The start of the new tax year is often a good time to take stock of your finances, to review what you already have and consider what you need to do next. And in today’s environment, where every penny counts, making full use of the tax allowances that are still available has never been more important.

The ever-popular Individual Savings Account, or ISA is a good place to start. Like a lot of our tax allowances, the ISA allowance has been frozen for many years, so for the 2026/27 tax year, the overall ISA allowance remains at £20,000, offering one of the simplest and most effective ways to protect your savings and investments from tax on interest, dividends, and capital gains.

However, there are changes coming for those who favour the cash element of an Individual Savings Account (ISA).

Cash ISA allowance to be cut

Cash ISAs regained their popularity over the last few years, as interest rates increased, which led to savers paying more tax than they had for over a decade when interest rates were at rock bottom. There is now some £458 billion stashed away in cash ISAs, almost a quarter of the total amount held in cash savings. But for savers under the age of 65, the current tax year is the last chance to make use of the full ISA allowance for cash only deposits.

From 6 April 2027, the rules are set to change. Whilst the overall ISA allowance will remain at £20,000, only £12,000 of that can be deposited into a cash ISA for those aged under 65. To use the full allowance, the remaining £8,000 will need to be invested in a stocks and shares ISA.

To add insult to injury, at the same time that the cash ISA allowance is to be cut, the tax on savings interest will be increasing by 2%. So, a basic rate taxpayer will pay 22% on any taxable interest, it’s 42% for higher rate taxpayers and 47% for additional rate taxpayers, making the cash ISA even more valuable.

The good news is that those aged 65 and over are not affected by this change. They will still be able to place the full £20,000 into cash if they wish, a welcome exemption for older savers. But it highlights a broader policy direction, encouraging younger savers towards investment. 

A nudge towards investing

Whilst the comfort of a cash ISA is understandable, particularly in volatile times, it’s important to be aware that inflation can quietly erode the value of savings, and even with improved interest rates, cash may struggle to deliver meaningful real returns over time if inflation is higher than the interest you are earning. So, it might be worth asking yourself whether a purely cash-based approach is the right strategy for the longer term.

This is where stocks and shares ISAs come into play. They are not without risk though as values can go down as well as up. But they offer the potential for growth that cash generally cannot match over the long term, as long as you are prepared to accept the inevitable bumps in the road. You can of course, choose investments that better reflect your own personal attitude to risk, which will help minimise any potential downs and ups.

These changes could therefore be viewed as a prompt to diversify if you don’t need access to your money for the longer term, so more than five years. Using some of your ISA allowance for investment could make a meaningful difference to your future financial health. 

Use it or lose it

Given the upcoming changes, this tax year (2026/27) is an opportunity not to be wasted. If you are under 65 and prefer cash, it may make sense to maximise your cash ISA contributions while you still can.

And due to the ongoing conflict in the Middle East, with the expectation that inflation and therefore the Bank of England base rate could rise, savings rates have been increasing recently. Good news for savers, especially those who don’t also have debts.  

So, if you have funds sitting in taxable accounts, now is the time to consider sheltering them, as once the tax year ends, you can’t carry it forward.

Don’t overlook the Lifetime ISA

Alongside the standard ISA options, there is also the valuable Lifetime ISA (LISA), which is available to those aged between 18 and 39. The LISA allows you to contribute up to £4,000 per tax year, which counts towards your overall £20,000 ISA allowance and the real attraction is the generous 25% government bonus. In simple terms, a £4,000 contribution is topped up to £5,000, an immediate and very attractive return, even before any interest of investment growth is added.

Traditionally, the LISA has served a dual purpose: helping people save for their first home or for retirement. However, it is currently under review, and there is growing speculation that the retirement element could be removed going forward, making it simply a product for first-time buyers.

In the meantime, for those eligible, it remains a compelling option, particularly if you are saving for your first home.  

ISAs for the next generation

It’s also worth remembering that children have their own ISA allowance through the Junior ISA (JISA).

With a current annual allowance of £9,000 per year, the Junior ISA allows parents, grandparents, and others to build a tax-free savings pot on behalf of a child. It can be held in cash or invested, depending on your preference and time horizon.

There is, however, an important point to bear in mind: there is no access to the money until the child turns 18, at which point they gain full control of the account, which could have grown to a really significant amount. The funds become theirs to use as they wish, whether that’s for university, a car, a house deposit, or, indeed, something less sensible.

Alternatively, the funds can be rolled over into an adult ISA, retaining the tax-free status and allowing the savings habit to continue into adulthood.

For those who save for their children, it makes sense to have open conversations with them as they grow older, so that hopefully they will do the right thing with this valuable gift. Financial education is just as important as the savings themselves.

Time to take action

The beginning of the tax year is a great time to make use of your ISA allowance, for a couple of reasons.  

First, during the ‘ISA season’ of which April is the pinnacle, cash savings providers tend to compete with each other, which pushes rates higher, providing plenty of choice.

Secondly, why leave your cash in a taxable account any longer than you need to. Although often the headline rates on taxable fixed rate bonds may look higher than the same term cash ISAs, once you deduct income tax, you can earn far more in the tax-free ISA, as the table below illustrates:

Now is also a good time to review your old ISAs, to see if you could be earning more by switching. The key rule is vital though - never withdraw the funds yourself. Instead, always use the official ISA transfer process provided by your new provider, who will liaise directly with your existing bank or building society. If you take the money out and attempt to redeposit it, it could lose its ISA “wrapper” which crucially means you would forfeit the tax-free status tied to those historic allowances. Given that ISA allowances cannot be reinstated once lost, this is an irreversible and often costly mistake.  

