{"id":7853,"date":"2025-12-17T13:12:27","date_gmt":"2025-12-17T13:12:27","guid":{"rendered":"https:\/\/new.contentdeployment.co.uk\/quilter\/?p=7853"},"modified":"2025-12-19T08:38:16","modified_gmt":"2025-12-19T08:38:16","slug":"year-in-review","status":"publish","type":"post","link":"https:\/\/new.contentdeployment.co.uk\/quilter\/2025\/12\/17\/year-in-review\/","title":{"rendered":"Year in Review"},"content":{"rendered":"\n
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Donald Trump was the key factor shaping global affairs in 2025, this won\u2019t change in 2026. Liberation Day trade traumas had a far-reaching impact back in April <\/td>The International Monetary Fund\u2019s (IMFs) latest World Economic Forecast entitled, \u2018Global economy in flux, prospects remain dim,\u2019 <\/em>shows projections have been revised upward from the spring forecast but continue to mark a downward revision. Global growth is projected to slow to 3.2% in 2025 and 3.1% in 2026 <\/td>2026 will be defined by the unpredictable influence of President Trump. The real economic test will show as 2026 progresses – tariff impacts should become more visible, placing pressure on consumers, supply chains and global growth <\/td><\/tr><\/tbody><\/table><\/figure>\n<\/div><\/td><\/tr><\/tbody><\/table>\n\n\n\n
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A whistlestop tour of the last 12 months, some key events in 2025 impacting the global economy, and looking ahead to 2026<\/strong> <\/p>\n<\/div>\n\n

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\u201cWe are at an inflection point\u201d <\/a><\/p>\n<\/div>\n\n

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Liberation Day – \u201cA little tough love\u201d <\/a><\/p>\n<\/div>\n\n

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A Klarna Budget \u2013 \u2018Spend now, pay later\u2019 <\/a><\/p>\n<\/div>\n\n

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Global economy – \u201cWhat we are seeing is demonstrable resilience\u201d <\/a><\/p>\n<\/div>\n\n

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Market volatility \u2013 \u201cYou\u2019re going to have to adapt to the world\u201d <\/a><\/p>\n<\/div>\n\n

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\u201cWe are at an inflection point\u201d<\/h2>\n<\/div>\n\n
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Equity markets in 2025 have been impacted by a mix of competing forces. Geopolitical tensions and evolving US trade policies have sparked short periods of volatility, while supportive fiscal policy, easier monetary conditions, solid corporate earnings and continued enthusiasm for AI have bolstered markets, providing a resilient economic backdrop\u2026 but it hasn\u2019t all been smooth sailing. <\/strong><\/p>\n<\/div>\n\n

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The World Economic Forum (WEF) in Davos (January 2025) was dominated by discussion about the global implications of Donald Trump\u2019s return to the White House – particularly his stance on tariffs, deregulation and energy policy. WEF President and CEO B\u00f8rge Brende noted, “We are at an inflection point,” saying that the event was taking place during “one of the most uncertain geopolitical and geoeconomic moments in generations.” <\/p>\n<\/div>\n\n

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The Annual Meeting coincided with Trump\u2019s inauguration, and on day four the newly sworn-in President addressed global CEOs virtually, setting out the priorities for his second term, saying, “Under the Trump administration, there will be no better place on Earth to create jobs, build factories, or grow a company than right here in the good old USA.” <\/p>\n<\/div>\n\n

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Ngozi Okonjo-Iweala, Director General of the World Trade Organization urged fellow delegates, \u201cDon\u2019t hyperventilate – let\u2019s keep calm and see what will actually happen.\u201d And as Q1 progressed, while European markets outperformed on expectations of higher defence spending and hopes for a de-escalation of the Russia-Ukraine conflict, US equities came under pressure amid rising concerns about trade tensions and fiscal management. As Trump\u2019s presidency embedded \u2013 we didn\u2019t have to wait long for\u2026<\/p>\n<\/div><\/td><\/tr><\/tbody><\/table>\n\n\n\n
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\u201cA little tough love\u201d<\/em><\/strong> <\/h2>\n<\/div>\n\n
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Donald Trump was the key factor shaping global affairs in 2025, this won\u2019t change in 2026. Liberation Day trade traumas had a far-reaching impact back in April. It all kicked off with one \u201cbig, beautiful chart\u201d featuring tariff increases for countries around the world, including 34% China, 20% EU, 49% Cambodia, UK 10%. Trump made it clear he was no longer allowing imports into the US without an appropriate tariff, saying countries should embrace “a little tough love.” <\/p>\n<\/div>\n\n

