Author: Dacre Unsworth

Conflict in the Middle East caused market volatility throughout March 2026. Find out what other factors may have affected your investments.

While the ongoing uncertainty may feel unsettling for investors, remember that your strategy reflects your long-term goals and considers periods of volatility.

Oil prices rising and ongoing uncertainty led to stock markets falling

On Saturday, 28 February, the US and Israel began strikes on Iran, which led to markets falling when they opened on Monday 2 March.

The FTSE 100 recorded its biggest loss since November 2025 when it fell 1.2%, with airlines, luxury goods makers, and banks particularly affected. In contrast, defence stocks increased, including the UK’s BAE Systems, which was up 7% at the start of trading.

It was a similar picture in Europe. The main indices in France, Germany, Italy, and Spain were down 2.2% or more. When markets opened in the US, the Dow Jones Industrial Average and the wider S&P 500 both dropped 1%.

As the Middle East is a major oil-exporting region, conflict there led to prices rising. Deutsche Bank stated Brent crude was up 8.4%, though it added it was only the 38th largest oil spike since 1990.

The volatility continued on 3 March, with the FTSE 100 recording the biggest daily loss in 11 months when it fell 2.75%. Germany’s DAX (-3.6%), France’s CAC 40 (-3.5%), and Italy’s FTSE MIB (-3.9%) also suffered losses.

Asia-Pacific markets weren’t immune to the effects of the war in Iran either. Japan’s Nikkei index fell 3.6%, and South Korea’s KOSPI was down 12% on 4 March due to concerns about shipping through the Strait of Hormuz, a key sea passage for trade, particularly for oil.

On 11 March, the International Energy Agency proposed the largest release of oil reserves in history to bring crude prices down. The news led to Asian shares climbing, with the main indices in Japan and South Korea rising by 1.4%.

However, energy fears continued to influence European markets. On 16 March, the FTSE 100 was down by 1.9%, and the index’s 2026 gains were wiped out on 20 March.

Markets briefly rallied on 23 March following news that negotiations would take place between the US and Iran. However, there were conflicting reports that led to confusion. Despite this, US markets improved, with the Dow Jones up 2%, and construction equipment firm Caterpillar leading the way with a 4.4% rise.

UK

The Office for National Statistics said the UK economy stagnated in January 2026. The data suggests the economy was weakening even before the effects of the conflict in the Middle East were felt. Furthermore, inflation in the 12 months to February 2026 was 3%, stubbornly sticking above the Bank of England’s (BoE) 2% target.

The British Chambers of Commerce commented that the UK is stuck in a “low-growth pattern”, after the 2026 GDP forecast was downgraded from 1.2% to 1%. The organisation said the revised estimate reflects weak productivity, subdued investment, and cautious consumer spending.

At the start of March 2026, Chancellor Rachel Reeves delivered the government’s Spring Statement. In it, she said inflation would fall faster than expected, economic growth would pick up in 2027 and 2028, and there was headroom in the budget.

However, the calculations were made before the conflict in the Middle East began, which is expected to affect the economic outlook.

For instance, rising energy prices could influence inflation. Indeed, the Office for Budget Responsibility estimated the Iran war would add 1% to UK inflation this year. In turn, high inflation may lead to the BoE increasing interest rates, which would place pressure on consumers and businesses.

Data from S&P Global’s Purchasing Managers’ Index (PMI) was positive for the manufacturing and service sectors.

In February 2026, the manufacturing PMI continued to grow, recording a reading of 51.7 – a figure above 50 indicates growth – and a rise in business both at home and abroad. The service sector fell slightly compared to the previous month to 53.9, but still shows growth.

In contrast, the construction sector fell to 44.5 in February, which marked 14 consecutive months of contraction.

Europe

Across the eurozone, the annual inflation rate was 1.9% in February 2026, up from 1.7% a month earlier, and very close to the European Central Bank’s (ECB) 2% target.

The ECB opted to hold interest rates in March, but warned that uncertainty could lead to higher inflation and pose risks to economic growth, which might lead to higher interest rates in the coming months.

The European Commission consumer confidence survey highlights this fear among consumers, with the reading falling amid worries that the Iran war could drive up energy costs.

The S&P flash report on output in the eurozone fell to 50.5 in March, down from 51.9 in February. The reading represents a 10-month low, and it is close to the 50 mark, which signals stagnation.

US

As expected, inflation in the 12 months to February 2026 remained stable at 2.4%.

However, data from the Bureau of Labor Statistics was less positive. The US economy lost 92,000 jobs in February, which could be a sign that the market is cooling, and the ongoing conflict might lead to businesses taking a more cautious approach in the coming months.