Reviewing your old ISAs whilst making the most of your new ISA allowance means that you can make your cash work as hard as possible, particularly important if we are to see inflation spiking upwards once again.

If you want to make your cash work harder, it is important to compare rates regularly and move money when better deals arise. In a market that is shifting and where relatively small rate differences can add up to hundreds of pounds over a year, staying informed is the best way to keep your savings working as hard as possible. Check our best buy tables for the most up to date savings rates. 

Arrange your free initial consultation

Rates correct as at 07/04/2026. 

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.  

The Financial Conduct Authority (FCA) does not regulate cash flow planning. 

In the last twenty-five years there have been numerous geopolitical events that have led to volatility in markets. Front of mind as we write is clearly the war in Iran, which has caused severe disruptions in oil and gas supplies. Stepping back, however, each geopolitical event brings something to worry about, but the critical question is whether the event is just a source of short-term market noise to be ignored, or a more consequential development that demands action within portfolios. 

This article is a follow up to our initial summary of market events from early March.

Escalation in the Middle East

All geopolitical events are different and require distinct analysis. Most create short-term volatility that is quickly ignored by markets in the callous way that they operate. Some, however, inflict significant damage on the macroeconomic environment, requiring meaningful changes to portfolios. What separates events that cause lasting damage from short-term volatility is their impact on corporate earnings, economic growth, and inflation. What makes these events challenging is that sometimes, they start off terrifying and are quickly resolved (such as the market panic caused by the hedge fund Long Term Capital Management in 1998), whilst others start out as seemingly benign and morph into something far more damaging. What’s critical is having a disciplined process run by an experienced investment team capable of responding as facts change. This often must be done with incomplete information in a highly volatile environment.

Activity within Managed portfolios in March 2026 

Earlier this year, several themes performed strongly, including value equities and artificial intelligence opportunities trading at attractive valuations. These areas had delivered strong returns and notable outperformance versus the wider market for portfolios over the past nine months. However, when markets experience a sudden shift in sentiment, positions that have performed well can sometimes move together, even if they are fundamentally different.  With that in mind, we took the opportunity to lock in profits and reduce overall equity tracking error. In practical terms, this involved:

Phase I – Tracking Error Reduction

• Reducing allocations to AI-related thematic investments (“AI at a discount”)
• Trimming value equity exposures across EM, US, Global equities.

At the same time, we tactically added exposure to areas where we were previously underweight, including:

• US Mega and Large Cap
• Canadian equities which benefit from higher energy prices

Phase II – Equity Reduction

As it has become increasingly clear that this conflict is likely to continue for longer than President Trump initially envisaged, we have reduced our exposure to equities on a highly tactical basis, with a broad-based reduction across:

• UK Equities
• European Equities
• Japanese Equities
• US Equities

Fixed Income 

Fixed income markets have also reacted to the conflict in the Middle East, with bonds selling off as investors reassess inflation and growth expectations. Our positioning within fixed income has been beneficial. Portfolios have been:

• Underweight duration
• Overweight inflation-linked bonds
• No exposure to High Yield (or Private Credit)

This positioning has helped mitigate the impact of the recent move in bond yields. 

Alternatives

We sold the small position in UK REITs, which are at risk of higher bond yields and rates in the UK. Gold has been one of the stronger performing assets this year, rising around 8% year-to-date in sterling terms. After the strong rally in January, we reduced our position in gold and gold miners. We are not surprised to see it caught up in a de-risking of global markets. However, we continue to see a strong long-term case for gold as a diversifier within portfolios. 

Diversifying assets - adding downside protection

Given the range of possible outcomes from the current geopolitical situation, we have also taken steps to enhance protection against extreme market events within portfolios by adding to our position in the Goldman Sachs Tail Risk Strategy. This provides an additional layer of protection in the event of a sharper equity market decline while allowing us to maintain exposure should markets recover.

Looking ahead

This is clearly a fast-moving situation which we are monitoring closely, and we will continue to adjust portfolios to ensure they reflect our views on the prevailing market conditions. 

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us through our website.

Arrange your free initial consultation

This information in this article is correct as at 30/03/2026.

This market update is for general information only, does not constitute individual advice and should not be used to inform financial decisions. Investment returns are not guaranteed, and you may get back less than originally invested; past performance is not a guide to future returns.

At the time of writing the Middle East conflict is in full flow. The Straits of Hormuz are effectively closed, and markets are swinging on a daily basis depending upon whether Donald Trump has got out of the left hand side or right hand side of his bed. In short, no one has got the faintest idea what’s happening and by the time this article goes to print, for all I know, the war will be over, and markets would have jumped 10% or, things will have escalated and markets will have fallen 10%.

Arrange your free initial consultation

“Don’t panic Mr Mainwaring” blurted Corporal Jones, in virtually every episode of the classic BBC comedy, Dad’s Army. Of course, no one was panicking, except for Corporal Jones himself and in this state of blind panic, he was the least likely member of the platoon to be able to resolve the predicament they happened to be in. Panicking, generally, does not lead to sound decision making and certainly not sound financial decisions.

There are plenty of reasons to ‘panic’ in today’s world (financially and otherwise) but as Corporal Jones has shown us, panicking gets you nowhere. Life goes on, and the markets go on too and the worst thing investors can do is convince themselves that “this time it’s different”, that the end is nigh and that we all need to grow carrots and store drinking water in industrial quantities.

