TOMD Content Deployment

Official data from the Office for National Statistics (ONS) last week showed UK inflation eased in March. The Consumer Prices Index (CPI) rose by 2.6% in the year to March, down from a 2.8% rise in the 12 months to February. 

The fall back in inflation can be attributed to a reduction in fuel prices and games, toys and hobbies – in particular computer games. Food inflation also eased from 3.3% to 3% in the month. Services inflation, a key measure of underlying price pressures for rate-setters, slowed more than expected to 4.7% in March from 5% the previous month. 

The lowest reading since December and a steeper drop than expected, economists in a Reuters poll had predicted a CPI reading of 2.7% in March. The slight tempering in CPI provided a boost for Chancellor Rachel Reeves, who said that two months of falling inflation, along with growth in real wages and GDP, were “encouraging signs.” 

Looking ahead, Research Director at the Resolution Foundation, James Smith said the reduction in CPI “comes among overwhelming uncertainty as to where inflation goes from here.” Expecting a sharp rise in inflation in April, due with the Ofgem price cap increasing, Smith added, “the truth is that the outlook for UK inflation hinges on President Trump’s tariff policies. Global trade uncertainty could drive down our prices, with oil already down more than 10% since the start of April… a global trade war would create renewed inflation, increasing pressure on British families already struggling with the cost of living.” 

With the next Monetary Policy Committee (MPC) meeting concluding on 8 May, the Committee have previously signalled their intention to adhere to a “careful and gradual” approach to cutting borrowing costs. The impact of a global trade war will dominate the central bank’s strategy going forward. 

During their first call since ‘Liberation Day’ tariff announcements, last week Donald Trump and Keir Starmer conducted “ongoing and productive discussions between the UK and US on trade,” according to a Downing Street spokesperson. The Prime Minister has reiterated his commitment to securing “free and open trade” in order to protect the national interest, following the imposition of 10% tariffs on UK goods and 25% on car, steel and aluminium imports. In addition, the White House confirmed the leaders spoke about security in the Middle East and resolving the Ukraine conflict.  

Last week the World Trade Organization (WTO) revised its outlook, forecasting a 0.2% decline in global goods trade in 2025. The downturn is largely attributed to US tariffs, with North America expected to see the steepest fall. WTO Director General Ngozi Okonjo-Iweala expressed concern over the growing “decoupling” between the US and China, saying the “phenomenon” is “really worrying.” The WTO warned of ‘severe downside risks,’ including political instability and reciprocal tariffs, which could result in an even steeper reduction in global trade.  

On the same day, the UN trade body UNCTAD predicted global economic growth would slow to 2.3% this year, falling below the 2.5% level ‘widely viewed as signalling a global recession,’ according to the organisation.  

Meanwhile, the International Monetary Fund (IMF) Managing Director Kristalina Georgieva, in her keynote speech at the organisation’s spring meeting in Washington, said there will be “notable” markdowns to growth forecasts, in the face of trade policy uncertainty, which she referred to as “literally off the charts.” 

The European Central Bank (ECB) cut interest rates for the seventh time since last June, lowering the deposit rate by 0.25% to 2.25%, in line with analyst expectations. The ECB also dropped the term ‘restrictive’ in terms of monetary policy stance from its statement, signalling a shift as trade tensions continue to weigh on Europe’s economy. ECB President Christine Lagarde warned that “downside risks to economic growth have increased,” with the impact of US tariffs still unfolding. She added that escalating global trade tensions are likely to dampen exports and weaken investment and consumption. Lagarde also cautioned that deteriorating market sentiment could tighten financial conditions further. 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

             All details are correct at time of writing (23 April 2025) 

“We want to secure the best deal possible for British jobs and British industry” 

After a tumultuous time for global markets following his Liberation Day announcement last Wednesday, President Trump took to social media to reveal a 90-day suspension on most of the tariffs, plus a lowering of reciprocal tariffs.  

Despite a lack of clarity over what will happen within the three months, the monumental U-turn initially boosted markets, with Trump saying there will be “fair deals for everybody.” 

The White House confirmed a 10% rate on most countries will be maintained, including those in the EU, plus higher 25% taxes on steel, aluminum and cars. Trade tariffs for China were increased to 125%, after they retaliated with elevated import tariffs. Canada and Mexico still face the tariffs imposed in March. 

At a cabinet meeting on Thursday, Trump described the turmoil on global markets that led to his decision to delay tariffs as “a big day,” highlighting the record stock market gains in the hours after he announced the U-turn. He added, “We’re working with a lot of different countries, and it’s all going to work out very well… we’re in good shape.”  

On home shores, a Downing Street spokesperson said the UK will “coolly and calmly” continue negotiations with the US. Rachel Reeves added, “Of course we want to secure the best deal possible for British jobs and British industry… we are absolutely resolved to do everything we can.” 