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The market fallout was immediate. The futures markets crashed, with the S&P 500 losing $2trn in market capitalisation in under 20 minutes. The S&P 500 fell more than 10% in just three days. Global indices traded sharply lower as investors sought safety in gold and bonds. European Commission Chief Ursula von der Leyen said the policy would produce \u201cdire\u201d consequences for people around the world, adding there was \u201cno clear path through the complexity and chaos.\u201d  <\/p>\n<\/div>\n\n

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Days later, President Trump softened his approach, announcing a 90-day pause in the implementation of tariffs, giving countries a chance to enter into negotiations with the US.<\/p>\n<\/div>\n\n

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The rebound<\/strong> <\/h3>\n<\/div>\n\n
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Following the sharp sell-off in global equity markets around Liberation Day, we have seen a strong and broad-based recovery. Volatility in late April and early May reflected a combination of concerns, from trade tensions and geopolitical risks to tighter financial conditions amid rising bond yields. The subsequent rebound through Q2 and into H2 was fuelled by a mix of macroeconomic resilience, shifts in policy expectations as Trump softened his stance, trade negotiations, renewed expectations of rate cuts, and a robust earnings season; with AI-driven earnings growth, particularly among US mega-cap tech companies, dominating. <\/p>\n<\/div>\n\n

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This chart of the MSCI World Index shows the market rebound since Liberation Day (2 April 2025) <\/p>\n<\/div>\n\n

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The MSCI World Index is a globally recognised equity benchmark, representing the performance of large and mid-cap stocks across developed markets <\/figcaption><\/figure>\n<\/div><\/td><\/tr><\/tbody><\/table>\n\n\n\n
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\u201cWhat we are seeing is demonstrable resilience in the world\u201d<\/em><\/strong> <\/h2>\n<\/div>\n\n
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The International Monetary Fund\u2019s (IMFs) latest World Economic Forecast entitled, \u2018Global economy in flux, prospects remain dim,\u2019 shows projections have been revised upward from the spring forecast but continue to mark a downward revision. Global growth is projected to slow to 3.2% in 2025 and 3.1% in 2026, with advanced economies growing around 1.5% and emerging market and developing economies just above 4%. Inflation is projected to continue to decline globally, though wide variation across countries exists.<\/p>\n<\/div>\n\n

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In October, IMF Managing Director Kristalina Georgieva said, \u201cAll signs point to a world economy that has generally withstood acute strains from multiple shocks\u2026 What we are seeing is demonstrable resilience in the world\u2026 we are also saying it is a time of exceptional uncertainty and downside risks are still dominating the forecast.”<\/p>\n<\/div>\n\n

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IMF cites that downside risks to growth include prolonged uncertainty, more protectionism and labour supply shocks, while stability is threatened by fiscal vulnerabilities and potential financial market corrections. IMF urges policymakers to restore confidence through credible, transparent and sustainable measures – strengthening trade diplomacy, restoring fiscal buffers and safeguarding central bank independence.<\/p>\n<\/div>\n\n

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For the UK, IMF predicts growth of 1.3% in 2025 and 2026. Although revised up from April estimates, reflecting an improvement in the external environment, including the UK-US trade deal announced in May, the projected growth is still lower than October 2024 forecasts.<\/p>\n<\/div><\/td><\/tr><\/tbody><\/table>\n\n\n\n
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A Klarna Budget \u2013 \u2018Spend now, pay later\u2019<\/em><\/strong> <\/h2>\n<\/div>\n\n
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At home, 2025 proved a challenging year for the government. Sir Keir Starmer\u2019s tenure has been turbulent, with Labour\u2019s promise of growth slow to materialise. Stubborn inflation, high living costs and weak economic momentum have left many households feeling worse off, while long-standing pressures in public services limited visible progress. Global uncertainty and tight fiscal conditions certainly added to the challenge.<\/p>\n<\/div>\n\n

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Rachel Reeves\u2019 26 November Budget – labelled the \u2018Klarna Budget\u2019 – underscored this difficult backdrop, with tax rises of \u00a326bn announced. The Institute for Fiscal Studies notes that the Chancellor is relying heavily on back-loaded tax hikes and increased medium-term borrowing – hence the moniker: spend now, pay later.<\/p>\n<\/div>\n\n

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Bank Rate has been gradually cut throughout the year, as the Bank of England (BoE) weighs inflation trends against economic softness. BoE forecasts inflation will remain above its 2% target until Q2 2027.\u202f<\/p>\n<\/div>\n\n