In their 2009 book “This Time is Different”, the economists Carmen Reinhart and Kenneth Rogoff argue that investors always fall for the trap of believing that the game is up and that capitalism is over and investing is no longer viable. There are always people who come out of the woodwork at these moments in time to endorse and bolster the naysayers, not because their views are valid but because the media is prepared to give them airtime. Funnily enough, we do not hear about them much when markets are doing well which, believe it or not, is most of the time.

The peace of mind a financial plan provides

I’m not pretending that the Iran war isn’t a threat to the world economies, far from it, but I wouldn’t like to bet on markets being lower in a year’s time to where they are now. They might be, of course, but if you want to safeguard yourself against inflation, history has taught us that market exposure is the best way to do it. Cash and bonds generally lose in real terms over the long term.  

Markets tend to recover from shocks, whatever they are, and economists call this antifragility, which is the general principle that markets are able to adapt to new conditions. As one source of enterprise closes down, another one opens up and markets always sniff them out, if not immediately, then in time.

It is all well and good to say "don’t panic," but that is much easier to achieve if you actually have a plan in place. The major benefit of having a plan that you regularly revisit is the emotional peace of mind it provides. It moves you away from making knee-jerk reactions based on the morning's headlines and back towards a structured approach. If your personal circumstances change, or the government decides to shift the goalposts on taxes, a quick review of the plan will tell you exactly what needs to be adjusted. By keeping a close eye on your financial roadmap, you can ignore the noise of the markets, knowing that while the path might get a bit bumpy, you are still heading in the right direction.

What we already know

In addition to the “unknowns” (such as the Iran war), we also have the “known” events of future tax changes which are much favoured by the current Labour Government. On going stealth taxes, announced in 2021 as a short-term measure post Covid but now expected to continue until at least 2031. Dividend Tax increase and VCT relief reduction (April 2026); IHT on pensions (April 2027); Mansion Tax (2028) and Salary Sacrifice capping (2029).  

In previous articles I have highlighted the dangers of not investing. Just to remind you, in the 20 years from 1st January 2004, $10,000 invested in the S&P 500 would have grown to $66,637 (an annualised growth rate of 9.7%). Had you missed the best 10 days during that 10 years the final sum would have been $29,154 (5.5% annualised growth rate). Take away the best 20 days and it’s $17,494 (2.8%). The message is, of course, stay invested and don’t try to call the markets.

As always, the key is to ensure that you have sufficient liquidity to ride out market volatility. For clients who are nearing retirement, they enter into the ‘decumulation’  - or ‘drawing down’ - phase of their investing life. That is, the scary moment when assets accumulated over decades must now step up to the plate and start delivering actual money to ensure a comfortable retirement. If you don’t plan this properly, you become exposed to what is known as “sequence risk”. This represents a significant threat to portfolios if investments are encashed to meet ongoing expenditure during a market downturn. Risk management planning is vital in retirement to ensure you avoid this pitfall. Investment portfolios need to remain invested, to protect them from long term real value erosion, but for decumulators, the higher risk elements must still be viewed as long term and kept invested for many years, if need be, to await a recovery if the downturn is severe. That’s why the cash buffer is important!

In January 2026, markets were looking bullish, economies were generally on the up and most market commentators were positive about the prospects of equity markets continuing to do well. So, what do we do? Keep calm and carry on investing, or, to quote another Dad’s Army character, hold our heads in our hands and say “we’re doomed!”.

But whatever you decide, the best approach is to have your own personal plan in place, review it with your professional advisers and above all, don’t panic!

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The Financial Conduct Authority (FCA) does not regulate cash flow planning, estate planning, will writing, tax or trust advice.

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age). The value of your investments (and any income from them) can go down as well as up which would have an impact on the level of pension benefits available.

Past performance is not a reliable indicator of future performance.

At the start of the year, we described geopolitical risk as a “known unknown.” We expected geopolitics to play an important role in shaping markets, but the timing and scale of any escalation were uncertain. Only two months into the year, that risk has materialised in dramatic fashion, with global geopolitical tensions now reaching their highest level in more than 20 years (see Figure 1). 
This sharp rise in tensions has quickly become the dominant theme for global markets and investors.

Figure 1: Geopolitical Risk Index (Source: Caldara and Iacoviello, March)

Arrange your free initial consultation

What happened?

The escalation followed events on Saturday 28 February, when US and Israeli forces launched coordinated strikes on Iran. The attacks killed Iran’s Supreme Leader, Ali Khamenei, along with several senior Iranian officials. President Trump described the operation as necessary to remove what he called an ongoing threat posed by Iran to the US and its allies, including concerns around nuclear proliferation.

Iran responded quickly, launching missiles at Israel and at American military bases across the Middle East, including strikes in Bahrain, the UAE, Qatar and Kuwait. These developments have significantly heightened tensions across the region and raised concerns about potential disruption to global energy supplies.

How markets responded

Markets reacted swiftly to the news. Major equity indices initially fell as investors assessed the risk of prolonged disruption to global oil and gas supplies.

However, the impact has not been uniform across regions.

US equities proved relatively resilient. The strengthening US dollar provided support, and the United States’ position as a net exporter of oil and gas helped shield its economy from some of the immediate energy-related pressures.

European and UK markets faced greater headwinds, declining by around 7% and 5% respectively. That said, the UK’s significant exposure to energy companies helped cushion some of the losses compared with other European markets.