A consumer sentiment survey carried out by the University of Michigan indicates that the Iran war is already influencing how confident people feel about their financial future. The reading fell from 56.6 in February to 55.5 in March.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Research suggests that many small business owners and self-employed workers aren’t prioritising their retirement and could face uncertainty later in life as a result. However, opening a pension could benefit both you and your business.

According to an article from Which? (1 March 2026), people who have spent most of their working life as self-employed are three times more likely not to have a private pension.

Fluctuating earnings and a reliance on your business could mean you overlook a pension

There are many reasons why small business owners are less likely to pay into a pension.

A key one is that your earnings might fluctuate, which may make it difficult to balance your short- and long-term financial priorities. Indeed, according to Which?, 4 in 10 self-employed workers cite this as their biggest barrier to retirement saving.

Working with a financial planner to create a tailored plan could help you understand how to manage retirement contributions.

Another reason small business owners might overlook a pension is the belief that their business will provide an alternative.

Whether you plan to sell your business or continue working later in life, having an alternative way to create income could be valuable, as it’s impossible to know what’s around the corner. For example, you might struggle to find a buyer who is willing to pay the price you want, or you may decide to retire earlier than expected due to ill health.

Without a pension to fall back on, you could face difficulties if things don’t follow your plan.

Working with a financial planner to create a cashflow model could help you assess your options. A cashflow model can help you visualise how your wealth might change depending on the decisions you make.

For example, you might use it to calculate how much you’d need to sell your business for to provide “enough” in retirement, or how much to contribute to a pension to provide a base income.

The outcomes of a cashflow model cannot be guaranteed. However, it could provide useful insight when you’re making long-term decisions, such as whether to contribute to a pension.

3 practical reasons small business owners could benefit from a pension

While most employed workers are now automatically enrolled into a pension, as a small business owner or self-employed worker, it is your responsibility to open a pension. Here are three practical reasons to do so.

1. A separate pension pot could offer peace of mind

While you may hope to use your business to fund your later years, a separate pension pot could act as a safety net in case something unexpected happens.

Separating some of your finances from those of your business could help keep your retirement on track. However, you should note that you cannot usually access your pension savings until you turn 55 (rising to 57 in 2028). As a result, you might want to consider your pension contributions in a wider context, such as other savings and investments that could help you meet short- and medium-term goals or expenses.

2. A pension is a tax-efficient way to save for your retirement

If you’re saving for retirement, a pension is often a tax-efficient way to do so.

First, your contributions will usually benefit from tax relief, which means some of the tax you’ve paid is added to your pot, providing an immediate boost to your retirement savings and reducing your tax liability.

Tax relief is paid at your rate of Income Tax. Typically, basic-rate tax relief will be added to your pension by your pension provider automatically. If you’re a higher- or additional-rate taxpayer, you can claim your full entitlement through a Self Assessment form.

Second, returns made from investments held in your pension will not be liable for Capital Gains Tax, which may not be the case for investments that aren’t in a tax-efficient wrapper.

3. Pension contributions may be an allowable business expense

Paying into your pension could be tax-efficient from a business perspective. In some cases, contributions are treated as an allowable business expense, which could reduce taxable profit and the business’s overall tax bill.

Contact us to talk about your retirement

If you’d like to create a retirement plan as a small business owner, please get in touch. We could help you assess your options, including opening a pension, and create a plan that’s tailored to your needs and goals.

Please note: This article is for general information only and does not constitute advice. The information is intended only for individuals.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow modelling.

Managing your pension doesn’t stop once you retire and start to draw an income from it. In fact, your pension still needs careful attention in retirement – just as much as when you were contributing – to ensure you don’t deplete it too quickly.

Research suggests that many retirees aren’t taking professional advice and are potentially making financial decisions they’ll regret in the future.

According to the Financial Conduct Authority (FCA) (22 September 2025), in 2024/25, less than a third of people accessing their pension for the first time took regulated financial advice.

In addition, an FTAdviser article (5 March 2026) noted that a previous survey found that many retirees will deplete their pension by their late seventies if they maintain their current withdrawal rate, leaving the average person with a nine-year shortfall. 1 in 7 already regret how much they’ve withdrawn.

Pension Freedoms provide retirees with greater flexibility but also risk

Pension Freedoms were introduced in 2015 and changed how you could access your defined contribution pension.

With a defined contribution pension, you and your employer both contribute to a pot, which is usually invested. When you retire, you use this pot to create an income. Under Pension Freedoms, you have several options, which can provide retirees with the flexibility to create an income that suits them.

