WeeklyWatch – The cat’s out the bag – Autumn Budget unpacked

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2^nd December 2025

Stock Take

Positive initial Budget reactions

Last week saw Chancellor Rachel Reeves deliver her Autumn Budget. She has four key groups to please – party, electorate, business and the market – of which only the market response can be precisely measured. So far, test passed! As November drew to a close, important domestic financial indicators like government bonds (gilts), the pound and shares all ended higher.

Early reveal causes chaos

Budget day started off rather messily. The accidental early release of the Office for Budget Responsibility’s (OBR) fiscal forecast broke a cardinal rule in finance markets: no surprises.

As a result, gilt yields yo-yoed (yields and prices move in opposite directions). But by 28^th November, the yields on UK government bonds fell to their lowest level for the week. Despite it being a fairly modest drop, investors seemed to be giving the government’s fiscal plans the benefit of the doubt. Additionally, lower gilt yields meant that the UK was also paying lower interest rate on borrowings.

OBR to the rescue?

The Fixed Income Strategist at St. James’s Place, Greg Venizelos, identifies that the easing in gilt yields was:

“Likely a reflection of the fact the OBR’s upward revision in the fiscal headroom to £22 billion reduces the near-term risks associated with possible macro-economic shocks.”

Sterling strengthened slightly after the Budget was revealed, which could be an indication that investors were willing to adopt a ‘glass half-full’ approach.

Venizelos highlights that the chances of the Bank of England cutting interest rates in December have increased by over 90% and believes it’s almost a done deal. The OBR forecast of domestic inflation looking to slow to 2.5% in 2026 would boost this move. He adds:

“It’s worth noting this probability jumped from below 40% to over 70% on 6^th November, when the Chancellor made a speech hinting at income tax hike.”

Fiscal hole to fiscal surplus?

The Director of Public Policy at St. James’s Place, James Heal, says:

“The Chancellor managed to walk a difficult tightrope on the day, but some of the relief on the day may have already evaporated. There is now a strong media and political focus on the strong pre-Budget signalling of a fiscal black hole (thereby justifying some of the difficult decisions taken) which turned out to be a small surplus.”

Relief rally by UK shares

It was a good week for UK shares. The FTSE 250 (the domestically focused index) rose by over 3% over the course of the week. Plus, the FTSE 100 concluded the week in the green.

Rate-sensitive beneficiaries whose earnings are helped by lower borrowing costs – for example, banks as well as utility companies, electricity and gas providers with high levels of borrowing – were helped by the expectations that interest rates are set to ease. Also benefiting were property companies and (more significantly) housebuilders, with hints of a potential increase in mortgage demand. Some consumer-facing sectors like retail and hospitality rose, showing that apparent relief wasn’t targeted more harshly. On the opposite side, the gaming sector weakened after higher taxes were announced in the Budget.

Downgraded UK growth

Market reaction to the Budget wasn’t unconditional. The commentary – and critics – have been particularly looking at the impact on economic growth and whether the Budget goes far enough. Worries that there could be more tax implications in the long run were expressed.

It also wasn’t a bright macro picture. The downgrading of its productivity forecast by the OBR will result in a lower economic outlook from next year. Venizelos says:

“While the Budget managed to smooth market anxieties, at least in the short and medium term, we remain cautious due to the longer-term fiscal concerns.”

AI and interest rate cut hopes support US shares

Shares rose strongly in the US, even though the trading week was shortened because of the Thanksgiving holiday. Talk of a US interest rate cut later in December seemed to boost investor sentiment. There was also a rally in AI-related shares, helping the S&P 500 recover from a bad start in November and finish the month with a 0.1% gain. On the flip side, the tech-focused Nasdaq index revealed a negative monthly return for the first time since March.

There was also a rise in continental European shares. Notes from the European Central Bank’s October meeting revealed that the eurozone was in a good place, as inflation stayed near the 2% target – below the level this time last year.

Wealth Check

The Budget rumours are finally over, even if the early release from the OBR didn’t help the speculation…

Measures announced in Rachel Reeves’ Autumn Budget weren’t as drastic or dramatic as many had expected. But the upcoming changes are likely to be felt across UK households over the next few years.

It will take a few weeks for the dust to settle, and then there’ll be a clearer picture of who wins and who loses out. Until then, here are some of the main reforms that were announced.

A freeze in Income Tax thresholds

Income Tax and National Insurance contribution (NIC) thresholds have been frozen for three more years (until 2031, beyond the next general election) and are expected to raise £23 billion for the government. This so-called fiscal drag will result in more people edging into higher tax rate bands.

Savings and property Income Tax increased

There will be a rise of two percentage points for savings and property Income Tax for each band of taxpayers from April 2027. The rate will rise to 22% for basic rate taxpayers, 42% for higher rate taxpayers and 47% for additional rate taxpayers. A similar increase in tax on dividend income will take place from April 2026, but this will only apply to basic and higher-rate taxpayers.

The cash ISA allowance is reduced

To little surprise, the annual cash ISA allowance will be capped at £12,000 from April 2027 – but this only applies to savers under 65 years of age. The rest of the £20,000 annual allowance will be reserved for investments.

NICs on pension salary sacrifice contributions

People paying into their pension through salary sacrifice will begin to pay National Insurance on contributions that exceed £2,000 a year from April 2029. Employers will also pay National Insurance contributions (NICs) on such contributions.

Mansion tax

Those who own a home valued at £2 million or over will receive a council tax surcharge from April 2028. The ‘mansion tax’ will bring in annual charges between £2,500 and £7,500 levied, but this will be dependent on the value of the property.

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

In the Picture

Not a friend, this trend… The UK tax take as a proportion of national wealth is set to rise to historic highs. Increased levels of tax take are being relied on heavily by the government to tackle debt and fund expenditure. Returning to a tax and spend could impact the UK’s competitive positioning for both investment and growth.

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 01/12/2025

WeeklyWatch – AI dominance sparks investor fear

W.24822 Wellesley WeeklyWatch 25.11.25_1420 x 474

25^th November 2025

Stock Take

AI fears shake the markets

In Japan during the 1980s, at peak stock market bubble, Tokyo’s Imperial Palace was estimated to be worth more than all the real estate in California. Unsurprisingly, the asset bubble burst as a result of the Bank of Japan raising their interest rates when they tightened their monetary policy.

Today, the opposite looks to be the case. In the MSCI All Country World Index (ACWI), only one company makes up over 5% of the overall index – Nvidia. To compare, Japan, which has one of the largest economies in the world, makes up just 4.89% of the index. The reason behind Nvidia’s rapid rise in value? Increased optimism surrounding AI which is largely reliant on Nvidia chips. Over recent years, these high levels of optimism have boosted the overall S&P 500.

The Equity Strategist at St. James’s Place, Carlota Estragues Lopez, identifies how the S&P 500 has experienced a huge rise since AI tech began to dominate the markets in October 2023. She states:

“Despite earnings strength being priced in, positive sentiment regarding AI companies continues to drive prices higher, which raises concerns over a potential price bubble. This is why investors are closely watching the most recent earnings season and markets are strongly reacting to disappointing results.”

Avoiding a dotcom repeat?

Investment awareness has increased, particularly when it comes to competing in the AI race. Expenditure was up 50% for Microsoft to US$16.8 billion in the third quarter, and Meta raised their 2025 guidance for capital expenditure to between US$70 billion and US$72 billion, for example.

These figures can be a cause for concern, with numerous investors remembering the dotcom bubble at the start of the millennium and some recalling the sub-prime mortgage bubble from 20 years ago in the US.

Consequently, investor nerves have resulted in market struggle over the last few weeks.

But it’s important to remember that there are big differences between now and other recent bubbles. One of which is that the big players today are profitable. Microsoft are an example of this, reporting a Q4 operating income of US$34.3 billion (an increase of 23% compared to the same period last year) as part of their latest results.