Asian markets also came under pressure, particularly in energy-importing economies such as Japan, which remain more exposed to rising energy costs.

Figure 2: Regional Equity Returns in Sterling (27 February – 11 March 2026, Source: Pacific Asset Management)

Bonds and interest rates

Government bond markets have also reacted to the shifting outlook.

Initially, investors had expected central banks in the US and UK to continue cutting interest rates as inflation pressures gradually eased. However, the surge in energy prices has changed that narrative.

Oil shocks tend to feed quickly into broader inflation because energy costs affect almost every part of the economy. As a result, markets have begun to reassess the interest rate outlook. Government bond yields have moved higher, with UK gilts falling around 2.9% as investors adjusted expectations.

Markets now see a greater likelihood that the Bank of England will keep interest rates at the current level of 3.75% for longer than previously anticipated.

Policymakers respond

A key question now is how long energy prices remain elevated.

Energy shocks are particularly challenging for economies because they can simultaneously push inflation higher while slowing economic growth. If sustained, higher oil and gas prices could reignite inflationary pressures just as they had begun to ease across Western economies.

Policymakers have already begun responding. The International Energy Agency (IEA), which was established after the oil crisis of the 1970s, has authorised the largest emergency release of strategic oil reserves in its history.

The agency’s 32 member nations have agreed to release 400 million barrels of crude oil into global markets. This represents roughly one third of government-held reserves and is more than double the amount released following Russia’s invasion of Ukraine in 2022. The aim is to stabilise energy markets and prevent supply shortages from pushing prices significantly higher.

Looking ahead

The situation remains highly fluid and continues to evolve.

Historically, equity markets often react to geopolitical shocks with an initial period of volatility before stabilising as investors assess the longer-term economic impact. Ultimately, the path of markets will depend on how events affect corporate earnings, energy prices and inflation.

One key risk would be a prolonged disruption to the Strait of Hormuz, a critical shipping route through which around one fifth of the world’s oil supply passes. If this route were to remain closed for an extended period, energy prices could rise further, increasing the risk of higher inflation and slower global growth.

That said, the global economy is far less dependent on oil than it was during the energy crises of the 1970s. Energy supplies are now more diversified, and alternative sources play a greater role, which helps reduce the potential economic impact compared with previous decades.

History also shows that while geopolitical shocks can create short-term volatility, their effects on equity markets are often relatively short-lived.

As we noted at the start of the year, the combination of a more assertive US administration and the approach of mid-term elections increases the likelihood of geopolitical developments shaping markets. In this environment, we remain vigilant and continue to monitor events closely.

Most importantly, we ensure that portfolios remain well diversified and positioned to navigate periods of uncertainty while continuing to capture opportunities as markets evolve.

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us centrally through our website.

Arrange your free initial consultation 

This information in this article is correct as at 12/03/2026.

This market update is for general information only, does not constitute individual advice and should not be used to inform financial decisions. Investment returns are not guaranteed, and you may get back less than originally invested; past performance is not a guide to future returns.
 

Rachel Reeves delivered her Spring Forecast this afternoon, which had been overshadowed before it even started by events in the Middle East.

As expected, the Spring Forecast (rather than Spring Statement as it has been referred to in previous years) did not include any fiscal changes, with Reeves previously committing to only holding one fiscal event each year, in the Autumn Budget.

By way of updates, Reeves announced that the Office for Budget Responsibility (OBR) had ‘adjusted the profile of GDP’ resulting in it downgrading its UK Growth projection for 2026 from 1.4% (as forecast in November 2025) to 1.1%, but the OBR increased its forecasts for 2027 (1.5% to 1.6%) and 2028 (again 1.5% to 1.6%).  Reeves also heralded the interest rate cuts seen in recent months, but events in the Middle East have significantly reduced the chance of a further cut in March, given the inflationary oil and gas price rises seen since the weekend.

Therefore, the most important upcoming tax changes are those we already knew about, specifically:

• A 2% increase in dividend tax taking effect on 6 April 2026.
• VCT tax relief being cut from 30% to 20% on 6 April 2026.
• Business and Agricultural Relief limited to £2.5m per individual, with effect from 6 April 2026 – this importantly increased from the previously proposed £1m and can be passed between spouses if not used on first death.
• A 2% increase in savings and property taxes taking effect on 6 April 2027.
• A cap in Cash ISA contributions of £12,000 for under 65s with effect from 6 April 2027.
• Pensions forming part of estates for inheritance tax purposes from 6 April 2027.
• A Mansion Tax being introduced in April 2028.
• Salary Sacrifice pension contributions benefiting from National Insurance Contribution savings limited to £2,000 with effect from 6 April 2029.
• Income Tax thresholds frozen until April 2031.

If you would like to discuss the impact of the above on your personal financial situation, why not get in touch for a free initial conversation to see how we can help.

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions

The Financial Conduct Authority (FCA) does not regulate estate planning or tax advice.

On Saturday morning, the US and Israeli forces carried out attacks on Iran, killing the Supreme Leader Ali Khamenei and several other high ranking Iranian officials. 

President Trump justified the action as necessary to eliminate the ongoing threats posed by Iran to the US and its allies, including the risk of nuclear proliferation. Iran has retaliated, by launching missiles at Israel and American military bases across the Middle East, including strikes in Bahrain, the United Arab Emirates (UAE), Qatar and Kuwait. 