However, you’re also responsible for ensuring your pension provides an income for the rest of your life. As a result, there’s a risk that you could spend too much too soon, or that a poor financial decision has a long-lasting impact.

6 steps that could help you manage pension withdrawals in retirement

1. Consider your life expectancy

The research reported by the FTAdviser suggests the average person could deplete their pension nine years before the average life expectancy, which could leave them in a financially vulnerable position.

According to the Office for National Statistics, the average 65-year-old woman has a life expectancy of 88. For men of the same age, it’s 85.

Yet, using the average figure when assessing your pension withdrawals could still leave a gap, as many people exceed this. For example, 1 in 4 65-year-old women will celebrate their 95th birthday, and 1 in 4 65-year-old men will reach 92.

2. Calculate the effects of inflation

One of the challenges of retirement planning is that you need to consider how your expenses will change over several decades. One of the factors that will affect your outgoings is inflation.

The Bank of England inflation calculator shows that an annual retirement income of £30,000 in 2015 would need to have grown to more than £41,000 by the end of 2025 simply to maintain your spending power.

As retirements are likely to span several decades, failing to factor in inflation when creating a withdrawal strategy could leave you struggling financially day to day or at risk of depleting your pension too soon.

3. Understand your guaranteed income

Having a guaranteed income that could cover your essential outgoings could offer peace of mind.

Most retirees will receive a reliable income for life from the government once they reach the State Pension Age. In addition, you may use your pension to purchase an annuity, which would provide a regular income for the rest of your life.

The amount you receive from an annuity will depend on the rates you are offered, which may be affected by your personal circumstances and external factors. You might also select an annuity where the income rises in line with inflation to preserve your spending power or provide an income for your partner if you pass away first.

You can use some or all of your pension to purchase an annuity to suit your needs. The decision is often irreversible, so it’s important to assess if an annuity is right for you first.

4. Assess your drawdown strategy

One way you might access your pension is known as flexi-access drawdown. This allows you to withdraw money from your pension and adjust the amount to suit your needs.

For many retirees, their income needs will change. So, this option can be valuable, and it’s important to calculate what your sustainable spending rate is to avoid running out of money.

Working with your financial planner to create a cashflow model could help you visualise how long your pension would last, depending on different withdrawal rates, including if your income needs rise and fall. It’s important to note that while a cashflow model can be useful when making financial decisions, the outcome isn’t guaranteed.

5. Make potential risks part of your retirement plan

You can’t always prevent events from affecting your finances, but you might be able to take steps so you’re in a better position to manage them.

For example, maintaining an emergency fund in retirement could help you cover unexpected costs, such as property repairs, or you might draw income from it during a period of market volatility if your pension remains invested.

6. Schedule regular reviews with your financial planner

Finally, scheduling regular reviews with your financial planner could provide you with an opportunity to ask questions and assess whether your withdrawals remain sustainable. By checking your pension throughout retirement, you might be in a better position to spot potential risks to your financial security.

If you’d like to arrange a meeting to talk about your pension and retirement, please get in touch.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate cashflow modelling.

Deciding how you’d like your assets to be managed later in life and after you pass away may be intimidating. However, a cashflow model could help you answer both financial and emotional questions, so you’re in a better position to tackle your estate plan.

According to a survey conducted by Aegon (5 March 2026), 1 in 3 UK adults has done nothing to prepare for death. Even among adults who have taken steps to prepare, many haven’t completed the full process. For example, while 38% said they’d written a will, only 18% had organised their core financial documents, such as pension information, insurance details, or account records.

While it may seem that estate planning is something you can put off until later, being proactive can be valuable. Not only could it offer peace of mind, but a longer time frame could present opportunities to pass on gifts during your lifetime and make tax-efficient decisions.

Cashflow modelling can project how your wealth will change

Cashflow modelling is a powerful tool that allows you to input information about your current finances and then use assumptions to project how the value of your assets might change. You may incorporate variables like expected investment returns, planned outgoings, or when you hope to start using your pension to create an income.

The output of cashflow modelling might help you make more informed decisions.

For example, when you’re planning for retirement, you might model several different scenarios to understand how your retirement age may affect your income. Or you could use it to calculate what a sustainable income throughout retirement would be for you.

It’s important to note that the output of a cashflow model cannot be guaranteed and will be based on the information you input and the assumptions made.

However, a cashflow model could be valuable when you’re making important decisions, including those relating to your estate plan. Here are five reasons why you might benefit from using a cashflow model when you’re thinking about how to use or pass on your assets in the future.

1. Assess the impact of gifting during your lifetime

For many people, gifting to loved ones during their lifetime is a goal. You might want to help adult children get on the property ladder, boost their income, or cover the cost of a grandchild’s school fees.