Estragues Lopez notes:

“Today’s technology giants have large cash buffers, which makes it more unlikely that we will see a systemic 2008-style crisis. There is a degree of operational interdependence, so if one of the ‘megacaps’ revenues suffers, this is likely to impact another, but they are ultimately independent, very profitable companies, well placed to absorb losses. It is unlikely that we will see a domino effect if one company fails.”

Investors continued to keep a close eye on Nvidia’s results from last week as they’re a key indicator of the health of the tech sector. The results showed that they beat expectations, however, it wasn’t enough to completely ease fears over a bubble.

Just one company having such a big impact on markets could be a warning sign regarding the dangers of concentrated portfolios. Estragues Lopez adds:

“The key takeaway from the past week should be that diversification is more important than ever.”

The data carries less weight

On home soil, it was revealed by the Office for National Statistics last week that UK inflation fell to 3.6% in October.

Even though the figure is significantly above the Bank of England’s 2% target, it’s the first figure drop since March 2025. ‘Sticky’ services inflation also experienced a drop, from 4.9% to 4.6%.

A fall in inflation has boosted hopes of an interest rate cut next month, but much will depend on what’s revealed in the Autumn Budget, due to be announced tomorrow. The uncertainty surrounding the Budget resulted in a slowing down in consumer spending in October, when it had been expected by economists to have stayed flat or grown.

Japan increase their spending

There was a significant rise in Japanese government bond yields last week. The Asian economy is facing big challenges:

The AI concerns over in the US have had a global impact.
Japanese and Chinese tensions have increased following Japanese Premier Sanae Takaichi saying that if Taiwan were invaded by China, a Japanese military response could be triggered.

Despite these difficulties, the Japanese markets responded to a large stimulus bill in a bid to encourage growth.

The Head of Asia and Middle East Investment Advisory and Comms at St. James’s Place, Martin Hennecke, says that the sharp rise in Japanese bond yields alongside the AI market concerns are a strong reminder on why diversification is important. He says:

“It also acts as a reminder of the severe risks of using leverage when investing. That includes borrowing in any other currencies, which can easily result in investors getting stopped out of positions at unfavourable times and be subject to much higher loss risks than assumed.”

Wealth Check

Increase in cash deposit protection limit

Benefits for savers are coming into place next week with increased protection on cash deposits and savings.

The limit will be increased to £120,000 from £85,000 from 1^st December by the Financial Services Compensation Scheme (FSCS). But what exactly does this mean for you? If a bank or building society fails, savers will have up to £120,000 of their deposit protected, per institution. For joint savings accounts, the protection will increase to £240,000 (£120,000 per person).

There’s also been an uplift in the amount protected under so-called ‘temporary high balances’ – such as those from property sales or insurance payouts. There will be a rise from £1 million to £1.4 million for six months.

As the Autumn Budget reveal draws close, many are waiting to see how hard and where the axe will fall. Reports from last week suggested that working pensioners may face higher taxes and electric vehicle owners could face new charges. There has been some speculation surrounding possible property taxes but until Chancellor Rachel Reeves makes the official announcement, nothing is certain.

On Budget Day, Wednesday, we will be posting an overview of the Chancellor’s key announcements. In the days that follow, we’ll also provide more detail on the different parts of the Budget, analysing what it could mean for different people, from business owners to pensioners and working families.

Please get in touch if you have any questions following the Budget.

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

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 24/11/2025

WeeklyWatch – U for uncertainty and U-turns

W.24822 Wellesley WeeklyWatch 18.11.25 _1420 x 474

18^th November 2025

Stock Take

A blue November

A week of inconsistency was in store for markets and investors as they endured many economic ups and downs. According to figures from the Office for National Statistics, the UK’s unemployment rate hit 5% – its highest level since Covid. And to rub more salt into the wound, third quarter economic growth (GDP) was disappointingly minimal. Jaguar Land Rover’s six-week shutdown that started in September – caused by a cyber-attack – was partially to blame.

Over in the US, a deal was made between a group of Democrats and the Republicans, ending the longest government shutdown in history. Despite this, the uncertainty still isn’t over; the government funding only runs until 30^th January 2026. Nevertheless, the end of the deadlock has been welcomed by the markets.

The US has faced challenging conditions in their labour market as well as stubborn inflation, but despite this, the latest corporate earnings season has been positive. Over 90% of companies have already released earnings. Out of these, over 75% delivered positive sales and earnings surprises.

The Equity Strategist at St. James’s Place, Carlota Estragues Lopez, highlights that the better-than-expected earnings weren’t just the case for the US. She states:

“As well as the US, we have noted that earnings upside surprises rose across other regions. They were particularly strong in Europe and Japan, although there were fewer in emerging markets, held back by some modest misses in China.”

Ending the week with a bang

The week started with a ‘business as usual’ approach for UK investors, but the end was a bit more explosive. Despite her strong indication that there would be an increase in Income Tax, Chancellor Rachel Reeves was reported to have done a U-turn, saying that the upcoming Autumn Budget wouldn’t break the manifesto promise of not raising Income Tax. This resulted in more investor uncertainty and a weakening of UK assets. There was also a fall in shares, and borrowing costs, which are reflected in gilt (government bond) yields, increased. Additionally, the pound weakened against the US dollar and fell to a two-year low against the euro.

Regardless of whether Reeves’ reasoning was politically focused – not wanting to break election pledges – or economic, where things may not be as bad as anticipated, her stance wasn’t well received by markets. Even though Income Tax rises are unpopular, there aren’t many analysts who disagree that tax rises are necessary to reduce the UK’s budget deficit mismatch between what’s spent and what’s earned or collected – alongside cuts to government spending. With only days to go until the Budget is announced, the government’s pullback has increased investor uncertainty further.

The Chief Economist at St. James’s Place, Hetal Mehta, noted:

“The government [is] trying to find a way to balance growth prospects versus manifesto pledges on taxes versus borrowing levels.

“UK inflation is still high and looks likely to moderate slowly and perhaps not as fast as the BoE (Bank of England) would like, suggesting there may not be an aggressive rate-cutting cycle in the UK.”

UK borrowing costs rise as bond prices fall

The reaction on Friday saw the pound weaken to a two-year low against the euro and decline against the US dollar. UK shares weakened too, but the benchmark FTSE 100 ended the week slightly ahead.

The price of UK government bonds also dropped, and yields (which move in the opposite direction) rose. The rise in bond yields makes the cost of future government borrowings even higher. Additionally, it unwinds positive sentiment that had been building since September, when investor expectations of a tough but necessary tax-raising Budget hardened.

Rising AI investment causes unease

There was a stabilisation in the US AI sector following the previous week’s sharp sell-off, but concerns remain despite this. There’s a large gap between the record levels of investment happening in the sector and the lower levels of sales for individual companies and the long path to profitability.

Investor concern is focused on the high levels of expenditure required over several years before they turn a profit. One of the most notable companies affected by this is OpenAI, which generates annual sales of $20 billion. Data provider Bloomberg reports that OpenAI are planning to invest $1.4 trillion in the next eight years in data centres and the chips needed to support their services. Moreover, they’ve forecasted no profit until 2030. This is strongly indicated by the gulf between investment plans and internal resources, and if investors become cautious, other companies in the sector are likely to be vulnerable. Share prices have fallen for many big names in AI, which includes some of the ‘Magnificent Seven’ tech companies. For example, Nvidia’s share price is now 10% lower than the peak they achieved at the end of October.

Waning anticipation for another US rate cut

Reports have arisen regarding a split within the US central bank (Federal Reserve) regarding a potential interest cut in December – an issue that has captured investors’ attention. The lack of data made available during the government shutdown impacted bankers’ ability to assess the relative risks between slowing job creation and inflation. Last month, the decision to make an interest rate cut was regarded as most likely. Within a month, however, market anticipation for a US interest rate cut has significantly decreased. Now, opinion is split: to cut or not to cut?