The range of possible outcomes from this intervention is extremely wide, and will depend on two key factors: how long the conflict lasts, and how Iran's political leadership is resolved, whether through an orderly succession or a broader collapse of the regime.

What this means for portfolios

As of Monday morning, there has been a broad sell off in equities and the US dollar has responded sharply.

The FTSE100 has seen more limited falls because of its sector weighting towards energy companies which have rallied on the back of the rising oil price. 

Government bonds, which have been trending higher over the past month, have eased back slightly on the risk of energy prices feeding through to inflation. 

Oil prices have risen 8% to $78/barrel, not just because of the direct impact on supply through disruptions in the Middle East but also because of the threat of Iranian attacks on the Strait of Hormuz, through which around 20% of global oil supply is shipped.

Once again, gold has proved to be an important source of diversification, with our gold ETF rallying around 4.5% in Sterling as we write. We added back some gold in our core portfolios last week, having reduced our exposure at higher prices in January. This has helped to cushion portfolios on a day when equities and bonds are both falling.

Looking ahead

Clearly this situation is unfolding as we write, and remains highly fluid. Equities always respond to geopolitical events by selling off initially; their subsequent performance depends entirely on the impact of events on corporate earnings and inflation. 

If the Strait of Hormuz is unpassable for a prolonged period, energy prices will move higher from here, which will feed through to inflation and weigh on consumption. But it’s worth noting that the dependence on oil has diminished significantly since the early 70s when the Yom Kippur War triggered a severe bear market. Today, alternative suppliers and sources of energy help to mitigate the economic impact compared to the 1970s. 

History shows that many geopolitical shocks have relatively short-lived effects on equity markets. We pointed out earlier in the year that with mid-term elections looming and an emboldened President Trump, geopolitical events were becoming more likely.

For now, we will remain highly vigilant and ready to respond whilst ensuring that portfolios remain well diversified. 

As ever, we remain long-term investors and whilst short-term market volatility is something that informs our portfolio decisions, the importance remains in the long-term plan and remaining both prudent and disciplined in our planning together.

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us through our website.

Arrange your free initial consultation

This information in this article is correct as at 02/03/2026.

This market update is for general information only, does not constitute individual advice and should not be used to inform financial decisions. Investment returns are not guaranteed, and you may get back less than originally invested; past performance is not a guide to future returns.

Despite high-profile geopolitical events and headline risk, global markets started 2026 on a resilient footing, supported by solid economic fundamentals and growth momentum.

The themes that dominated markets last year have carried into the new year, dispelling any expectation that 2026 would be ‘quieter'. The US’s audacious extradition of Nicolás Maduro from Venezuela and President Trump’s announcement to pursue the acquisition of Greenland have reinforced this dynamic.

Arrange your free initial consultation

Once again, we see a clear divergence between the prevailing narrative ‘the noise’ and what is happening in financial markets. Despite these headline grabbing risks, which ultimately proved to be temporary flashpoints, global equity markets were buoyed by stronger growth expectations and a macroeconomic backdrop that remains broadly supportive. In this environment, economic resilience has helped offset lingering inflation concerns.

Equities

Figure 1. Equity market returns (January 2026, Source: Pacific Asset Management)

Equity markets were broadly positive across regions, although US equities lagged as technology stocks came under pressure. Microsoft notably fell 10% in a single day, highlighting growing investor caution over elevated valuations and increasing scepticism regarding the scale of spending on AI and related projects.

US policy uncertainty increased with the nomination of Kevin Warsh as the next Federal Reserve Chair, set to succeed Jerome Powell in May. Front-runner Kevin Hassett was ultimately passed over, partly due to concerns over his perceived political alignment amid scrutiny of Fed independence. Warsh’s appointment was broadly welcomed, but questions remain given his past reputation during his previous tenure at the Federal Reserve as an inflation hawk - prioritising price stability - and how this will align with President Trump’s preference for lower interest rates, leaving markets watching closely how his approach will unfold.

European equities ended the period higher, despite earlier pressure from President Trump’s threat to impose tariffs on European countries over Greenland. Sentiment improved as tensions eased, supported by stronger-than-expected Q4 2025 GDP growth of 0.3% and a near record-low unemployment rate of 6.2% in December.

In the UK, the FTSE 100 surpassed 10,000 points for the first time since its launch in 1984, led by basic materials benefiting from higher metal prices. Domestically focused companies maintained positive momentum, with mid-cap stocks outperforming large caps. Inflation rose to 3.4%, the first increase in five months, leaving the UK with the unenviable record of the highest inflation in the G7. Markets continue to view this as largely transitory, driven by factors such as higher airfare over the Christmas period, and expect inflation to gradually return toward the 2% target.

In Japan, equities continued to rise following the announcement of a snap lower house election on 8 February, called by Prime Minister Sanae Takaichi to strengthen her mandate and support her agenda of easier monetary policy and targeted fiscal stimulus.

Fixed income

Government bond markets came under pressure as stronger-than-expected economic growth and concerns over elevated public spending dampened expectations for near-term policy easing, pushing yields higher. US Treasuries fell, especially at the short end of the curve, as robust data delayed anticipated Federal Reserve rate cuts. UK gilts also declined, with December inflation coming in above expectations, reducing the likelihood of further easing from the Bank of England. European government bonds were relatively resilient, led by France and Italy, supported by improved risk sentiment across core and peripheral markets. In Japan, government bonds faced significant pressure, recording a particularly challenging start to the year as yields adjusted to evolving domestic policy expectations.