However, you may be worried about how it’ll affect your financial security in the long term. A cashflow model could help you visualise the potential impact of gifting to understand if it’s an option you want to consider.

2. Decide how to pass on your estate

The value of your estate may affect how you choose to divide your assets. As a result, a cashflow model can be a useful tool when thinking about inheritances.

Understanding the value of your assets could be useful for your beneficiaries too, as their expected inheritance might influence their financial decisions.

3. Highlight when you might benefit from Inheritance Tax planning

Inheritance Tax (IHT) is a tax on your estate after you pass away if its value exceeds certain thresholds. As the value of your assets is likely to change during your lifetime, it can be difficult to assess whether IHT is something you might need to consider.

A cashflow model could highlight if your estate may be liable for IHT and potentially help you find ways to reduce the bill.

4. Support creating a care plan

Planning for care costs can be challenging. However, it may be an important part of your long-term plan.

As people live longer lives, the number of individuals who require support is expected to rise. Indeed, according to research from the Joseph Rowntree Foundation (22 August 2024), the number of people who could benefit from support with daily activities will rise from 1.7 million in 2015 to 3 million in 2040.

A cashflow model could help you assess how you’d pay for care costs should you need support later in life.

5. Test “what if” scenarios

One challenge when making decisions is understanding the long-term impact. A cashflow model could allow you to test “what if” scenarios and assess the impact they might have on your assets.

For instance, you may use a cashflow model to answer questions like:

• How would increasing my annual spending impact what I leave behind for loved ones?
• How would gifting each of my children £25,000 now affect my financial security in the long term?
• How would leaving a percentage of my estate to charity affect the inheritance my beneficiaries will receive?

Being able to visualise the effect of these decisions on your wealth might give you the confidence to move your plans forward or identify potential gaps before you act.

Get in touch

If you’d like to create an estate plan or review an existing one, please contact us.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The Financial Conduct Authority does not regulate estate planning, tax planning or cashflow modelling.

How your brain works can affect how you view wealth and different assets. For many, this can mean cash feels like a safer option than alternatives, but it’s not always the right one. Indeed, sometimes choosing to hold cash could mean you miss growth opportunities.

3 reasons why cash might feel like the “safe” option

1. Cash can feel more tangible than alternatives

One of the benefits of cash is that you can withdraw the money and hold it. This makes it feel more tangible as an asset. Even when cash is held in an account, knowing that you can access it and it’s typically simple to manage online might mean it feels more comfortable than assets like bonds or stocks.

2. Cash is accessible when you need it

You can usually access cash when required. This means it can act as a valuable safety net and feel like the safe option as a result.

3. Cash can seem more stable than other assets

While the value of cash assets does change due to inflation, the effect is often gradual. When you compare this to market movements that may affect your investments, this stability might seem attractive.

These factors, as well as others, might lead people to choose cash over alternatives because it’s perceived as safer.

According to an article published by IFA Magazine (7 March 2026), cash is taking on a more prominent role in the portfolios of high-net-worth individuals. Indeed, 38% of this group say they hold more cash than they did three years ago, with cash accounting for around £1 for every £5 of their wealth.

Inflation could mean the value of your cash falls in real terms

The value of cash can feel static. After all, when you place a sum into an account, the figure doesn’t rise and fall as other assets might. However, inflation can erode the value of cash if the interest rate doesn’t keep up.

As the cost of goods and services rises, your cash will gradually buy less as its spending power is reduced. Over the short term you might not notice this, but it can have an impact over the long term.

According to the Bank of England’s inflation calculator, if you deposited £10,000 into a savings account in 2014, it would need to have grown to £13,390 by 2024 to have the same spending power. This is due to an average annual inflation rate of 2.96%.

So, while holding cash might feel safe and be appropriate in some circumstances, you could benefit from examining the alternatives.

When you might consider investing instead of cash

Investing might be an appropriate option when your goal is long term.

Over a long-term time frame, investments have the potential to deliver returns that are above interest rates. As a result, you may consider it if your goal is more than five years away. This is because the ups and downs of market movements typically smooth out over a long period.

However, it’s important to note that investment returns aren’t guaranteed. All investments carry some risk, and assessing what level of risk is appropriate for your circumstances and goals is an essential step when creating an investment strategy.

Contact us

If you’d like to discuss how to manage your wealth, including cash, as part of a wider financial plan, please get in touch.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Just over three months after her lengthy Autumn Budget, chancellor Rachel Reeves has addressed the House of Commons and delivered the government’s 2026 Spring Statement.