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Looking ahead, 2026 is shaping up to be a year of political insurgents, with May\u2019s local elections likely to be a telling barometer. It also marks the tenth anniversary of the Brexit referendum and the five-year review of Boris Johnson\u2019s Trade and Co-operation Agreement – ensuring Brexit re-enters the national conversation. With polls showing over 56% now viewing Brexit as a mistake, the government is pursuing steps to ease trade frictions by aligning with EU food standards and adopting shared energy and environmental rules.<\/p>\n<\/div>\n\n

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In a historic moment for the London Stock Exchange, the FTSE 100 Index surged past the 9,000-point mark for the first time ever on 15 July 2025, setting a new all-time high.<\/strong><\/p>\n<\/div><\/td><\/tr><\/tbody><\/table>\n\n\n\n
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Market volatility<\/strong> \u2013 \u201c<\/em><\/strong>You\u2019re going to have to adapt to the world\u201d<\/em><\/strong> <\/h2>\n<\/div>\n\n
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Despite challenges \u2013\u00a0the fallout from Liberation Day being the most significant in 2025 –\u00a0global stock markets have\u00a0demonstrated\u00a0resilience. Renowned investing principal Warren Buffett dismissed market volatility in the spring as\u00a0\u201creally nothing\u201d<\/em>\u00a0to worry about. He elaborated,\u00a0\u201cIf it makes a difference to you whether your stocks are down 15%, you need to get a somewhat different\u00a0investment philosophy.\u201d\u00a0<\/em>Buffett added,\u202f\u201cThe world is not going to adapt to you.\u00a0You\u2019re\u00a0going to have to adapt to the world.\u00a0People have emotions but\u00a0you\u2019ve\u00a0got to check them at the door when you invest.\u201d<\/em>\u00a0\u00a0<\/p>\n<\/div>\n\n

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The overriding message is, volatility is a normal part of investing. Emotions run high and it\u2019s not always easy to block out the short term \u2018noise\u2019 and focus on longer term goals, but investors who keep perspective, avoid knee jerk reactions and stick to their long-term plan are far better placed to ride out the turbulence. <\/p>\n<\/div>\n\n

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The CBOE Volatility Index or the VIX\u00ae Index is a measure of the US stock market\u2019s expectation of volatility based on S&P 500 Index options. Widely known as the \u2018Fear Index,\u2019 the higher the VIX\u00ae Index, the greater the level of fear and uncertainty in the market, with levels above 30 indicating tremendous uncertainty, levels above 20 regarded as \u2018high\u2019 and below 12 as \u2018low\u2019 volatility.  <\/p>\n<\/div>\n\n

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  • In 2025, the VIX\u00ae peaked on 8 April at 52.33  <\/li>\n<\/div>\n\n
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  • In early December (at the time of writing), the VIX\u00ae Index had moderated to around 16.19. <\/li>\n<\/div><\/ul>\n<\/div><\/td><\/tr><\/tbody><\/table>\n\n\n\n
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    Did you know? <\/strong> <\/h2>\n<\/div>\n\n
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    Oxford University Press has named \u2018rage bait\u2019<\/strong> its 2025 Word of the Year – and no, they insist they\u2019re not<\/em> rage-baiting us with a two-word winner! The term describes online content deliberately crafted to provoke anger or outrage to drive clicks and engagement – and its usage has tripled in a year. It feels fitting. The online environment is saturated with high-octane commentary, often blurring the line between messaging and provocation – and adding yet more \u2018noise\u2019 for investors to tune out.<\/p>\n<\/div><\/td><\/tr><\/tbody><\/table>\n\n\n\n
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    2026 \u2013 key themes for the year ahead<\/strong> <\/h2>\n<\/div>\n\n
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    The US – Trump, midterms and a 250<\/strong>th<\/sup><\/strong> Anniversary!<\/strong> <\/h3>\n<\/div>\n\n
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    2026 will be defined by the unpredictable influence of President Trump. The real economic test will show as 2026 progresses – tariff impacts should become more visible, placing pressure on consumers, supply chains and global growth. A pivotal moment arrives in May, when Jerome Powell steps down – Trump\u2019s pick for the next Federal Reserve Chair will signal whether the central bank\u2019s independence holds or erodes. On 3 <\/strong>November 2026, all 435 House seats and 35 Senate seats are contested in mid-term elections. With Republicans holding a slim House majority, Democrats view this as their chance to reassert influence. And America\u2019s 250th<\/sup> anniversary will no doubt amplify political spectacle and national introspection. <\/p>\n<\/div>\n\n

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    Global geopolitics – a new order emerging<\/strong> <\/h3>\n<\/div>\n\n
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    As the world continues to drift towards \u2018coalitions of the willing,\u2019 partnerships on defence, climate and trade will likely emerge. Although China enters 2026 with its own economic headwinds – deflation, slowing growth and excess industrial capacity \u2013 \u2018America First\u2019 creates opportunities for Beijing to extend its influence – as Trump ostracises nations – other alliances forge. One challenge will be keeping US-China relations transactional rather than confrontational.<\/p>\n<\/div>\n\n

