Client Update - 3rd July 2026

This week we have been considering two major themes for our clients: a renewed domestic focus on regional growth led by Andy Burnham, and a wider geopolitical shift towards higher defence spending. Undoubtedly both have the potential to influence markets, taxation, public investment and therefore long-term financial planning.

The first story concerns Andy Burnham’s proposed “Number 10 North”, a Manchester-based growth unit intended to give the prospective prime minister a stronger regional economic operation outside Whitehall. The idea is to use devolution to drive long-term investment, regeneration, housing and re-industrialisation across the UK. Reports suggest the unit would coordinate with government departments, mayors and local areas, while also giving the prime minister an economic perspective separate from the Treasury.

For our clients, the immediate implications are more political than practical. A stronger regional growth agenda could eventually affect infrastructure spending, housing supply, local employment, transport, utilities and business investment. If delivered well, this could support regional productivity and broaden economic opportunity beyond London and the South East. That matters for property owners, entrepreneurs, employees and investors with exposure to UK assets. However, the detail remains limited, and there may be tension between ambitious investment plans and the need to maintain fiscal credibility with bond markets.

Fiscal discipline will be important. UK government borrowing costs affect mortgage rates, annuity pricing, gilt values and the wider investment environment. If markets believe a future government has a credible plan for growth while keeping borrowing under control, that would finally be very good news. If investors fear unfunded spending promises, gilt yields could rise, putting pressure on public finances and potentially household borrowing costs. Therefore, on the assumption that Burnham does become prime minister, watch for credible delivery plans, funding sources and the likely tax implications.

The second story is geopolitical. This week, Nato secretary-general Mark Rutte has argued that Europe’s rearmament is supporting a large order book for US defence companies, while also underlining that European countries are increasing their own defence spending. Perhaps Trump should revisit his views on Europe. This reflects a broader shift since Russia’s invasion of Ukraine: defence is no longer seen as a discretionary area of public spending. For investors, defence, aerospace, cybersecurity, infrastructure and advanced manufacturing may remain long-term themes, but valuations and execution risks matter. Some defence shares have already performed strongly and we have been the beneficiaries of this in our discretionary portfolios.

From a portfolio perspective, the defence spending cycle highlights why diversification remains essential. Geopolitical risk can support some sectors while weighing on others through higher energy prices, supply disruption, inflation or market volatility. We have therefore tended to avoid chasing fashionable themes after strong performance.

For now, the conclusion is that both developments point to a more active debate about the UK’s long-term economic future. A credible regional growth strategy could help unlock productivity and improve living standards, while higher European defence investment may support innovation, skilled employment and industrial capacity. For our clients, we continue to keep financial plans up to date, stress-test retirement income, diversify investments, and use tax allowances where appropriate. Political and geopolitical change will always create uncertainty, but well-structured financial planning turns uncertainty into something manageable — and often into opportunity. Do have a good weekend.