Ahead of the Statement, Reeves reinforced the government’s commitment to “one fiscal event, one Budget, a year”. So, it will come as a relief to many, including business owners, that the Spring Statement included no additional tax-raising measures. Furthermore, no changes to pensions or Individual Savings Accounts (ISAs) were announced.

Reeves also said that household disposable income is set to grow at twice the rate that was forecast in the Autumn Budget – leaving the average person £1,000 better off each year by the next election.

That being said, previous announcements, including changes to the tax regime, remain in place, and may affect personal finances and business owners in 2026/27 and beyond.

Reeves gave an overview of the Office for Budget Responsibility’s (OBR) economic forecast for the years to come. Notably, the OBR’s forecasts and the Statement as a whole made no mention of the potential economic impact of the unfolding situation in the Middle East, which may contribute to increased oil and gas prices that could prove inflationary and cause stock market volatility.

The chancellor confirmed the changes announced in the 2024 and 2025 Budgets

In an effort to reduce speculation and prevent a chop-and-change approach, the chancellor confirmed that key tax measures, announced in the Autumn Budgets of 2024 and 2025, will remain in place.

Among the key changes that have been reconfirmed and will affect personal finances are:

• Inheritance Tax (IHT) will be levied on most unused pension benefits from April 2027. It’s estimated that this change will result in an additional 10,500 estates being liable for IHT in 2027/28. This will contribute to a predicted rise in IHT receipts to £15 billion by 2030.
• Tax on income earned from property will rise by two percentage points from April 2027, increasing tax liability for landlords.
• There will also be a two percentage point increase in the basic and higher rates of Dividend Tax from April 2026, which may affect business owners and investors.
• Key tax thresholds, including those for Income Tax and the IHT nil-rate bands, will remain frozen until April 2031.

The lack of any tax-raising measures in the Spring Statement will be welcome news for many people. However, the previously announced changes could mean a review would still be beneficial.

The Office for Budget Responsibility has updated its forecasts for GDP growth, inflation, and house prices

The OBR has updated its real-terms GDP forecast every year between 2026 and 2029 when compared to the estimates it made in the 2025 Autumn Budget. The organisation now expects the economy to grow by:

• 2026 – 1.1% (a decrease of 0.3%)
• 2027 – 1.6% (unchanged)
• 2028 – 1.6% (an increase of 0.1%)
• 2029 – 1.5% (unchanged)

The OBR expects inflation to be at or around the Bank of England’s (BoE) 2% target over the next five years. Inflation easing would improve household spending power, which, in turn, could provide a boost for the economy and businesses. Indeed, real household disposable income is expected to grow by between 0.6% and 0.9% each year until 2030.

The BoE has already cut its base interest rate several times since the current government formed in July 2024, as inflationary pressures eased. If the OBR’s forecast is accurate, the BoE is likely to make additional cuts, which would reduce the cost of borrowing for households and businesses.

The OBR expects unemployment to rise from 4.75% in 2025 to a peak of 5.33% in 2026, driven by weaker demand for labour. After peaking in 2026, unemployment is expected to fall to 4.1% in 2030.

It also forecasts that house prices will rise by between 2.4% and 2.9% each year between 2026 and 2030.

The government reinforced its ongoing commitment to two key fiscal rules

In her speech, the chancellor confirmed the two fiscal rules set out in the Budget

• Stability rule – Not to borrow money to fund day-to-day public spending by the end of this parliament (2029/30).
• Investment rule – To reduce government debt as a share of national income by 2029/30.

Addressing the stability rule first, although the cost of borrowing has risen during this period of heightened uncertainty, the chancellor vowed that the steps taken in the Statement will restore its headroom.

Turning next to the investment rule, Reeves also stated that this commitment will be met two years early, with net financial debt predicted to be 82.9% of GDP in 2025/26.

4 key Spring Statement measures

1. Boosting defence spending

At a time of growing worldwide tension, the chancellor announced increases to defence spending, aimed at making the UK a “defence industrial superpower”. Defence spending is set to reach 3.5% of GDP by 2035.

Defence innovation will include harnessing AI and drones, creating employment opportunities for engineers in the devolved nations, while a previously announced Defence Growth Board is also being created to support £400 million for defence innovation.

2. Tackling youth unemployment

The chancellor reconfirmed her commitment to getting those in Britain who can work into work. She stated that 1 in 8 young people is currently not in employment, education, or training.

The chancellor confirmed that reforms to the welfare system will produce welfare savings of £4.8 billion between 2026 and the end of the forecast period (2029/30).

3. Increasing property revenue

Previously announced property planning reforms will go ahead.