Figure 2. Fixed Income returns (January 2026, Source: Pacific Asset Management)

Commodities

Commodity markets extended their positive momentum early in the year, underpinned by strong gains in precious metals and oil. Gold performed well through most of the month, buoyed by sustained central bank buying particularly from emerging-market reserve managers and heightened geopolitical tensions that supported safe-haven demand. However, the metal sold off late in the period as speculative positioning shifted and investors took profits from earlier strength. Brent crude oil also advanced, holding near multi month highs as ongoing supply risk concerns continued to provide support to energy prices.

Portfolio implications

The start of the year has reinforced the case for international diversification, with opportunities increasingly emerging outside the US. Uncertainty is likely to continue - the classic ‘known unknown’ - requiring investors to remain proactive and adaptable in navigating the evolving market landscape.

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us centrally through our website.

Arrange your free initial consultation

This information in this article is correct as at 13/02/2026.

This market update is for general information only, does not constitute individual advice and should not be used to inform financial decisions. Investment returns are not guaranteed, and you may get back less than originally invested; past performance is not a guide to future returns.

2025 will be remembered as a year in which uncertainty and strong investment performance were not mutually exclusive. For the first time since 2019, global equities, bonds and commodities all delivered positive returns, supported by AI-driven investment themes, central bank easing and eventually falling tariffs.

This headline performance, however, understates the challenges investors faced over the year. Policy and trade uncertainty dominated the news flow early on, with U.S. equities falling more than 20% in sterling terms as markets grappled with the implications of global tariff rates reaching levels not seen since the 1930s. At the same time, government balance sheets came under increased scrutiny amid fiscal largesse, while a shifting world order heightened geopolitical risks.

Arrange your free initial consultation

Equity markets

Equities reached new highs, but unlike much of the past decade, leadership did not come from the United States. Instead, investors were rewarded for adopting a more global approach, as market performance broadened beyond U.S. mega-caps into more attractively valued regions. Structural themes such as artificial intelligence and clean energy also gained traction across a wider range of geographies, reinforcing the shift toward more diversified sources of return.

European equities

European equities led global markets, delivering returns of over 26% in sterling terms. Performance was supported by a combination of attractive valuations and improving investor sentiment, as falling inflation enabled the European Central Bank to cut EU interest rate to 2%. In addition, a renewed commitment to fiscal expansion - most notably in Germany, which announced plans to allocate €500 billion to infrastructure and adopted a “whatever it takes” approach to defence spending - provided a further boost to the region.

UK equities

Outside Europe, UK equities also delivered strong results, recording their fifth-best annual return since 1984. Performance was underpinned by renewed investor interest in lower-valued markets, as well as the index’s structural bias toward defensive sectors, which performed particularly well over the year.

Emerging markets

Emerging markets, meanwhile, challenged the notion that the United States is the sole driver of equity returns. A rally in technology companies outside the U.S. supported a broader advance across emerging market equities, with particularly strong performances in China, Taiwan, and South Korea. Combined with a weakening U.S. dollar and that many emerging economies carry lower debt levels and are growing faster than their developed-market peers, the outlook for the asset class remains constructive.

Figure 1: 3 and 12 month equity returns (Source: Pacific Asset Management, January 2026)

Fixed income

In fixed income, declining inflation and the gradual easing of monetary policy supported bond markets overall.

Interest rates fell in the UK and Europe as the Bank of England and the ECB reduced rates to their lowest levels since 2023. Meanwhile, after holding steady for much of the year, the Federal Reserve resumed its rate-cutting cycle, delivering reductions in September. This contributed to a decline in short-term rates. However, fiscal concerns continued to weigh on government bonds, leading to a steepening of yield curves across major markets as long-term yields rose, which could have implications for future borrowing costs.

Corporate bond spreads - the premium investors receive for holding credit risk - recovered from the widening seen in April. For much of the year, spreads narrowed amid a risk-on environment, which saw higher prices for both investment-grade and high-yield bonds.  


Figure 2: 3 and 12 month fixed income returns (Source: Pacific Asset Management, January 2026)

Gold

Gold surged to its strongest performance in half a century, reflecting investors concerns provoked by fiscal profligacy among Western governments, political uncertainty, and a weaker U.S. dollar. The safe-haven metal broke multiple records over the year, reaching $4,482 per ounce in December. Looking ahead, we expect gold prices to remain supported by ongoing central bank purchases and elevated fiscal deficits.

Outlook

Continued global growth and resilient consumer demand underpin a constructive outlook for equities. However, valuations remain high in concentrated markets, and investors are increasingly cautious about the risks associated with AI-driven themes.

This environment presents opportunities as markets broaden, with previously overlooked areas likely to benefit. Thoughtful portfolio construction and rigorous risk management will be critical as emerging opportunities - and potential risks - come into focus over the year.

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us centrally through our website.

Arrange your free initial consultation 

This information in this article is correct as at 16/01/2026.

This market update is for general information only, does not constitute individual advice and should not be used to inform financial decisions. Investment returns are not guaranteed, and you may get back less than originally invested; past performance is not a guide to future returns.

The first Budget of my professional career was the 1988 Nigel Lawson “Giveaway” Budget. As an office junior, my job was to head into the city and queue up (with dozens of other fresh faced office juniors) to receive the printed full Budget from the Government’s press offices. I dutifully returned to work, clutching it in my sweaty palms, so that the senior advisers could pore over it. No internet, no leaks, just a bundle of white pages hastily stapled together.