Wealth Check

Budget backdowns – how many more?

Markets may have reacted negatively following Chancellor Rachel Reeves’ decision not to raise Income Tax in the upcoming Autumn Budget, but was the decision made as a result of an improved economic outlook? It’s believed the move came about (at least in part) due to forecasts from the Office for Budget Responsibility.

Increasing Income Tax would have betrayed one of Labour’s manifesto promises and likely caused hostility from both the public and Reeves’ own party members.

Additionally, it’s been reported that Reeves has scrapped plans to increase taxes for lawyers and accountants in limited liability partnerships (LLPs), which could have created an estimated £2 billion in additional revenues. Reeves was warned by the Treasury that LLP members would be against this increase and take action to avoid the new charges, which could cost the government more than it might raise over the long term.

The Chancellor will need to rely on other methods to plug the estimated £30 billion hole in public finances. As new figures reflect low economic growth and increased unemployment, Reeves’ challenge looks even tougher.

After numerous rumours that there would be cuts to the tax-free lump sum allowance on pensions, reports now say that the Treasury has confirmed that no plans are in place to make changes to the tax-free cash rules.

Savers can currently withdraw up to 25% of their pension tax-free, up to a maximum of £268,275. A lot of financial advisers have noticed increased interest from clients to access the tax-free cash lump sum in 2025. There were rumours that the cash-free lump sum allowance would be slashed last year too, which also saw people requesting withdrawals in unprecedented volumes. In an effort to reassure savers, it’s been reportedly confirmed by the Treasury that it won’t feature in the Budget.

There have also been widespread warnings about the risks of withdrawing cash from pensions in expectation of a cut. Once a saver takes out their tax-free cash, the funds can’t be returned to the pension – there’s no undoing any action already taken if they have a change of mind. In recent weeks, HMRC has confirmed that payments of tax-free cash aren’t subject to cooling-off rules, and payment back to the scheme could have large tax consequences.

Last week also gave rise to rumours that there would be a possible removal of National Insurance savings on salary sacrifice pension contributions above £2,000, which would be extremely costly for higher-rate taxpayers. Because the move is so complex, it’s unlikely that anything will come into force with immediate effect.

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.

In the Picture

Tax and spend? The independent Office for Budget Responsibility reports that the UK tax take is on course to reach its highest levels since records began. This is also boosted by the increase in employer National Insurance and the freeze in tax thresholds.

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 17/11/2025

WeeklyWatch – The Bank of England’s delicate balancing act

D.6367 Wellesley WeeklyWatch 11.11.25_1420 x 474

11^th November 2025

Stock Take

Holding the line

Hopes had been running high in the UK for a long-awaited base rate cut last week. Yet the Bank of England (BoE) chose to hold it steady at 4%, in what proved to be a close decision. Of the nine members of the Monetary Policy Committee (MPC), four voted for a reduction, while five favoured keeping rates unchanged.

While a few analysts had anticipated a cut, most believed the BoE would remain cautious. A surprise reduction could have unsettled both the pound and UK government bonds. In the end, the value of both remained largely stable following the MPC’s announcement.

With UK consumer inflation currently running at 3.8% – still well above the BoE’s 2% target – policymakers remain alert. Normally, in such a scenario, central banks prefer to keep rates higher to help temper spending and avoid fuelling inflation. Still, the narrow vote margin hints that a rate cut may well be on the cards in December.

Wages down, unemployment up

The fact that markets even entertained the idea of a rate cut ahead of this month’s Autumn Budget speaks volumes about expectations – and about leaks of a likely 2p increase in income tax for higher earners.

The BoE’s own assessment (in the statement accompanying the base rate decision) points to slowing wage growth and rising unemployment, both of which ease inflationary pressure. The BoE also believes consumer inflation (CPI) has now peaked – due to many firms having already passed on most of their recent cost increases to customers – and will therefore start easing in the months ahead.

A data-driven pause

The BoE forecasts that UK consumer inflation (CPI) will fall to 3.2% by March 2026. Yet, as ever, central bankers remain cautious. Carlota Estragues Lopez, Equity Strategist at St. James’s Place, describes the BoE’s move not to cut as “a data-driven decision based on the fact that inflation is very high. I think they want to see a bit more data before being comfortable about cutting rates further.”

She also notes that the upcoming Budget likely played a role, even if it wasn’t mentioned outright, saying:

“The upcoming Budget would have contributed to its wait-and-see mode.”

Even so, the MPC’s statement hinted that further rate reductions are likely in the near future. Greg Venizelos, Fixed Income Strategist at St. James’s Place, notes that market expectations for a December rate cut are now close to 70%. He says:

“Assuming the next set of inflation data confirms that inflation has peaked, the MPC will be in a much more comfortable position to cut rates in December. It could be needed – the Budget is likely to prove a growth dampener on the economy.”

Are tech-bubble bets premature?

It’s been a difficult week for tech investors. The Nasdaq-100 suffered its worst performance since April’s ‘Liberation Day’ tariffs, and weakness spread across Asia’s tech and AI-related stocks. Concerns over stretched valuations and potential bubbles (which could eventually lead to a major sell-off) have resurfaced, not helped by high-profile Hedge Fund Manager Michael Burry’s bets against AI shares.

But is trying to link current valuations in the technology sector to those during the dot-com era a mistake? Estragues Lopez urges perspective:

“Many of today’s tech firms are supported by really strong earnings and we are seeing that in the third quarter earnings results. If you look at valuations in the 2000s, some of these were as much as 80 times the price-to-earnings ratio. Now, many better-quality companies are trading on an equivalent ratio of 20–30 times. What is going on with AI is very much a broader shift in the markets. Yes, there are pockets of optimism reflected in some tech valuations that are extreme but these in time should normalise. Of course, technology is only a part of a well-diversified portfolio.”

US shutdown sets a new record

Across the Atlantic, the US federal government shutdown, now stretching beyond its previous record, has left up to 750,000 government workers unpaid since it began on 1^st October.

One major repercussion has been the decision to reduce flight traffic by up to 10% at 40 airports for safety reasons. Neither air traffic controllers or airport security are receiving salaries during the shutdown and some are not reporting for work. Furthermore, some government workers sent home without pay may permanently lose their jobs when the shutdown is resolved.

But the nation will be breathing a sigh of relief today, with signs the shutdown could nearly be over. The Senate passed a crucial funding bill late last night (10^th November), which would fund the government until the end of January. It passed in a 60-40 vote, with eight Democrats who splintered from the party to help get it over the line. The House of Representatives will now have to pass the bill before President Donald Trump can sign it into effect.

It’s clear that the ongoing uncertainty and disruption caused by the shutdown could take a toll on the US economy. Some analysts estimate that each additional week of closure may trim economic growth (GDP) by around 0.1%. This is adding pressure on the US central bank (the Fed), which is working to gauge the economy’s health while missing key national and regional data on employment and inflation which isn’t being gathered during the shutdown. Even so, markets currently expect a 70% likelihood of a 0.25% rate cut by the Fed next month.

Wealth Check

A taxing time?

Speculation is mounting that Chancellor Rachel Reeves will target pension savings as part of a wide range of tax and spending measures due in the Budget. Reports suggest she may cap annual pension contributions through salary sacrifice schemes at £2,000, a sharp drop from the current allowance of up to £60,000.

Contributions made through salary sacrifice are currently exempt from National Insurance for both employees and employers. Such a move could potentially raise up to £2 billion a year, according to reports, while causing frustration for savers keen to bring down their tax liability while saving for their retirement.