The reforms are expected to increase real levels of GDP by 0.2%, the equivalent of £6.8 billion for the economy, by 2029/30. Over 10 years, this is expected to increase to 0.4% of GDP (£15 billion). Reeves said this represents the biggest growth forecast for a policy with no fiscal cost.

4. Making government more efficient

The abolition of NHS England was announced back in March 2025 as part of wider efforts to increase NHS efficiency and productivity, and to cut spending. These measures will also include reducing costly agency outsourcing.

More widely, Reeves confirmed the £3.25 billion of investment in a new “transformation fund” that will drive modernisation across the public sector through digital reform and the adoption of AI. It’s hoped that these changes will result in a “leaner” and more efficient public sector.

After announcing a raft of changes in the Autumn Budget, the Spring Statement acts as a fiscal pitstop, upholding the government’s commitment to one significant fiscal event a year.

Please note

All information is from the chancellor’s speech, the gov.uk website, the Spring Statement press release and the Autumn Budget documents published by HM Treasury.

The content of this Spring Statement summary is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.

While we believe this interpretation to be correct, it cannot be guaranteed, and we cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained within this summary. Please obtain professional advice before entering into or altering any new arrangement.

The Financial Conduct Authority does not regulate tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

After a year filled with uncertainty and rising trade tensions, markets were calmer in December 2025. Find out what may have affected the performance of your portfolio at the end of the year.

Market volatility eased in December 2025

Markets were downbeat at the start of the month. Most European markets were in the red on 1 December, including Germany’s DAX (-1.2%), France’s CAC 40 (-0.55%), and the UK’s FTSE 100 (-0.13%).

The Bank of England (BoE) carried out stress tests on 2 December, which all major banks involved passed. This led to bank stocks rising, including Lloyds (1%), Barclays (0.95%), and HSBC (0.7%).

American technology firm Oracle Corporation missed its revenue forecast and hiked expenditure plans by $15 billion (£11.3 billion). This led to the company’s shares dropping by 15.7% when trading started on 11 December – knocking almost £100 billion off the company’s market capitalisation.

The news dragged down other AI stocks as well, including Nvidia, which became the biggest faller on the Dow Jones Industrial Average index after it tumbled 2.7%.

Despite the concerns about AI, the Dow Jones Industrial Average hit a record high after rising 0.95% on 11 December following news that US interest rates had fallen.

On 17 December, the FTSE 100 was up 1.6% following a bigger-than-expected drop in inflation, leading gains in European markets.

With Christmas nearing, festive optimism swept through London. On 19 December, the FTSE 100 closed at an almost record high, with leading firms including Rolls-Royce (2.7%) and precious metal producers Endeavour Mining (3.1%) and Fresnillo (2.8%). However, housebuilders and retailers suffered falls.

UK

UK inflation slowed to 3.2% in the 12 months to November 2025, according to the Office for National Statistics. The news led the BoE’s Monetary Policy Committee to vote to cut the base interest rate from 4% to 3.75%, with further cuts anticipated in 2026.

The headline GDP figure was weak in the UK. The economy unexpectedly shrank by 0.1% in October, according to official data.

In addition, UK unemployment hit a four-year high of 5.1% in the three months to October. This could signal a weakening economy.

However, forecasts suggest the economy could pick up in 2026. The Organisation for Economic Co-operation and Development (OECD) expects the UK to be the third fastest-growing economy among G7 members in 2026, falling behind only the US and Canada.

This view is supported by a return to growth in the manufacturing sector.

According to S&P Global’s Purchasing Managers’ Index, manufacturing grew for the first time in a year. The reading came ahead of the Budget, when uncertainty was likely to have been playing on the minds of businesses, so the improvement is particularly encouraging.

Sadly, it’s a different picture for retail.

The Confederation of British Industry (CBI) reported that retail volumes fell at an accelerated pace in December despite the festive season, and firms don’t expect any relief in the opening months of 2026.

Europe

The European Central Bank (ECB) opted to hold its interest rates in December as it noted that it’s on track for inflation to settle around its 2% target.

The ECB also raised its growth forecast for the economic bloc, driven by rising domestic demand. The bank now expects GDP to rise by 1.4% in 2025 and 1.2% in 2026.

An industrial recovery is likely to play a crucial role in the higher GDP forecasts. According to Eurostat data, industrial output increased by 0.8% in October as businesses benefited from trade uncertainty fading and falling energy costs.

However, not every part of the region is as optimistic.

The German Ifo Institute’s business climate index fell in December, despite analysts predicting a rise. The gloomy outlook is linked to two years of economic contraction in manufacturing, confidence in the service sector falling, and unhappy retailers facing lower-than-expected sales in the lead-up to Christmas.

