Article display

• Many equity markets advanced, led by the US (+2.7%), Europe (+2.4%) and the UK (+1.9%). Japan, Asia-ex Japan and EM equities added between +1.4% and +1.6% (all in sterling terms)
• The prices of UK index-linked bonds rose by +1.9% and UK gilts by 1% in response to the Autumn Budget
• Gold was bid up +4.3% in dollar terms

• The US dollar, euro and yen all slid against a firmer sterling by -1%, -0.3% and -0.9% respectively

Chancellor Rachel Reeves announced an estimated £26 billion in tax rises last week, marking a second consecutive year of revenue-raising to help bolster public finances and support welfare spending. Key measures include extending the freeze on personal tax thresholds to 2031, introducing an annual tax surcharge on properties valued over £2m and rising taxes on investment income. In all, there were over 80 measures.

The Office for Budget Responsibility (OBR) – which accidentally published its response to the new budget prior to Reeves’s statement – cut its medium-term growth forecast by 0.3% and expects inflation to fall to an average of 2.5% in 2026. It also confirmed the government remains on track to meet its two main fiscal-rules by 2029-30.

With no major surprises, markets reacted calmly. Gilt yields fell, with the 10-year dipping to 4.45%, close to its 2025 low, as higher tax revenues eased concerns of weakening public finances and the need to issue more debt. The pound strengthened by 1% against the dollar to $1.32 and held steady against the euro at €1.14.

Some 174,000 British nationals aged 16-34 emigrated in the year ending March 2025 according to data released last week by the Office for National Statistics. The net Briton migration figure (arrivals less departures) was most pronounced among 16–24-year-olds, with a net 59,000 choosing to leave long-term, meaning for more than a year. It’s risky to extrapolate a trend from the numbers given that the ONS changed its data collation methodology in 2021. But the young emigrants may reflect another reality: that almost one million 16-24-year-olds are not in employment, education or training – so called NEETs – and that leaving may appear a better option. More broadly, annual net migration to the UK fell to 204,000 in June 2025, a big drop from 694,000 reported a year earlier. Immigration is an emotive issue that polarises opinion. However, the economic challenges of higher youth emigration coupled with an ageing population are clear. All things equal, fewer people means lower output unless those in work can become more productive. The government will hope that these latest figures do not become a trend.

• Financial Services Compensation Scheme new deposit protections – From 1 December the FSCS will protect up to £120,000 of deposits or savings per eligible person, per authorised firm – a significant rise from £85,000 set back in 2017. It will also now cover ‘temporary high balances’ from major life events of up to £1.4m for up to six months
• Meta is in talks to use Google’s chips instead of Nvidia’s – Meta is reportedly looking to sign a deal worth billions of dollars to use Google’s chips for its AI efforts, a step potentially reducing Nvidia’s dominant market share
• European GDP – France, Italy and Germany last week announced positive GDP on a yearly basis without beating expectations (0.9%, 0.6% and 0.3% respectively). Italy’s GDP expanded by 0.1% on a quarterly basis, erasing the 0.1% contraction from Q2
• VW announces possible ‘Made in China’ EV car – Volkswagen reckon they could produce electric vehicles entirely ‘Made in China’ for half the cost of doing so elsewhere
• Indian rupee at record low versus the US dollar – The currency fell to 89.75 due to low flows coupled with the lack of a trade deal with the US, eclipsing the positive economic growth in India
• Revolut reaches a $75bn valuation – Revolut has become Europe’s most valuable financial technology company following a secondary share sale valuing it at $75bn (~£57bn). The valuation means Revolut is worth more than Barclays, Société Générale or Deutsche Bank
• Chinese real estate company Vanke asks for a delay on a bond payment – its shares and bonds plunged last week after the request sparked fears about the Chinese real estate sector’s financial health
• The Organisation of the Petroleum Exporting Countries and allies stick to output targets – Members of OPEC+ agreed last week to leave levels unchanged for the first quarter of 2026 and introduced a new mechanism to assess members’ maximum production capacity. WTI oil prices traded up slightly on the news but below $60 per barrel

 

Autumn Budget 2025: Implications and opportunities

Autumn Budget 2025: Key takeaways

Autumn Budget 2025: Video

Disclaimer

Past performance is not a reliable indicator of future returns. Nothing herein should be construed as a recommendation to hold, buy or sell any security or encourage any investment decision. The mention of any particular asset class, sub-asset class or company does not imply that it is held, or may ever be held, in any product or service.