout than feared.”

One of Hennecke’s points refers to the recent trilateral talks that have taken place between Japan, China and Korea that have been focused on deepening their trade ties.

Tariffs commonly impact inflation figures. In the previous week, the Bureau of Economic Analysis showed that US core personal consumption expenditures inflation went up to 2.8% in February – an increase from 2.7% in January – which is above expectations.

As more tariffs are likely to be announced over the next few days, the Federal Reserve are looking to face quite the challenge during their next meeting to discuss interest rates.

Wealth Check

Insuring to protect yourself

Often, to keep our tangible assets safe (cars, contents of our homes, pets and much more), we take out insurance on them. But putting more protection on your standard of living and health can be much more valuable than insuring material possessions.

What kinds of protection insurance are available?

There are many types of protection insurance, all of which offer different types of coverage and depend on what – or who – requires the protection and for how long. Income protection, life assurance and critical illness cover are the three most widely available forms of protection insurance.

Income protection – This pays a percentage of your income to allow you to cover bills and outgoings if you can’t work as a result of illness. For self-employed individuals, this can be particularly useful as they’re responsible for their own health, welfare and pension.

Life assurance – This form of protection insurance pays out a lump sum after death. If the policy is written in trust, the payout will not be affected by inheritance tax. This significantly helps avoid delays during probate. These policies are also different from life insurance; they’re whole-life policies as opposed to fixed-term policies, which usually makes them cheaper as well.

Critical illness cover – This protection will pay out a lump sum if you suffer a serious illness such as cancer or a heart attack. You can choose whether you want the cover to be in place for a specific period of time or for your whole life. And as life expectancy is increased, this policy could be one of the most significant to have to ensure future financial resilience.

Planning protection insurance with a financial adviser

We understand that taking out life assurance or critical illness can be a significant step in your financial planning. Our team of expert financial advisers are on hand to help guide you through the process and provide more information about protection insurance.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

Trusts are not regulated by the Financial Conduct Authority.

Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). ©LSE Group 2025. FTSE Russell is a trading name of certain of the LSE Group companies.

SJP Approved 31/03/2025

Business Matters – Issue 41

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7 expensive tax mistakes business owners keep making, and how to avoid them!

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Launching a new service or product is just the start – a clear strategy and smart tax planning are what keep your business booming. But corporate tax planning is ever-changing and complex. You don’t want to pay more tax than you need to, and missing out on valuable allowances can cost you, too.

In our latest Business Matters, we’re bringing you a selection of tax ‘don’ts’. We also reveal our top tax strategy tips that’ll help you make the most of your finances. After all, tax planning isn’t just about staying on the right side of HMRC – it’s also about taking advantage of every relief and allowance, helping to shape a strong strategy for future growth and long-term success.

The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.

Speak to us today

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7 common tax blunders

1. Not understanding your tax obligations

Tax miscalculations can be costly. Underestimating profits can result in fines for non-compliance with HMRC rules, while missing deadlines can result in interest for overdue payments.

What’s more, failing to set aside enough funds for your tax liability can disrupt cash flow at crucial times of the year. National Insurance contributions hit the headlines recently, with the government increasing employer contributions from 13.8% to 15% from April 2025, as well as dropping the threshold at which employers start to pay National Insurance from £9,100 to £5,000.

What taxes do business owners need to pay?

Any business is taxed on its profits so the more you make, the more you may pay. The taxes you may need to consider include:

Corporation Tax
VAT
Capital Gains Tax
Business Asset Disposal Relief
Income tax for salary
Income tax for dividends
Employee National Insurance contributions (NICs)
Employers’ NICs.

The amount of tax you pay is governed by statute and based on how your business is structured and how you pay yourself and others.

2. Tax avoidance

We won’t give this one too much page space – but it certainly earns a spot on the list. In short, just don’t do it!

Example 1:

A retail company was accused of using aggressive tax avoidance schemes. They were found to have set up a system that allowed them to avoid paying UK tax by shifting profits to offshore jurisdictions and were therefore required to pay a significant sum in back taxes and penalties. The company later collapsed into administration.

3. Not keeping clear records

Accurate record-keeping is vital for any business, offering key financial insights, supporting tax returns and forming the foundation of audits. Clear, up-to-date records should track all income, expenses and financial transactions, including dates, invoices and supplier details.

But it’s not just about ensuring you’re meeting your tax obligations; maintaining meticulous records can also highlight opportunities.

Example 2:

Another retail company has faced multiple controversies regarding tax planning, particularly in relation to how they classified workers as ‘self-employed’ when they were actually working as regular employees. This allowed them to avoid paying National Insurance and other taxes. After an investigation by HMRC, the company was ordered to pay back unpaid taxes and National Insurance contributions.

4. Confusing personal and business finances

Not keeping your personal and business finances separate can cause confusion, result in errors and ultimately risk tax liabilities. For example, you need to be careful about how you pay yourself and avoid using company money for personal expenses, which HMRC treats as a director’s loan.