US

US inflation unexpectedly fell to 2.7% in the 12 months to November 2025. Experts had predicted inflation would be 3.1%.

While falling inflation is good news for struggling families, rising unemployment could suggest further difficulties ahead. The unemployment rate hit 4.6%, amid apprehension about the strength of the US economy.

However, job growth was higher than anticipated in November. A total of 64,000 jobs were added, against the predicted 40,000.

The economic news led to the Federal Reserve cutting the base interest rate by a quarter of a percentage point. The base rate is now at its lowest point since 2022.

President Donald Trump permitted technology giant Nvidia to ship H200 chips to China in exchange for a 25% surcharge for the US. The move could allow Nvidia to win back billions of dollars in lost revenue, which led to its shares rising by 2.3% on 9 December.

While good news for Nvidia, the move has been criticised for being an “economic and national security failure” by some Democratic senators.

Asia

The International Monetary Fund (IMF) raised its growth forecast for China. The organisation now expects the country’s economy to grow by 5% in 2025 and 4.5% in 2026, thanks to lower-than-expected tariffs on Chinese exports.

However, the IMF also urged China to fix “significant” imbalances in its economy, primarily by shifting from export-led growth to domestic consumption.

The positive news from the IMF was supported by official trade data.

China’s trade surplus hit $1 trillion (£0.74 trillion) for the first time in November 2025, as the economy appeared to shrug off concerns about the impact of trade with the US. Exports grew by 5.9% year-on-year in November following a 1.1% contraction in October.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

After much speculation that the chancellor would announce an additional property tax, the new “mansion tax” was unveiled during the November 2025 Budget. Read on to find out whether it’ll affect you, and how the new tax works.

The mansion tax will apply to properties worth more than £2 million in England

Officially called the High Value Council Tax Surcharge, the mansion tax will be applied to most properties that are valued at more than £2 million from 2028. Social housing will be exempt from the tax.

In the Budget document (26 November 2025), the government estimates that the new tax will affect fewer than 1% of properties and will raise £400 million in 2029/30.

The Treasury (26 November 2026) said the introduction of the surcharge will improve fairness within England’s property tax system. It noted: “Under the current system, the average band D charge for a typical family home across England is £2,280. That is £250 more per year than a £10 million property in Mayfair, based on the band H charge in the City of Westminster, currently pays.”

While a relatively small proportion of households will pay the tax, it’s set to disproportionately affect homeowners in London and the south-east. According to a Yahoo article (25 November 2025), estate agent Hamptons estimates that 50% of homes worth more than £2 million are located in London, and 85% are located in the south-east.

The new tax will not automatically apply to properties in Wales, Scotland, or Northern Ireland. Property taxes are a devolved matter, which means each government has the power to set its own system. However, devolved governments may choose to introduce a similar tax.

The mansion tax will be collected alongside Council Tax from 2028

A consultation on the details of the scheme will take place this year, before the tax comes into force in April 2028.

Under current proposals, the tax will be collected alongside Council Tax. However, rather than the money going to local authorities, like Council Tax, it will go to the Treasury.

The proposals include four bands.

The tax could significantly affect the budgets of homeowners, who might need to review their finances to account for the additional expense.

It’s expected that properties in the top Council Tax bands (F, G, and H) will be revalued to estimate their current market value, with valuations conducted every five years going forward. As a result, homeowners could unexpectedly find they’re liable for the mansion tax.

Importantly, it is homeowners, not occupiers, who will need to pay the tax. So, if you’re a landlord with a property valued at more than £2 million in your portfolio, you may be liable for the tax.

So far, the government hasn’t revealed further details about reliefs and exemptions, including an appeal system, whether homeowners will be able to defer paying the mansion tax if they’re unable to pay immediately, and the treatment of those who are required to live in a property as a condition of their job. These areas will likely be considered during the consultation period.

The mansion tax could push down property prices at the top of the market

As the mansion tax will only apply to high-value properties, it’s unlikely to have a marked impact on the property market overall. However, it could push down property prices around each mansion tax band boundary to attract potential buyers.

Some homeowners might consider downsizing to avoid the tax altogether. However, Stamp Duty costs may make this option prohibitive for some families.

Contact us to talk about your mortgage options

If you’re searching for a new home, we could help you secure a mortgage. We’ll search the market for a deal that suits your needs, which could help you manage your budget if you need to consider the effects of the mansion tax. Please get in touch to talk about your mortgage.

Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

In the Autumn Budget 2025, the chancellor announced that Inheritance Tax (IHT) thresholds would remain frozen for a further year, until 2031.