This move would come alongside a likely rise in Income Tax, following Reeves’ submission of spending plans to the Office for Budget Responsibility (OBR). In doing so, she reportedly confirmed her intention to raise personal taxation – marking what could be a break from Labour’s manifesto commitments. The OBR will assess the potential impact of the measures before giving the government its view.

This all follows Reeves’ decision to give an unusual ‘pre-Budget’ speech on Tuesday of last week. In it, she declined to rule out increases in the ‘big three’ taxes – Income Tax, National Insurance and VAT – blaming the deteriorating economic backdrop.

Her stated priorities are cutting NHS waitlists, reducing the cost of living and tackling the UK’s £2.9 trillion national debt, now equivalent to roughly 95% of GDP.¹ Achieving these goals will require significant revenue – particularly as economists estimate a fiscal deficit of £20–30 billion.

Although the speculation can be unnerving, it’s always worth trying to remain calm and avoid making knee-jerk decisions.

Retirement on hold to help the next generation

In further challenges to personal retirement savings, it’s been revealed that nearly one in three parents expects to delay retirement to support their children financially. These statistics, which show that many are facing hard trade-offs between supporting the next generation and securing their own futures, come from Chapter 2 of SJP’s Real Life Advice Report 2025.

For the report, Opinium surveyed 8,000 people between 22^nd July and 5^th August 2025 to find out how their attitudes to money, financial advice and the future had changed over time. Quotas and post-weighting were applied to the sample to make the dataset representative of the UK adult population.

31% of parents said they expect to delay retirement to continue helping their children financially. Another 39% anticipate doing so even after retiring, and a quarter believe they may have to dip into their retirement savings to provide support.

In more positive news, the report also compared sentiment across parents who benefit from financial advice and those who don’t. Those receiving ongoing financial advice are twice as likely to encourage their children to have a financial plan, which could help set them up for a more secure future.

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

Source:

¹Public sector finances, UK – Office for National Statistics

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Source: MSCI. Certain information contained herein, including without limitation text, data, graphs, charts (collectively, the “Information”) is the copyrighted, trade secret, trademarked and/or proprietary property of MSCI Inc. or its subsidiaries (collectively, “MSCI”), or MSCI’s licensors, direct or indirect suppliers or any third party involved in making or compiling any Information (collectively, with MSCI, the “Information Providers”), is provided for informational purposes only, and may not be modified, reverse-engineered, reproduced, resold or redisseminated in whole or in part, without prior written consent.

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SJP Approved 10/11/2025

WeeklyWatch – Tough decisions amid data darkness

W.24822 Wellesley WeeklyWatch 04.11.25_1420 x 474

4^th November 2025

Stock Take

Congress stalemate causing limited visibility of key data

The US Federal Reserve opted to cut their interest rates by 0.25%, as worries about a stalling labour market surpassed inflation fears. However, the vote wasn’t unanimous: one member voted for a 0.5% cut, and another voted for no cut.

Despite the divisions, the outcome was widely anticipated and is the second consecutive month where the Fed have chosen to cut rates. Even though inflation remains a consistent pressure, a slowdown in the job market was the key driver.

Because the result was expected, investors were paying closer attention to Fed Chair Jerome Powell’s comments. The federal government is currently in a shutdown which has been going on for nearly six weeks. As such, the Fed aren’t able to access the flow of economic data they require to monitor the nation’s economic health.

When it came to key data points, Powell commented that the central bank was effectively “flying blind”. With an incomplete picture, he suggested the Fed would likely choose to move slower when it came to making decisions on future interest rate cuts. He stated:

“What do you do if you’re driving in the fog? You slow down.”

Regarding next month specifically, Powell said a December rate cut was “not to be seen as a foregone conclusion – in fact, far from it”.

Following his comments, the expectations of another interest rate cut to take place this year narrowed.

Tech stocks on the rise

Continuing to soar this week were tech stocks. The $4 trillion club received a new member in Apple, who joined the ranks of Microsoft and Nvidia. Despite this, Nvidia still stole the spotlight as their market cap reached $5 trillion for the first time. But with such a high value, it’s led to the question – is Nvidia approaching bubble territory?

The Equity Strategist at St. James’s Place, Carlota Estragues Lopez, said:

“On one hand, Nvidia’s elevated valuations seem justified by strong realised earnings growth. But on the other hand, the significant investment and energy for data centres required to keep up with high demand means that there is downside risk and puts into question the sustainability of this growth.

“The question is whether Nvidia is part of a long-lasting structural shift towards a new technology and how reliably can they keep beating earnings expectations to live up to the optimism that is priced in to the market.”

But these tech companies weren’t the only ones who enjoyed success this week. Amazon, Alphabet, Microsoft and Meta also posted strong third-quarter results, adding to the notion that the AI boom is continuing. Reuters reported that OpenAI were putting down the foundations for a trillion-dollar listing.

Having said this, there was a cloud on the horizon for tech’s time in the sun, due to concerns over the level of spending that’s required to sustain the AI revolution. OpenAI are set to lose billions by the end of the year, and Microsoft’s share price fell despite growing revenue and profits – it reflected investor concerns regarding spending on AI at the company.

Strength in Europe

In the eurozone, real GDP increased by 0.2% during the third quarter, surpassing the 0.1% that’s been the pattern in previous quarters and performing better than numerous analysts’ predictions. Unemployment remained level with the previous month.

The European Central Bank also voted to keep interest rates level on Friday. They remain at 2%, which is in keeping with expectations.

UK faces stormy conditions

The UK didn’t enjoy such good news this week. As the Budget draws ever closer, Chancellor Rachel Reeves continues to face challenging decisions.

The fresh productivity downgrade from the Office for Budget Responsibility last week will have made matters even more difficult. There was a 0.3% reduction to forecasts – larger than expected – meaning that Reeves will need to find more money while she finalises the Budget plans ready to be revealed on 26^th November.

Sitting right in the middle of these two events is the Bank of England (BoE) meeting to discuss interest rates – due to take place this Thursday. It’s expected that the BoE will keep rates as they are, even though there have been calls for a reduction. Whatever the choice, markets will be listening closely to BoE Governor Andrew Bailey’s comments after the announcement. Hints concerning more rate cuts this year will be of particular interest to investors.

Uncertainty didn’t hold back British equities, as they saw a rise. A few factors are responsible for this, including a possible interest rate cut before the end of 2025.

Estragues Lopez added:

“The UK equity rally has been driven in part by optimism surrounding interest rate cuts and in part by dollar weakness. It is very hard to tell whether the BoE’s rate cut will have any impact on the November budget.”

There was a bitter taste in the mouth as the week drew to a close. On Sunday, the Telegraph reported that the UK’s national debt grew at the quickest rate of any advanced economy between 2005 and 2025 which will only add more pressure on Reeves, as the cost of servicing it continues to mount.

Wealth Check

Beginning the conversation

Talking about money is a great way to help people make better-informed decisions about their finances, both now and in the future. This is the key message from Talk Money Week – run by the Money and Pensions Service (MaPS), a UK public body.

MaPS want to encourage people to be more open about their finances and highlight the benefits of discussing money. As well as improving decision making, they identify how these conversations can have further benefits including reducing stress and even deepening and developing stronger relationships.

UK families are set to pass on trillions over the next three decades which has already been titled “the great wealth transfer”; therefore, starting those important conversations is going to become more and more pertinent.

Much is expected to change in the next few years – and short term with the upcoming Autumn Budget – so planning ahead for the future while having honest financial conversations will be highly beneficial for many people. One of the ways in which they’ll help is to ease the transfer of wealth across families.

Many people are hesitant to discuss money and fear potential conflict as a result, which is why having a close friend or trusted financial adviser alongside you to guide these discussions could be extremely valuable.

In the Picture

The latest IMF forecasts show that the US will have a higher debt/GDP ratio than Italy or Greece by the end of the decade – unless checked. For those who recall the eurozone debt crisis, this pending inversion goes further than symbolism. Interest payments in the US are one of the fastest-growing categories of government spending – could this prove to be unsustainable long term?