Establishing dedicated accounts for personal and business finances is a best practice, particularly for maintaining clear tax records. This separation also simplifies asset management and strengthens financial oversight, helping to keep your business running efficiently and compliantly.

5. Not paying yourself or your team in a tax-efficient way

Not paying yourself or your team in a tax-efficient way can mean missing out on valuable deductions and incentives that could otherwise be reinvested into the business. Poor tax planning can result in higher tax liabilities and cash flow issues and can also impact employee morale.

If you set up a limited company, it’s important to think about your remuneration structure – how you pay yourself and any staff. This is the salary versus dividend question. If you have a very profitable year, you could choose to pay more dividends, as well as or instead of bigger bonuses. But with recent changes to the rate of Corporation Tax, the increase in Dividend Tax and the reduction of the Dividend Allowance, you might decide on a fixed salary structure.

Incorporating pension contributions into your remuneration structure is also an important part of creating tax-efficient drawings. On that topic…

6. Not maximising your pension contributions

Pension contributions are an important consideration for tax deduction, both for retirement planning and tax efficiency. For sole traders and partners, personal pension contributions are eligible for tax relief at their highest rate of income tax. Employer contributions are highly tax efficient since they are generally an allowance expense for corporation tax and not a benefit in kind for the employee.

Under the auto-enrolment regulations, all eligible employees must be part of a pension scheme (unless they choose to opt out). As their employer, you must contribute a minimum of 3% of their salary – with a ceiling of 8% for combined employer and employee contributions. But as a business owner, you have the freedom to put more in if you wish.

Pension contributions are an attractive benefit and for the business owner, you’re also moving money out of your business. So, if the business falters or fails, you have less capital at risk.

Once the money is out of the business and in a personal pension, it’s in your name and separate from the business.

The value of a pension will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

Example 3:

A department store collapsed, partly due to poor pension planning and failure to seek proper advice about its large pension deficit. There were also issues with financial management that, while not directly tax-related, had tax consequences.

7. Not knowing what you can claim and what you can’t

And last but certainly not least, have you thought about what business tax allowances you might be eligible for? Here are three to consider:

A Capital Allowance is where you offset the costs of buying assets for the company against your Corporation Tax liability. This allowance is particularly valuable during the early years, when you may be scaling up and investing in both people and plant, such as IT equipment, office furniture, storage facilities or plant and machinery.
Sole traders, entrepreneurs or businesses running from home can also potentially claim a percentage of household bills as business expenses if trading from home. This needs to be approached with caution, consideration and sound advice.
Research and Development tax credits are often overlooked. You may be eligible for a tax break when researching or developing new products or services. Any expenses you incur could be eligible for a cash payment or a reduction on your Corporation Tax. These can be complex, so to know if your innovation qualifies, speak to your accountant.

Example 4: Carillion

While not directly linked to tax allowances, we wonder whether better use of allowances and reliefs could have helped Carillion, which went into much-publicised liquidation in 2018. The major UK construction company was involved in large public-sector projects. Its failure is often cited as a case of corporate mismanagement and a reliance on risky contracts, but poor financial practices – including unpaid tax and pension obligations – were also a factor.

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Spotlight on start-ups

Tax planning can feel like a low priority for new business owners, as you understandably focus on getting sales and operations off the ground. But optimising your tax position is just as valuable in a start-up as it is in larger organisations, as it can help you build a solid foundation for your new business.

Tax to-do list for start-ups

Appoint an accountant and financial adviser: There’s much more to tax planning in a start-up than you may realise, especially if you’ve never run a company before. It’s a specialised area, and many businesses invest in professionally qualified advice.
Choose what trading structure you’ll have: Decide on whether being sole trader, a partnership, a limited liability partnership or a limited company is most suited to your business.
Make sure you understand all your tax obligations: Your chosen business structure is a key factor in this, so think carefully as it can be difficult to change later. It’s also important to decide whether you want to be registered for VAT and, if so, which VAT scheme to use.
Register with HMRC for each tax you need to pay: There is no one-stop shop for this, so you must register separately for Income Tax, PAYE, VAT and (for limited companies) Corporation Tax.
Self-employed accounting: If you’re self-employed, decide whether to use cash or accrual accounting to calculate your business profits subject to Income Tax. This decision can affect your cash flow significantly.

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Smarter tax planning for business owners

These seven sins of tax planning are designed to highlight the negatives, but they also show how a well-structured tax strategy can help your company thrive.

And there’s one more top tip to bear in mind! Involving all your professional advisers – your accountant, financial adviser and solicitor – in your tax planning is absolutely key. While accountants focus on tax years, your financial adviser will think in decades to ensure you and your business enjoy a successful future.

If you have a question about tax allowances for businesses, we’re always happy to help – get in touch today.

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The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.

Auto enrolment is not regulated by the Financial Conduct Authority.

SJP Approved XX/XX/XXXX