Upcoming changes will also see unused pensions included in an estate for IHT purposes for the first time from April 2027.

These measures could see estates facing a larger IHT liability, or coming into the scope of IHT when they may previously have been exempt.

Research has suggested that families concerned about being caught in the IHT net are taking steps to mitigate their bills. According to MoneyAge (6 October 2025), 23% of people are planning to give away money to reduce their IHT bill, with 8% saying they would even give away their home.

While gifting can help to lower your IHT liability, it’s not always a simple or straightforward solution.

Read on to discover five things you need to know before you consider gifting as part of your financial strategy.

Understanding the current Inheritance Tax landscape can help you clarify whether your estate is likely to incur any liability

There are a number of rules surrounding IHT, and having a grasp of them can help you decide whether gifting could be a beneficial option.

The current nil-rate band, the amount you can pass on free from IHT, is set at £325,000 (now frozen until 2031). This means that anything above £325,000 will be taxed at 40%.

However, the residence nil-rate band offers an extra allowance of £175,000 if you leave your main residence to your children or grandchildren (this can include those you’ve adopted or fostered, or stepchildren).

Together, these two thresholds mean that you could have an estate worth £500,000 free from IHT.

In most cases, anything you leave to your spouse or civil partner, even above the threshold, is free from IHT.

You can also transfer your allowances to your spouse or civil partner when you die, or they can do the same for you. This means that, in some cases, a couple could have a £1 million estate they can leave without generating an IHT bill.

Gifting is a popular way to reduce the value of an estate to bring it below these thresholds.

However, it’s not as simple as just giving your money away, and the government has introduced rules to prevent people from simply offloading their wealth to avoid IHT.

1. Gifts aren’t automatically exempt from Inheritance Tax

You can gift up to £3,000 annually free from IHT, and you can also make smaller one-off gifts of up to £250 per person. Gifts of any amount to your spouse or civil partner are also IHT-free.

Gifts above £3,000 are usually known as potentially exempt transfers (PETs), which means they only become fully exempt from IHT after seven years.

In some cases, PETs can be eligible for taper relief over the seven years, with the level of IHT applied dropping incrementally until it reaches 0%.

Another option is to make regular gifts, as opposed to lump sums, out of your everyday income. These can be tax-free if they meet three specific criteria.

• They are regular, forming part of your normal expenditure.
• Gifts are made from your income, such as pension, rental, or dividend income.
• You can still maintain your usual standard of living after making the gift.

Talk to us to find out if making any of these gifts could help to lower your IHT liability.

2. Gifting could potentially affect your long-term finances

You need to give careful consideration to how much you’re gifting, so that your generosity doesn’t leave you short in later years.

The rising cost of living means you may need to factor in an increased income to cover your everyday expenditure and household bills.

Health and care costs are another significant later-life consideration. It’s impossible to know if you’ll need care, or to what extent, but care costs in particular can really whittle away your wealth.

According to the UK Care Guide (1 October 2025), the average cost of a live-in home carer ranges from £650 to £1,500 per week, while average care home fees range from £27,000 to £39,000 per year, with costs rising further if you need nursing care.

It’s always a good idea to talk to your financial planner before gifting, to ensure your strategy is robust enough to withstand inflation and potential care costs.

3. There could be challenges associated with gifting certain assets

While gifting your home may seem both extremely generous and a logical way to mitigate IHT, there can be some complications you need to navigate.

If you plan to continue living in your home, this will be considered a “gift with reservation of benefit” and will still count as part of your estate for IHT purposes.

However, if you pay full market rent (not just a nominal amount), this can remove the property from your estate, but you need to be willing and able to make rental payments.

4. Is the gift right for your loved ones?

While gifting is a generous gesture, it’s always worth checking that it won’t backfire. For example, if you make large gifts to your adult children, they could potentially push them into a higher tax bracket or make them no longer eligible for benefits.

If you gift them your property, as well as the issues outlined earlier, they could face a Capital Gains Tax (CGT) bill if it isn’t their main residence and they sell it.

Doing some due diligence before making any gifts can ensure they’re beneficial for the intended recipient.

5. Could there be a more tax-efficient way to pass on your wealth?

Gifting isn’t always the most tax-efficient way to pass on your wealth, either. In some cases, putting some of your wealth into a trust can be an option to remove it from your estate.

You could also take out a life insurance policy, which is then written in trust. The policy would then pay directly to the trustees, rather than your estate, and can be used to pay an IHT bill.

Trusts can be extremely complex, and we’d always urge you to take financial advice before proceeding.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning, or trusts.