Client Update - 13th June 2025

This week’s update must surely start with sincere condolences for anyone involved in the terrible plane crash in India yesterday. As I write, many details remain unclear, however it has been a tragic accident and an incredibly sad and sudden loss of human life. It is hard to single this event out given the loss of life around the world on a weekly basis, be it in the Ukraine, or the Middle East, or the many other regions that see conflict and tragedy. However, air accidents tend to capture our sub conscious fears as it is an activity that many of us take part in over the years.

Back to the financial news and this week saw Chancellor Rachel Reeves confirm her spending plans to boost growth and confidence in the UK. Her announcement was subsequently over-shadowed by the news on Thursday that the UK economy unexpectedly shrank by 0.3% in April, mainly due to the rise in employers NI, fuel bills and falling exports to the US. Trade data showed the value of UK exports decreased by some £2.7bn in April, with goods to America alone falling by £2bn, the largest monthly fall on record in exports across the Atlantic.

When asked to clarify if she expected taxes to rise in October as a result, she simply stated to the BBC “"No chancellor is able to write another four years of Budgets within a first year of government, you know how much uncertainty there is in the world at the moment". This sounds a little ominous to me.

I must admit that I have not, and will not attempt, to read Reeves 128 page document that accompanied her announcement, however the main focus was on an extra £29bn per year for the NHS, with additional boosts for defence spending and affordable and social housing.

The losers over the next three years included the Home Office funding falling 1.7% a year, the Foreign Office loses 6.9% a year, mainly in aid spending, the Department for Transport loses 5% a year, Environment and Rural Affairs loses 2.7%, and Business and Trade loses 1.8%.

The announcement, as always, drew as much mirth as congratulations, with the SNP's Dave Doogan noting that the chancellor had mentioned Reform UK and its leader Nigel Farage more than she mentioned Scotland, such is the governments focus on the challenge from the right.

It was good to hear that the winter fuel payment - which helps cover energy costs during the coldest months, will now go to all pensioners in England and Wales who have an annual taxable income of £35,000 or less. Separate policies in Scotland and Northern Ireland may now be reconsidered. Details of the change of policy came on Monday, although how this is paid for will not be clear until the autumn Budget.

The final part that caught my eye was the mammoth project to build a new nuclear power plant. A total of £17.8bn of taxpayers' money has been pledged for the new Sizewell C plant in Suffolk to date. The Treasury will borrow that money, but the interest on that debt is paid for through household energy bills. The government estimates that will be about £1 a month on a bill. However, ministers stress that longer-term - perhaps in about 10 years' time - this domestically generated power will reduce household bills significantly, compared with bills had the plant not been built.

Back to markets and worries about the UK economy have not been shared by the UK stock market that closed at a record high yesterday as investors sought opportunities away from the Trump stricken US equity market. Trade agreements with the US, EU and India in recent weeks had also been helpful in terms of sentiment and maybe after 10 years when the UK was seen as a country that was difficult to do deals with, we are now back in as a partner country of choice. I like the sound of that, do have a good weekend.