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    Europe faces an increasingly difficult balancing act – strengthening defence, maintaining US ties, reviving growth and managing deficits simultaneously.<\/p>\n<\/div>\n\n

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    Conflict hot spots remain fragile: hopes for a lasting peace in Gaza, a continuing war in Ukraine, turmoil in Sudan and Myanmar, and persistent \u2018grey-zone\u2019 pressure from Russia and China in Northern Europe and the South China Sea.<\/p>\n<\/div>\n\n

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    AI – booming investment, slow adoption<\/strong> <\/h3>\n<\/div>\n\n
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    American tech giants spent over $400bn on AI data centres and infrastructure in 2025, but revenues total around $50bn. Despite 800 million global ChatGPT users, formal business adoption is still modest, with only around 10% of large firms having embedded AI. The focus for 2026 is speeding up adoption; crucial given AI-linked companies now make up 44% of S&P 500 market cap.  <\/p>\n<\/div>\n\n

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    Climate and clean tech momentum<\/strong> <\/h3>\n<\/div>\n\n
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    Global emissions likely peaked in 2025, with clean-tech investment expanding across the Global South. Many firms remain committed to climate targets, though some may downplay their messaging to avoid political scrutiny in Washington. <\/p>\n<\/div><\/td><\/tr><\/tbody><\/table>\n\n\n\n
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    Opinion on the year ahead<\/strong> <\/h2>\n<\/div>\n\n
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    We aren\u2019t in the habit of making predictions, but here are some thoughts from reputable banks and organisations for consideration <\/strong><\/p>\n<\/div>\n\n

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    \u2018Global real GDP growth will continue to slow over the next year but improve somewhat in 2027\u2026 For many economies around the world, the negative shock to growth associated with US tariffs is beginning to manifest. Surges in exports to the US, resulting from front-loaded demand and inventory stockpiling among US businesses ahead of tariff implementation, resulted in strong growth rates in H1 2025 for many economies. We expect weaker numbers in Q4 2025 and early 2026 as the full weight of tariffs takes its toll\u2019<\/em> – The Conference Board <\/p>\n<\/div>\n\n

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    \u2018Global growth will likely remain steady but subdued with advanced economies growing modestly and emerging markets mostly maintaining stronger momentum. On trade, the possibility of China and the US decoupling has increased with rising restrictions and uncertainty, but other global economies could strengthen their relationships. Outlooks vary widely across G-20 economies\u2019 \u2013 <\/em>Moody\u2019s <\/p>\n<\/div>\n\n

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    \u2018The global economy is undergoing a period of profound transformation, marked by persistent short-term disruption and heightened uncertainty as well as long-term structural change. Regional outlooks are divergent: the US faces subdued prospects and inflationary pressures; Europe shows fragile but improving growth; China confronts deflationary headwinds; and emerging regions such as Sub-Saharan Africa and the Middle East and North Africa project stronger momentum\u2019 \u2013 <\/em>World Economic Forum <\/p>\n<\/div>\n\n

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    Today\u2019s world is unpredictable. Whatever happens in the markets, we can you help take control with a long-term financial strategy, so you can face the future with confidence.<\/strong> <\/p>\n<\/div>\n\n

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    Here\u2019s to a happy, healthy and prosperous 2026!<\/strong> <\/p>\n<\/div><\/td><\/tr><\/tbody><\/table>\n\n\n\n
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    It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. Tax treatment varies according to individual circumstances and is subject to change. Advice on Cash on Deposit, National Savings Products, Inheritance Tax Planning and Tax Planning are not regulated by the Financial Conduct Authority.<\/strong> <\/p>\n<\/div>\n\n

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    All details are believed to be correct at the time of writing (5 December 2025)<\/strong> <\/p>\n<\/div>\n\n

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    \u202fApprover Quilter Financial Limited and Quilter Financial Services Limited 15\/12\/2025<\/strong> <\/p>\n<\/div><\/td><\/tr><\/tbody><\/table>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"hd_content_source":[],"_links":{"self":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts\/7853"}],"collection":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/comments?post=7853"}],"version-history":[{"count":3,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts\/7853\/revisions"}],"predecessor-version":[{"id":7871,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts\/7853\/revisions\/7871"}],"wp:attachment":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/media?parent=7853"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/categories?post=7853"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/tags?post=7853"},{"taxonomy":"hd_content_source","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/hd_content_source?post=7853"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}