News came at the end of the week that the Trump administration is exempting imported smartphones, laptops and other electronics from reciprocal tariffs. Market sentiment improved initially following the shifting signals on US trade policy.  

UK economy grows 

New data from the Office for National Statistics (ONS) shows the UK economy grew by 0.5% in February, beating expectations of 0.1% growth in the period. Contributing factors to the surprise boost in growth include service output (increased by 0.3%, the largest contributor), while production output grew by 1.5% and construction output by 0.4%. 

This positive uptick follows no growth in January (revised up from a 0.1% fall). In the three months to February, real GDP is estimated to have grown by 0.6%. 

Rachel Reeves said the growth figures are an “encouraging sign,” adding “we must go further and faster to kickstart economic growth, provide security for working people and put more money in their pockets.” 

This strength in growth is likely to be short-lived, with higher tariffs and business taxes set to impact.  

Government gains control of British Steel 

On Saturday, MPs had their Easter break interrupted as emergency legislation was rushed through Parliament, allowing the UK government to take control of Chinese-owned British Steel. Business Secretary Jonathan Reynolds said nationalising the Scunthorpe plant, which employs 2,700 people, may be the next step. He sought emergency powers to stop owner Jingye from shutting its blast furnaces, which would end primary steel production in the UK. In a rare move, both Commons and Lords returned for a Saturday sitting to debate the bill, which has now passed and received Royal Assent. 

Unemployment stagnant, pay growth strong 

The UK’s unemployment rate remained steady at 4.4% in the three months leading up to February 2025, according to latest ONS data released on Tuesday. This stability comes amid signs of a cooling labour market, with job vacancies falling below pre-pandemic levels for the first time since mid-2021 and a decrease of 78,000 in payroll employment during March.​  

Average weekly earnings, excluding bonuses, increased by 5.9% year-on-year in February. Including bonuses, wage growth held steady at 5.6%. This sustained growth in earnings, particularly in the public sector, has been a key driver. Liz McKeown, Director of Economic Statistics at the ONS said, “Regular pay growth remains strong having increased slightly in the latest period. Growth accelerated in the public sector as previous pay rises fully fed through to our headline figures, while pay in the private sector was little changed. The latest survey results estimate that the unemployment rate is unchanged on the previous three months, while separately the number of employees on payroll fell slightly over the same period.” 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

             All details are correct at time of writing (16 April 2025) 

“This is one of the most important days… in American history. It’s our declaration of economic independence” 

On what Trump called ‘Liberation Day’ last Wednesday, the US president disrupted the global trade system by introducing tariffs of more than 40% on key trading partners. From 5 April, most countries trading with the US faced a minimum tariff of 10%. Some will be hit much harder, with rates rising as high as 50%. Trump professed, “This is one of the most important days… in American history. It’s our declaration of economic independence.” 

These new measures follow earlier tariff announcements, meaning Chinese goods will now face combined duties of 54% from 9 April. Other countries affected include the European Union, with tariffs of 20%, Japan at 24%, South Africa at 30%, Vietnam at 46% and Thailand at 36%. The UK is subject to the baseline 10% tariff. Other countries facing the 10% baseline tariff include Australia, New Zealand, Argentina, Brazil, the United Arab Emirates and Turkey. 

Global stock markets volatile as Trump stays firm  

More than $5trn was wiped off the value of the S&P 500 index last Thursday and Friday, marking the worst week for US stocks since the start of the pandemic in 2020. When asked about the steep falls, Trump said, “Sometimes you have to take medicine to fix something.”  The sharp losses suffered by global stock markets continued on Monday after Trump said he would not soften his stance on trade, despite growing concerns about a possible global recession.  

Markets were highly volatile again on Monday trading, with the FTSE 100 dropping by 5.1% and Hong Kong’s Hang Seng index falling by more than 13%, its steepest one-day drop this century.  

US stocks sank sharply again on Tuesday despite starting off the session with decent gains, sending the S&P 500 to its lowest close in 14 months. 

In recent days, investors have turned to safe-haven assets, pushing bond prices higher and yields lower. Commodity markets were also under pressure, with Brent crude, the international benchmark, falling by around 2%. Copper, a key industrial metal often seen as a barometer of global economic health, dropped 4%. 

Goldman Sachs raised the odds of a US recession from 35% to 45%, citing ‘a sharp tightening in financial conditions’ since the tariffs were announced.  

Extra 50% tariff on China  

In retaliation, China announced a 34% duty on US goods on Friday. However, on Monday, President Trump said he would impose additional 50% tariffs on all goods from China, if Beijing did not withdraw its 34% retaliatory tariffs. The response to that from China was, ‘If the US insists on its own way, China will fight to the end.’ 