Arrange your free initial consultation

Since that March day (it always used to be in the Spring) Budgets have come and gone but they all have one thing in common. Namely, the fear and rumour that ferments in the days and weeks beforehand. I have to say that the media are one of the major guilty parties and, more than ever, are responsible for whipping up a frenzy of bitterness and resentment, even before the Chancellor, whoever they happen to be, has stepped up to the dispatch box.

I don’t think I’m wrong in saying that I’ve never witnessed quite so much ‘bracing’ in fear and anticipation as this Budget. The nation became paralysed in apocalyptic fear as if the end of the world were approaching.

So, I thought it was time to take stock and look at the Budget in the clear light of day and also in the context of historical Budgets.

The fear and rumour mill

Ever since that dreary March day in 1988, I can say that one fear has pervaded every single Budget. Namely, the fear that higher rate tax relief will be removed from pension contributions. This Budget was, of course, no exception and the fear spread even further than that. About sometime in September this year, a rumour started (I don’t know from where) that tax free cash (now technically known as the Pension Commencement Lump Sum, or PCLS) would be reduced from £268,275 to £40,000. Personally, I thought it was unlikely and wasn’t afraid to say so. Not only would it not result in higher tax take for the Treasury (who in their right mind would now willingly withdraw £286,275, subjecting themselves to income tax on £246,275?) but it would also have made Rachel and Labour, even more unpopular than they are already.

Nevertheless, a huge number of people acted and withdrew their tax free cash and are now sitting on it in a taxable environment.

But pensions were definitely going to take a bullet somehow. After all, they are still highly efficient methods of saving, something which seems to have been lost on some of the general public, based on a tsunami of negative press, again, which doesn’t always help. Animal Farm springs to mind when the animals, having taking over the farm, come up with the tenets of animal life. “Four legs good, two legs bad”. And so, the media has a similar chant “non pensions good, pensions bad”. But are they? If I were to tell you that you could invest in a pension and get 41.6% tax free cash from it, would you be interested? If you are a higher rate taxpayer, this is exactly what you get! For every £100 put in, you only pay £60 (20% tax relief at source and a further 20% back in your tax returns). So, tax free cash at 25% means 25% of £60 which equals 41.6%. When you retire, if you’re a basic rate taxpayer, you are only paying 20% on the £75 whenever you draw on it. By the way, if you make pension contributions and your earnings are between £100,000 and £125,140, because this income reduces your personal allowance, the equivalent tax relief is not 40%, it is 60% so the effective tax free cash rate is a whopping 62.5%.

Given how generous tax relief is, I think that the slight knock pensions took (future reductions in salary sacrifice) is really getting away with it.

The hammer blow came last year

Of course, last year’s Budget delivered a hammerblow to pensions in that, from April 2027, Inheritance Tax (IHT) will apply. For ten years, since George Osborne announced pensions ‘freedom’ many have earmarked their pension funds for Estate Planning purposes, since so this recent news was very unwelcome. In effect, this now puts pensions in roughly the same position as they were before 2015. Before 1995, remember, people were forced to buy annuities with their pension funds so, in spite of goal post moving, pensions are still the best tax planning vehicles around, so let’s not throw the baby out with the bath water.

Overall, it has to be said that the Budget was probably a slight relief. Many, myself included, had expected increases in Capital Gains Tax and even Income Tax and none of these came to pass. Instead, we saw a continued freezing of allowances. Stealth taxes. The death of wealth by a thousand cuts. Each one painless, but in five years’ time, we’re all significantly worse off without immediately feeling the pain. 

Stealth taxes are at the heart of the Budget

There were a few other ‘tampering's’ such as the reduction in cash ISA contributions from £20,000 to £12,000 for under 65s, and an increase to the tax rate on savings interest, both from April 2027, but this is mostly tinkering around the edges and irritants for some, at worst. There was an innovation in the introduction of ‘Mansion tax’ for houses worth over £2m but, again, this was kicked into the future and will not apply until 2028. But the stealth taxes, freezing of allowances, are at the heart of this budget.

I sometimes think of the 1988 “giveaway” Budget with fondness. Lawson reduced higher rate income tax from 60% to 40% and basic rate from 27% to 25%. All of this was possible due to the fact that the economy had been overheating (remember that?) but was now under control and the predicted Budget surplus allowed for such cuts. What luxury! There was uproar in the house and the Speaker had to suspend proceedings due to “grave disorder”. A lesser known MP called Alex Salmond exclaimed that it was an “obscenity” and was duly suspended for breaching Parliamentary convention.

The world has changed though, and the UK doesn’t have the room for manoeuvre afforded by those halcyon days. Nigel Lawson didn’t have the fallout of QE, Brexit, Covid and the Ukraine invasion to hamper him and I doubt if any modern day Chancellor from any persuasion would make us all happy, given the state of the economy. The only one who tried, and failed, was Kwasi Kwarteng who, in cahoots with Liz Truss, grabbed the Treasury money bag and started running down Whitehall throwing £20 notes in the air before being rugby tackled by the bond markets. I sadly, don’t expect too much from any Chancellor, from whichever party, over the next few years at least.

On the plus side, bond markets (the ultimate bellwether of economic prudence) have reacted well to the Budget. Gone are the days when a Labour Government would react to fiscal shortfall by applying for a payday loan!