Conversely, Japan is often spotlighted as an example of even higher national debt/GDP ratios. But it’s worth remembering that most of their debt is held domestically and is therefore less sensitive to external economic conditions and Japanese interest rates are significantly lower than the US’s.

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 03/11/2025

WeeklyWatch – A golden week for inflation?

W.24822 Wellesley WeeklyWatch 28.10.25_1420 x 474

28^th October 2025

Stock Take

Surprise inflation data

Investors and central bankers around the globe breathed a sigh of relief when last week’s inflation figures came in below expectations on both sides of the Atlantic.

The UK’s consumer price inflation (CPI) had been expected to rise slightly to 4% in September compared with the same month in 2024. Instead, it surprised many and stayed flat at 3.8% for a third consecutive month. There was even a slowdown in core inflation (which doesn’t include volatile price effects of food, alcohol and tobacco) compared to August, with a drop from 3.6% to 3.5%.

Even though the data has been well received by the markets, the figure still remains significantly higher than the 2% target set by the Bank of England (BoE).

The Fixed Income Strategist at St. James’s Place, Greg Venizelos, said:

“The figure we got was better than a disappointment, but the Bank of England cannot latch on to these figures and start rapidly cutting rates again because we are not quite there yet in terms of target.”

The BoE Monetary Policy Committee (who decide the level of UK interest rates) are due to meet next week and are expected to maintain the current level of 4%. However, the encouraging inflation data had an instant effect on UK government borrowings – known as gilts. 10-year gilt yields reached their lowest levels this year (while their prices, which move in the opposite direction, rose). As Chancellor Rachel Reeves continues to weigh up her options for the upcoming Autumn Budget, lower borrowing costs will come as a relief.

The UK market received further good news this week, as the London Stock Exchange (LSE) saw two new companies (Princes Group and Shawbrook Bank) list for over £1 billion. The news came not long after infrastructure company Fermi chose to dual list in both the UK and US.

Going back just a few years, companies listing in the UK wouldn’t have been regarded as particularly significant. But the recent lack of IPO activity in the UK has given cause for concern over the LSE’s long-term position as a global financial centre. Consequently, the recent activity will be lauded.

Carlota Estragues Lopez, Equity Strategist at St. James’s Place, agrees that the listings add to the momentum that’s been building in the UK market with improving conditions. She says:

“A lot of companies were listing in the New York Stock Exchange straight away. However, given the rerating and improving UK valuations that we’ve seen year to date, it feels like UK companies are starting to improve on that, especially in more traditional sectors outside of technology.”

BoE Governor issues warning

Despite the positive news, there remains a need for caution. Last Tuesday, BoE Governor Andrew Bailey spoke of ‘alarm bells’ ringing that were reminiscent of the 2008 global financial crisis, following recent US company failures.

Particular examples included car parts maker First Brands and sub-prime auto lender Tricolor, who both collapsed over the last few days. Bailey identified:

“We certainly are beginning to see, for instance, what used to be called slicing and dicing and tranching of loan structures going on, and if you were involved before the financial crisis then alarm bells start going off at that point.”

Bailey’s warning may come across as unsettling, but Estragues Lopez highlights that we still don’t know whether these companies will prove the thin end of a wedge or remain as isolated issues. Additionally, she states that there are key differences between today and 2008 as banks are better capitalised and have better regulations in place, and regulators are more vigilant.

Investors showed little concern about a possible correction, with the FTSE 100 finishing the week up over 2.5%.

A slowdown in US inflation

Across the pond, good news for inflation continued. Similar to the UK, US inflation figures came in slightly lower than expected.

In the year to September, annual inflation was recorded at 3% – a slight increase from the 2.9% in August, but below the 3.1% predicted by analysts.

This has been good news for the US President, who’s been wanting to reduce interest rates. Next week, the Federal Reserve will meet and are expected to cut interest rates by 0.25%. On the back of the inflation news, markets responded quickly to price in four interest rate cuts for 2026.

Although, it must be remembered that even though September inflation was lower than expected, it still remains at its highest point for the year.

US markets finished the week on a high. Aside from the encouraging inflation readings, investor sentiment is being boosted by the latest quarterly updates. Non-AI and tech companies are delivering strong results.

There was also a rise in European shares as eurozone business sentiment reported at a multi-month high. Additionally, Chinese and Japanese shares finished higher, the latter being boosted by the election of Sanae Takaichi as Prime Minister.

Oil prices rallied in response to the US’s sanctions on the Russia’s energy sector. On the other side, gold suffered its worst-performing week since the end of last year.

Wealth Check

Avoiding the CGT penalty

In the past two years, penalties related to the failure of people to disclose capital gains liabilities to HMRC have doubled – this was revealed by a freedom of information request.

Capital Gains Tax (CGT) represents the amount payable based on profits made upon selling an asset. This could be personal possessions, a second home, any shares (excluding ISAs) or business assets.

The rise in penalty notices comes on the back of sharp cuts to the CGT allowance over the last few years. During the 2023/24 tax year, the annual exemption (the tax-free allowance) fell from £12,300 to £6,000 and then in 2024/25 it was reduced again to £3,000.

Financial experts are encouraging people to submit any gains above the threshold in order to avoid fines from HMRC. To ensure this is done accurately and punctually, making a record of any asset sales and disposals and keeping track of the deadlines to submit them is key.

Those who have questions regarding the scope of CGT, including whether you need to pay, should always consult a financial expert. Depending on your individual circumstances, a financial adviser can provide valuable guidance on what’s affected by CGT and recommend the best steps going forward to ensure nothing gets missed out.

Are LLPs in the line of fire?

In other personal finance news, recent reports suggest that Limited Liability Partnerships (LLPS) could possibly be in the firing line in the upcoming Autumn Budget as the Chancellor is looking to close this tax loophole.

Those who are currently in LLPs (usually lawyers, accountants and GPs) don’t have to pay employer’s National Insurance (levied at 15%) as they’re registered as self-employed.

More than 190,000 people in the UK work in an LLP.¹ And according to thinktank CenTax, if the Chancellor levels the field for all partnerships, it has the potential to raise up to £2 billion. However, critics have cautioned that a move like this could mean higher costs, which may be passed onto customers, clients and patients.

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

Source: ¹Almeida, L. (2025). ‘How might Rachel Reeves target lawyers, accountants and doctors in her budget?’, The Guardian, 23 October. Available at: www.theguardian.com/uk-news/2025/oct/23/how-might-rachel-reeves-target-lawyers-accountants-and-doctors-in-her-budget

In the Picture

In October, gold rose above $4,000 an ounce. This came as a result of geopolitical concerns and weakness in the dollar. This six-month move compares with the nearly five years it took for gold to increase from $2,000 an ounce to $3,000. Last week saw the largest percentage drop for gold in a decade.

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 27/10/2025

WeeklyWatch – UK inflation not set to fall soon

D.6367 Wellesley WeeklyWatch 21.10.25_1420 x 474

21^st October 2025

Stock Take

Is the UK economic picture improving?

The International Monetary Fund (IMF) has published a rare positive headline regarding the latest global outlook, forecasting the UK to be one of the fastest-growing economies in the G7. The IMF upgraded the UK growth outlook (GDP) for 2025, while the outlook for 2026 remains positive, but possibly not as high as previously hoped for. But has the wait been worthwhile?

On closer inspection, it’s still slim gains for the UK. Expected domestic annual real GDP growth (i.e. accounting for inflation) of 1.3% in 2025 and 2026 is only just ahead of the eurozone. It also falls behind the US GDP outlook.