According to a spokesperson at the Ministry of Commerce, China has filed a lawsuit with the World Trade Organization (WTO), saying the tariffs violate WTO rules and undermine ‘the rules-based multilateral trading system and the international economic and trade order.’ 

UK to relax electric car rules as US tariffs hit 

The government announced plans to help the UK car industry cope with trade tariffs by relaxing electric vehicle (EV) sales targets. While the ban on selling new petrol and diesel cars will still be introduced from 2030, manufacturers will now have more flexibility on annual sales targets and face lower fines for missing them.  

The US has imposed a 25% tariff on cars imported from the UK, affecting one of the UK motor industry’s most important export markets. This came into effect last week and is in addition to a 10% tariff on nearly all UK goods announced on Wednesday. 

Transport Secretary Heidi Alexander said the move was not a “silver bullet”, but part of a wider strategy to respond to the tariffs. Although a consultation on the EV rules closed in mid-February, Alexander told the BBC the government had fast-tracked the changes because of the latest trade developments.  

Speaking at a Jaguar Land Rover plant in the West Midlands, Prime Minister Keir Starmer said Trump’s decision to increase tariffs posed “a huge challenge for our future” but said his government would “shelter British business from the storm” with a more active industrial policy. 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (9 April 2025) 

“The global economy has become more uncertain” 

Chancellor Rachel Reeves delivered the government’s Spring Statement on 26 March, with spending cuts taking centre stage – and no further tax rises announced. 

As had been widely expected, Ms Reeves announced further reductions to welfare spending within a package of reforms designed to raise £14bn by 2029/30. According to forecasts by the Office for Budget Responsibility (OBR), welfare cuts are estimated to save £4.8bn. 

Meanwhile, an additional £2.2bn of funding was made available for the Ministry of Defence in 2025/26, such that the government will increase defence spending to 2.5% of GDP; Ms Reeves pledged “to make the UK a defence industrial superpower.” To compensate for the rising defence budget, overseas aid has fallen to 0.3% of Gross National Income, as had been set out prior to the Spring Statement. 

The government also released confirmation that it is considering reforms to Individual Savings Accounts (ISAs). The plans would seek to boost savers’ returns and the government’s growth goals, for example by nudging more savers from Cash ISAs to Stocks & Shares ISAs. Specifically, the government is reportedly weighing up a split to the current £20,000 allowance for all ISAs into targeted caps, though no changes have been made for now.  

The Chancellor outlined the OBR’s latest assessment of the UK economy, notably a revised growth forecast of just 1% for 2025. Despite the poor short-term forecast, the OBR’s estimates now look brighter for the rest of the decade, with increases to growth figures for each of the subsequent four years.  

In a separate release last week, the latest inflation figures from the Office for National Statistics (ONS) revealed that prices in the UK rose by 2.8% in the 12 months to February. Ms Reeves expressed disappointment with the growth data but noted that the latest spending cuts have restored the government’s planned headroom, with a surplus of £9.9bn still expected in 2029/30. 

Other key measures announced included: 

“The global economy has become more uncertain,” remarked Ms Reeves during her Statement, “as trading patterns become more unstable and borrowing costs rise for many major economies.” 

She added, “The job of a responsible government is not simply to watch this change. This moment demands an active government.” 

Government support urged for UK car makers 

UK car firms reportedly met with industry minister Sarah Jones on Friday, faced with the looming threat of 25% tariffs on US car imports set to come into force at midnight on 3 April. 

Hopes of a deal with President Donald Trump over import levies have faded in recent weeks, leaving car companies scrambling for government reassurances that they will have access to support. Mr Trump has been explicit in saying that there will be no carve-outs for car imports. 

Official figures put the cost of US tariffs on the UK economy at a 1% reduction in growth in a worst-case scenario. 

Another decline in UK retail sales 

Retail sales in the UK dropped sharply in March, according to the latest Distributive Trades Survey released last week by the Confederation of British Industry (CBI), a sixth consecutive month of falling volumes. 

In total, sales volumes dropped by a weighted balance of -41% in March, down further from -23% in February. Although the downturn is expected to ease slightly in April, sales volumes are still expected to decline by -30%. 

UK housing affordability improves in 2024 

In more positive economic news, the house price-to-income ratio in England and Wales returned to pre-pandemic levels, according to newly released government data. While house prices have risen by 1% since 2021, average earnings have grown by 20% over the same time span, the ONS’ annual housing affordability report found, providing a welcome boost to homebuyers. 

Specifically, the median average home in England in 2024 (£290,000) cost 7.7 times the median average earnings of a full-time employee (£37,600), meaning that affordability has returned to its pre-pandemic range. 

Here to help 

Financial advice is key, so please do not hesitate to get in contact with any questions or concerns you may have. 

The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated. 

All details are correct at time of writing (2 April 2025)