So, in the final analysis, maybe the 2025 Budget was a bit of a non-event. But fear and loathing were the lasting memories of the days leading up to it, which probably explains why the UK economy reported a contraction in October. Meanwhile, back at Animal Farm, I’d like to paraphrase another animal tenet. “All Budgets are equal, but some are more equal than others”.

Arrange your free initial consultation

This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions.

The opinions shared in this article are solely those of the individual and they do not necessarily reflect those of The Private Office. 

The Financial Conduct Authority (FCA) does not regulate cash flow planning, estate planning, tax or trust advice. 

Global markets were a mixed bag in November, pausing after several months of strong gains. Volatility increased, as concerns over stretched AI-related and technology stocks resurfaced, prompting a switch towards defensive sectors such as healthcare and consumer staples. The technology sector was challenged, recording its biggest decline since March 2025.  

Arrange your free initial consultation

Figure 1. Regional equity returns  (Source: Pacific Asset Management, November 2025)

US Markets

US equities remained largely unchanged as investors looked past the positives of strong Q3 earnings and the end of the 43-day government shutdown - the longest in US history - and instead focused on uncertainty around interest rates and concerns around an AI-driven bubble. Volatility was driven primarily by the shifting expectations around Federal Reserve policy. The probability of a December rate cut swung sharply, falling from nearly 98% in late October to about 40% by mid-November, before rebounding above 80% by the end of November. Market movements reflected not only the potential timing of rate cuts, but also investor interpretations of the Fed’s economic outlook and the likelihood of a ‘soft landing’. 

European Markets 

Across the Atlantic, Eurozone inflation in November ticked up to 2.2% from 2.1%, slightly above forecasts and suggesting that price pressures remain. Economic expansion was modest, with Q3 growth at 0.2% and unemployment steady at 6.4%. The European Central Bank (ECB) indicated a cautious stance, signalling that keeping interest rates unchanged remains the prudent course. European equities remained relatively flat as investors navigated these mixed economic indicators. 

Japan Markets 

In Japan, headline inflation climbed to 3.0% in October - the highest since July - driven by energy costs, currency fluctuations, and ongoing supply chain strains. A softer yen provided support to export-focused equities but also contributed to higher inflation, while government bonds underperformed as yields rose amid doubts over the long-term sustainability of fiscal and monetary support. 

UK Markets

 The UK’s Autumn Budget 2025, long anticipated and partially pre-empted by the early Office for Budget Responsibility (OBR) publication, had a relatively muted immediate impact on markets.

The Chancellor outlined £26 billion in tax measures; however, with many provisions deferred over several years - some beyond the next general election - the near-term fiscal landscape remains largely unchanged. Fiscal flexibility is set to improve, with the Chancellor projecting a buffer of approximately £22 billion - more than double last year’s level - which had been largely eroded and fueled months of speculation over potential tax increases. While this represents a meaningful increase in fiscal headroom, it remains below average, with the typical revision to an OBR forecast over six months around £21 billion, leaving little room for error (see Figure 2.). 

Figure 2. Forecast headroom against fiscal room  (Source: Pacific Asset Management, IfG, November 2025). 

Markets responded positively to the extra fiscal headroom and the reduced risk of near-term borrowing pressures or unexpected tax adjustments. UK government bonds delivered one of their strongest Budget-day performances in twenty years, reflecting renewed confidence in the fiscal outlook. Meanwhile, equity markets, which had softened amid pre-budget leaks and speculation, stabilized as investors assessed the measures as supportive of macroeconomic stability without introducing major new uncertainties. 

Commodities and Gold

Away from equities, commodities posted modest gains in November, with performance varying across sectors. Gold emerged as the standout performer, supported by sustained investor demand for safe-haven assets amid ongoing macroeconomic uncertainty, including inflationary pressures, central bank policies, and geopolitical risks.  

While November’s advance was more measured than recent rallies - partly due to profit-taking - the metal’s underlying fundamentals remain strong. Structural demand, constrained supply, and its role as a portfolio diversifier continue to underpin gold’s outlook into 2026. Gold mining companies also continue to benefit from elevated gold prices and more disciplined capital management, with earnings growth reflecting these favourable conditions (see Figure 3.). 

Figure 3: Goldmining companies return and earnings profile (Source: Pacific Asset Management, November 2025). 

Summary

Despite some volatility in November, global equities are positioned to deliver another strong year in 2025. Equity markets in the UK, Europe, and Japan have all shown relative outperformance compared with the US, underscoring the value of international diversification. Moreover, the recent underperformance of technology stocks highlights the importance of sector diversification - not only as a risk management tool but also as a potential source of returns.

Looking back over November, there were no major shifts in economic fundamentals. Instead, market movements reflected changes in sentiment, emphasizing how investor perceptions and expectations can drive short-term volatility - even in the absence of significant economic or market developments. This serves as a reminder that as we move into the next year, investors will continue to face sentiment-driven risks alongside structural considerations, including central bank policy, inflation dynamics, and sector-specific trends.

Overall, the performance of global equities this year reinforces the importance of maintaining a diversified investment approach that balances geographic exposure, sector allocation, and risk management strategies. 

If you have any questions or concerns about your investments or your future plans, don’t hesitate to get in touch with your TPO Adviser or contact us centrally through our website.

Arrange your free initial consultation

This information in this article is correct as at 12/12/2025.

This market update is for general information only, does not constitute individual advice and should not be used to inform financial decisions. Investment returns are not guaranteed, and you may get back less than originally invested; past performance is not a guide to future returns.