In another troubling turn, the UK unfortunately takes the top spot on the G7 table for inflation figures…and regular WeeklyWatch readers will know there are many reasons as to why this is the case. There was a sharp acceleration in UK wage growth after Brexit was ratified and following the pandemic. Currently, there are labour shortages across multiple sectors, including the NHS, social care and construction. One-off adjustments to some regulated household utility bills have taken place. Plus, last year’s budget saw an increase in employers’ National Insurance contributions, which has only put more upward pressure on UK inflation.

This week will see the Office for National Statistics publish their latest data. It’ll likely reveal that UK inflation reached a near two-year peak of 4% in September.

Compared to its peers, the UK is more vulnerable to higher wage growth, which in part is due to the persistent problem of low productivity. Domestic companies then face the challenge of being unable to offset higher wage demands or input prices by making more, meaning they’re unable to build up a buffer before higher costs can be passed on to consumers. US firms, on the other hand, were able to absorb some of the additional costs after the new tariffs were introduced earlier this year. This helped contain inflationary pressures.

The latest IMF update echoes what many commentators have been saying about the UK economy. If high wage pressure remains strong and productivity growth remains weak, the Bank of England won’t be keen to cut interest rates. However, the Chief Economist at St. James’s Place, Hetal Mehta, believes that despite the Bank of England’s focus on increased inflation in the short-term:

“Continual labour market weakness might create the opportunity for a pivot later on, allowing it to cut interest rates.”

Cockroach watch in the US

The US earnings season began last week, and it started rather well. Leading the way were investment banks, who produced impressive earnings and were supported by an easing interest environment and buoyant markets.

Bank returns are widely considered to be a useful measure of how the economy is performing overall, but it’s investment banks that have a closer link to financial markets. Trading desks, which buy and sell shares, bonds and other assets, performed very well. Additional successes were found in wealth management and mergers and acquisitions (M&A). Reports confirmed that US consumers and businesses were in a good place.

However, by the middle of the week, the mood had shifted. There was a fall in share prices of a few US regional banks (those more concerned with ‘Main St.’ rather than ‘Wall St.’) following reports of problem loans, some of which were allegedly fraudulent. Some of these issues were known to investors as a result of the recent bankruptcies of two companies: First Brands and Tricolor Holdings.

The resulting news fed the fear of more systemic issues in private credit markets. The ‘contagion’ and the resultant investor concern regarding pockets of weakness and fraud in US regional banks saw global markets fall. This led to a sell-off in the banking sector on Thursday, particularly for smaller banks. There was a partial recovery in sentiment, but analysts will continue to scrutinise the sector earnings releases as the week unfolds.

Discussing the apparent fraud in this area, the CEO of JP Morgan, Jamie Dimon, said:

“When you see one cockroach, there are probably more.”

As it stands, the problems are specific to individual banks and aren’t necessarily reflective of a sector-wide issue. Having said this, Dimon’s words imply an expectation of further issues coming to light.

Wealth Check

Beware the Budget rumours: why we shouldn’t try to predict the future

Following months of whispers and theories, Chancellor Rachel Reeves has confirmed what the vast majority were predicting: tax rises and spending cuts will be big features in the Autumn Budget.

A £30 billion fiscal black hole needs to be filled, and Reeves has been quoted as saying that wealthy people should shoulder more of the burden. But how this will be accomplished remains to be seen.

We’ve compiled some of the key themes below. As always, we advise that you wait to see what’s revealed on 26^th November before you make any big financial decisions. Making moves based on hearsay or rumours can lead to unintended consequences.

Reform for pensions

There could be a potential reduction in the amount that can be withdrawn from pensions as tax-free cash. Additionally, there may be cuts to the tax relief on pension contributions or the implementation of a flat level of relief. Currently, basic rate taxpayers benefit from tax relief of 20% on pension contributions; it’s 40% for higher rate taxpayers and 45% for additional rate taxpayers.

Overhaul of property taxes

Property tax could replace stamp duty. It was reported in August that a national tax paid by owner-occupiers on properties worth more than £500,000 when they sell their home was being considered.

Council tax may be scrapped. Conversely, speculation has arisen that a new, higher council tax band will be put in place instead. Additionally, Capital Gains Tax could be applied to the sale of main homes above a particular value. Rental income may also have National Insurance applied to it as a way of targeting landlords.

Cash ISAs

Following the backlash, notions to cut the cash ISA allowance were shelved in July. But last week, renewed rumours carried the possibility that there may be a reduction as the government tries to encourage more people to invest in equities.

Inheritance Tax (IHT)

Currently, the period donors must live after making a substantial gift before it falls outside their estate for Inheritance Tax purposes is seven years – this could be increased to 10 years. Furthermore, there may be a potential lifetime cap on the value of gifts people can make that are free from IHT.

Focus on the here and now

It’s hard to predict the future, but it’s highly likely that some of the current Budget rumours in circulation won’t come to pass. A good question to ask yourself is: How would I feel if I took an action based on speculation of change which then didn’t come to pass and I found myself in a less beneficial position? Staying calm until the Budget is revealed and avoiding knee-jerk reactions is key.

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

Longstanding weak UK productivity and the long-lasting effects of Brexit on the supply of labour have resulted in high domestic wage growth. It’s a significant reason for the expectations that the UK will have the highest inflation levels in the G7 for both 2025 and 2026.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and the value 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.

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 20/10/2025

WeeklyWatch – Earth’s core financial focus

D.6367 Wellesley WeeklyWatch 14.10.25_1420 x 474

14^th October 2025

Stock Take

China’s mineral move shakes markets

9^th October was a bad day for Nasdaq and the broader-based S&P 500, after they experienced their worst day’s performance in six months. The catalyst? China’s announcement on 8^th October regarding their latest restrictions on exporting rare-earth minerals. It took less than a day for the US government to bite back, opting to impose an additional 100% tariff on all Chinese imports into the US, due to begin on 1^st November.

Exporters in both China and the US are already impacted by some of the most far-reaching tariffs that have been seen in modern trade history. Back in August, the average US tariff on Chinese goods was 50%, with Chinese tariffs on US imports being 33%. If these latest tariffs come into force, Chinese imports will become prohibitively expensive.

However, by the time the weekend rolled around, President Trump had softened his stance, which left investors feeling hopeful for a rebound in US equities for the week coming. The Chief Economist at St. James’s Place, Hetal Mehta, says that even though there’s ongoing uncertainty as a result of the government shutdown and newly proposed tariffs, the prospect of a US recession has decreased. She links this to the recent actions of the US Federal Reserve to cut interest rates and ongoing government spending, adding:

“Still, we think it makes sense to remain more cautious and keep our recession probability assumption unchanged at 35% for the time being.”

Central to the debate

Rare-earth minerals – the name is somewhat misleading, as they’re not actually uncommon. They can be found worldwide; however, some reports indicate that China accounts for nearly 90% of global output. This is due to their extensive refining capabilities, which have been built up over decades, leading to many regarding the nation as having a strategic monopoly in this area.

These minerals are used in both civilian and defence industries and are particularly essential for chip manufacturing. They’re used in multiple ways for defence systems and everyday life, including smartphones, renewable energy systems and electric vehicles.

As part of their crackdown, China have also implemented the need for foreign companies to get government authorisation for some products. For international companies, this could make things rather difficult and may threaten the advancement of US artificial intelligence (AI) companies. Some experts speculate that it could potentially take the US and other Western governments years – maybe even decades – to create alternative supply chains.

AI facing an arms race

Supply issues aren’t the only challenge facing AI and chip companies… They tend not to look to the open market, rather focusing on securing multi-year deals that take equity and building partnerships to make sure that there’s continuity in their supply chains.

Leading industry player OpenAI recently secured deals worth $1 trillion with a wide range of chip makers in order to get long-term access to supplies of the latest high-powered semiconductors. In order to ‘train’ their computer models, these semiconductors are essential.

Despite the obvious benefits, these deals also have quite a big downside. AI tech is evolving quickly and long-term commitments to purchase specific chips could be more expensive for companies if better tech is invented. Additionally, chip companies that have a concentrated supply chain also face possible issues if components suddenly become inaccessible.

Japan on a positive climb

Turning away from minerals and AI, a look at the global markets saw a successful week for the Nikkei 225, closing 5% higher, which came as a welcome relief for global investors. After Sanae Takaichi was elected as the new leader of the Liberal Democratic Party – Japan’s ruling party – investors reacted positively. However, as the week continued, the hope that she would become the nation’s first female prime minister had diminished.

In the year to date, the Nikkei 225 has risen 21% in local currency terms. Japan’s negative real interest rates (i.e. inflation exceeding interest rates) have boosted the relative attractiveness of equities. Interest rates are expected to remain low due to Japan’s weakened economy and rising debt servicing costs on the nation’s debt.

Markets in summary

US treasury yields concluded the week lower (as bond prices moved higher). The demand for traditional ‘safe haven’ assets like US treasuries usually increases during periods of high uncertainty. The CBOE Volatility Index – Wall Street’s ‘fear index’ – saw a rise of 30%. Shares in Europe saw a drop on Friday as trade tensions increased between the US and China.

There was an easing in oil prices to a level that hasn’t been seen since ‘Liberation Day’ back in April, as China is the world’s second-largest consumer. Increased global production has also been a headwind. Gold ended the week edging close to an all-time high of $4,000/troy oz.

Wealth Check

UK party conferences – what’s been happening?

The last of the annual party conferences concluded last week, with the Conservatives finishing theirs in Manchester. Conferences are a key opportunity for the major parties to lay out and communicate their agenda to party members, the public and media ahead of the next Budget from Labour, due on 26^th November. Below is a summary of some of the key announcements made by each party.

Labour

Keir Starmer declared that growth would be the ‘defining mission’ of his government. Despite this, he couldn’t rule out tax increases due to the changed global economic outlook over the last 12 months. This has fuelled further speculation that tax increases will be a big part of the upcoming Budget.

Liberal Democrats

Europe forms a key part of the Lib Dems’ economic agenda. The party have put forward the idea of a new customs union and even the possibility of the UK rejoining the EU. The party also would look to launch a ‘family farm test’ to oppose the upcoming changes to Inheritance Tax (IHT) liability for agricultural businesses. Additionally, they introduced the idea of a new tax to be levied on windfall profits made by banks.

Conservatives

Stamp duty put the Conservatives and leader Kemi Badenoch firmly in the spotlight when they announced that they would scrap it and VAT on private school fees, as well as banning doctors’ strikes. In a similar approach to the Lib Dems, the Tories also said they’d reverse proposed IHT on family farms.

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.

In the Picture

The phrase ‘tech bubble’ is being more commonly used by investors since the summer regarding their trading terminals. But it still remains below some of the recent highs.

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 13/10/2025

WeeklyWatch – Disappointing digits for the UK economy

7^th October 2025

Stock Take

All adding up, and not for the better for the UK

There’s less than two months to go until the Autumn Budget is revealed, and the economic news of last week will not have made for happy listening for Chancellor Rachel Reeves.

The Office for National Statistics (ONS) revealed on Tuesday that in the second quarter, the UK economy only grew by 0.3% – a big drop from 0.7% in the quarter preceding it. They believe that the slowdown could be partly the result of initiatives being brought forward to February and March, just prior to the stamp duty changes in April. And ‘to some extent’, the US tariffs might have played their part too.

Unfortunately, the negative numbers didn’t end there. On Friday, reports came to light that revealed a warning from the Office for Budget Responsibility (OBR) to the Chancellor that the economic outlook for the UK is actually much worse than initially thought in its March update.

The reasoning behind the OBR’s downgrade was largely due to lower than forecast productivity. And this doesn’t bode well for public finances; it has the potential to create a hole to the tune of £15–£20 billion.

Reeves had given herself just under £10 billion in fiscal headroom, but, as this was based on older productivity forecasts, the new numbers will likely erase the headroom entirely.

Budget recalculation

A shortfall like this will leave Reeves scratching her head as she plans and prepares the annual Budget which is due to be announced on 26^th November. The UK’s national debt/GDP ratio is nearly 100% – further borrowing could cause gilt yields to rise. On the other hand, her ability to raise new taxes without facing fierce political backlash is very limited. Additionally, new taxes could negatively impact the already slow economic growth.

Slow productivity growth isn’t a new issue for the current Chancellor, it’s a key issue that’s haunted successive UK governments since the Great Financial Crisis (GFC) nearly 20 years ago. The UK’s domestic productivity is below 2022 levels and economic growth since the GFC has been significantly slower compared to the years leading up to it.

The OBR’s overestimation of productivity growth and underestimation of government borrowing requirements have also been unhelpful in allowing the Chancellor to balance the books.

Although the domestic economic outlook is bleak, the FTSE 100 has enjoyed success, reaching record territory last week. Against such a weak economic backdrop, the contradiction may seem strange. The Equity Strategist at St. James’s Place, Carlota Estragues Lopez, says:

“It’s partly thanks to the Bank of England’s rate cuts back in August, and the belief that further cuts are likely in the future. There is also evidence that some of the largest companies in the UK are starting to adopt AI in more meaningful ways. A third driver is the effects of the increased level of stock buybacks we’ve seen in the market over the last few years coming through.”

Shutdown for the US government

Well, it happened! Despite commentary that federal shutdown threats are common but rarely occur… After the Senate failed to pass a spending bill that allowed federal offices to remain open, the US federal government did indeed shut down some of its services last week, with some workers being let go.

Past shutdowns have lasted, on average, for about a week. However, during President Trump’s first term, one lasted over a month.

Historically, shutdowns haven’t had too much of a negative effect on US GDP or stock market returns. On Thursday, the S&P 500 reached another record high, the day after the shutdown happened. It suggests that investors aren’t worried about the lockdown’s impact at the moment.

However, one of the ways in which the shutdown could have an impact is by delaying the release of data from the Bureau of Labor Statistics, which is used by the Federal Reserve to determine what happens with US interest rates. On Wednesday, the independent payroll company ADP released its private sector jobs data. It revealed that in September, US private-sector businesses lost 32,000 jobs, fuelling concerns that the US economy is slowing down.

Government woes for France

It feels like a never-ending cycle of political turmoil for the French. Yesterday morning (6^th October), less than a day after unveiling his new cabinet, and having been in charge for less than a month, the French Prime Minister, Sébastien Lecornu, unexpectedly resigned.

France has now had five prime ministers in under two years, and Lecornu’s resignation places immense pressure back on the French President, Emmanuel Macron, who may call new parliamentary elections or even choose to personally stand down.

As a result of the news, French stocks and the euro fell.

Market summary

Markets across the globe had a strong week, performing well despite bullish sentiment regarding potential US interest rate cuts.

By Friday, the S&P 500 had achieved a record close. Expensive growth companies outperformed value style companies as investors remained calm in light of the federal government shutdown. These kinds of disruptions haven’t been too problematic for market returns in years gone by. In the year to date, the tech-heavy NASDAQ index has risen 18% in US dollar terms, more than the S&P 500 at 14.2%. There was a rise in US Treasury prices, and a fall in yields (which move in the opposite direction).

In local currency terms, the FTSE 100 closed just a few points below its all-time intra-day high. There were also record highs for the European STOXX 600 index. Gold prices rose for a seventh consecutive week. This year, metal is up 46% in US dollars. Contrasting this were oil prices, which were noticeably lower over the period with concern that the OPEC+ cartel is planning to increase its daily output.

Wealth Check

How do I protect my estate? 5 ways to reduce Inheritance Tax (IHT)

Death is never an easy conversation, and IHT is intrinsically linked with the topic. But talking about finances and IHT is becoming more common, and rightly so.

In last year’s Autumn Budget it was announced that, from 2027, unspent pension pots would be included as part of an estate and could be liable for up to 40% IHT on amounts above available allowances. And that’s not all… Nil rate bands and residence nil rate bands will remain frozen until 2030, meaning that more people could find themselves with IHT woes. All of which comes about as inherited wealth is at an all-time high…

Over the next 30 years or so, ‘baby boomers’ (people born between 1946 and 1964) are expected to leave behind an unprecedented figure of £7 trillion to Gen Z and millennials.¹ Already, this is being labelled as the greatest wealth transfer in history – but many will face the unwelcome IHT bill alongside it. Having said this, there are ways in which you can plan to mitigate this through practical and timely estate planning to help those you love.

What can I do to reduce the IHT bill on my estate?

There are many things you can do now to help IHT charges:

Regularly gift using your gifting allowance
Leave a larger gift – to a charity or leave a legacy
Put aside larger assets in a discretionary trust
Set up a whole of life insurance policy written in trust
Review your Wills to make sure that they’re as tax-efficient as possible

If you’re not sure how or where to start, this is where financial advice can be extremely valuable. At Wellesley, our expert advisers will help you create a fair, sustainable plan to help keep money exactly where it should be: with your loved ones.

Did you know that one in five adults said that financial advice enabled them to leave a better inheritance for their children? These were the findings from St. James’s Place’s recent consumer survey, The Real Life Advice Report.²

The more conversations that happen about money in general, not just inheritance, the more we understand each other’s hopes, ambitions and dreams. Contact Wellesley today to start your journey to better financial health.

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

Will writing involves the referral to a service that is separate and distinct to those offered by St. James’s Place and along with Trusts are not regulated by the Financial Conduct Authority.

Sources:

¹Unbiased: the Great Wealth Transfer (22^nd July 2025)
²The Real Life Advice Report was commissioned by St. James’s Place. Opinium surveyed just under 12,000 UK adults nationwide in two polls between May and August 2024. Quotas and post-weighting were applied to the sample to make the dataset representative of the UK adult population. Quantitative data referenced is sourced from the first poll which had a total sample of 7,995 respondents. Survey included those aged 18–34 (1,940), aged 35–54 (2,654) and aged 55 and over (3,401).

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.

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 06/10/2025

WeeklyWatch – Congress standoff may cause shutdown

D.6367 Wellesley WeeklyWatch 29.09.25_1420 x 474

30^th September 2025

Stock Take

A lesser-spotted shutdown coming to the US?

Investors were left with a mixed picture last week as a US government shutdown looked more probable.

Every year by 1^st October, Congress must pass several bills to fund a variety of federal agencies. None have passed so far in 2025, with both political parties – Democrats and Republicans – firmly sticking to their guns. But it’s worth remembering that while the threat of federal shutdowns isn’t uncommon in the news, they rarely actually happen. In fact, there’ve only been 14 shutdowns since 1981, and they have lasted one week each on average, according to investment bank Berenberg.¹

The Chief Economist at St. James’s Place, Hetal Mehta, estimates that a one-week shutdown could trim about 0.1% from annual US GDP growth.

But the wider effect would likely be noticeable in the labour market statistics. As noted in last week’s article, job numbers are of keen interest to the Fed as they’re currently a focus point in their decisions regarding interest rates.

Mehta says:

“How long the shutdown lasts will be important. It would see a temporary rise in unemployment numbers, as federal workers are furloughed through the shutdown. These workers will include Bureau of Labor Statistics employees, which could also cause delays to important upcoming economic releases. Taken together, the Fed might have to make decisions on data they know is not necessarily the full picture.”

Fresh data – new US GDP numbers are in

It was a much more positive outlook regarding US GDP growth for the second quarter, having been revised up 0.5 percentage points to 3.8%.

Increased consumer spending and a decrease in imports were the main boosts behind this. Despite a weakening job market plus increasing inflationary pressure, spending in the US has remained resilient.

UK faces fiscal pressure

Labour headed to Liverpool to kickstart their party conference, which began on 28^th September, and there’s already been a multitude of news stories reporting on the potential next steps for the government.

Chancellor Rachel Reeves’ comments continued to fuel wide expectations for future tax increases, which included her refusal to rule out an increase in VAT. Additionally, it’s believed that getting rid of the two-child benefits cap is being considered, which would cost approximately £3 billion.

Reeves faces a large fiscal black hole, and her challenge is certainly significant – UK government spending for this year is around 45% of the GDP so far. Ahead of the conference, she emphasised the party’s election promise to not raise certain taxes for working people, but speculation among investors continues to develop regarding the upcoming Autumn Budget.

Economic sentiment begins to wane in Germany

The Ifo index, the closely monitored indicator of German business sentiment, revealed a sharp deterioration between August and September – one which surpassed expectations. This comes a week after sports car maker Porsche announced a fourth profit warning in 2025.

Germany’s improving cycle began in February, and this reversal is the first break in the upward trend and stands as a reminder of how quickly business optimism can change. Indeed, weaker demand was recorded in the services, retail and construction sectors.

German exporters are facing a challenging year. A stronger euro has acted as a headwind, as have US tariffs. €500 billion for investment and defence investment has already been pledged by the government; however, the situation could get worse before the impact of the stimulus is felt or operating conditions get better.

Changes for China’s WTO status

As the world’s second-largest economy, China announced last week that they will no longer seek developing country World Trade Organisation privileges. The Head of Asia and Middle East Investment Advisory and Comms at St. James’s Place, Martin Hennecke, put forward three reasons for the decision:

“Firstly, to help facilitate a trade deal with the United States. This question has long been one of the points of contention between them.

“Secondly, it will ease concerns of other nations to whom many exports have recently been redirected. This has led to a record trade surplus, expected to exceed $1.2 trillion this year. Finally, the change arguably represents a realistic reflection of how far China’s development has come.”

Source

¹Berenberg, Macro News – 24/09/2025

Wealth Check

St. James’s Place, Real Life Advice Report 2025: Chapter 1 – The value of advice in a volatile world

To say this year has been a volatile one would be an understatement! With ongoing geopolitical turmoil, Trump’s tariffs, global conflict and the rise in living costs, the challenge has been immense.

In November, Rachel Reeves will deliver the Autumn Budget, which has continued to be a source of uncertainty for investors, especially regarding tax rises.

In the first chapter of the Real Life Advice Report by St. James’s Place, they look closely at this rising uncertainty on financial behaviour and explain how important financial advice is in navigating the challenges as they arise.

The report addresses how people are feeling affected by the current political and economic backdrop and the scope of the impact, and showcases some interesting figures:

One in two people feel more uncertain about the future than they did two years ago.
76% of this group cited inflation and cost of living as the biggest contributors to their unease.
57% of this group said that global conflicts – the Ukraine war and Middle East conflict – were big causes of their unease.

But the noticeable difference was between people taking professional advice or with a financial plan in place versus those who aren’t seeking any advice or plan.

Over half of the people who have a financial adviser and ongoing advice or are executing a full financial plan reported good levels of optimism for the rest of the year (51% and 53% respectively). This is in comparison to only a third of those who don’t seek any financial advice expressing optimism about the next few months. Only 29% of people without a financial plan reported positive sentiment for the rest of 2025.

To read the full first chapter of St. James’s Place 2025 Real Life Advice Report, click here.

Background:

Opinium surveyed 8,000 UK adults nationwide between 22^nd July and 5^th August 2025. Quotas and post-weighting were applied to the sample to make the dataset representative of the UK adult population.

In the Picture

UK consumer confidence remains low, but the Bank of England’s rate cut has helped slow inflation and made small improvements in sentiment. A sign of resilience?

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.

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 29/09/2025