It is now just over a year since the country went to the polls and elected a new government. The pitch was one of ‘change’ – stability, competence and growth. Since then, there have been signs of progress, but for many individuals and businesses, day-to-day conditions remain difficult and people, it seems, may need more convincing of the current trajectory.
Have the headline numbers improved?
Markets have calmed, but inflation seems to be ticking up again, growth is weak and interest rates are still comparatively high, although current thinking is that they could reduce before the end of the year. The economy has so far avoided a technical recession, but the recovery has been slow, and two of the most recent months show negative growth. While the tone of policy has shifted, the practical effect on personal finances has been far more gradual.
What policy changes have affected businesses?
One of the most immediate policy changes came in April. Employer National Insurance contributions were increased from 13.8% to 15%, and the threshold for contributions was lowered from £9,100 to £5,000. The Employment Allowance was expanded to offer relief to some businesses, but many employers are now facing higher wage costs just as other input costs remain elevated. For business owners and managers, these changes are having a real and ongoing impact, with most recent unemployment figures sadly showing a rise, up to 4.7% according to the latest data.
Where do pensions stand now?
Pensions (and Wealth overall) remain a focus for reform. The abolition of the Lifetime Allowance in April 2024 continues to shape longer-term planning. That change was implemented under the previous government, but has so far remained in place.
The current government has confirmed its broader vision for pensions reform, including the creation of large-scale ‘megafunds’ and new rules designed to deliver better returns for savers and more investment in UK growth. However, most of these changes are still some years away. According to the recently published pensions roadmap, key measures such as guided retirement products, value for money rules, and small pot consolidation will not come into force until 2027 or later. Reforms to defined benefit pensions, including new rules around surpluses and superfunds, are also set to follow a staged process beginning in 2027.
In the meantime, targeted consumer support rules and consultations on default consolidation are expected to begin from 2026, giving providers and trustees time to prepare. The direction of travel is now clearer, but the pace remains measured.
What’s happening with ISAs?
ISAs have returned to the agenda. The government has confirmed that Long-Term Asset Funds can now be included within stocks and shares ISAs, part of a broader plan to encourage investment into UK-based businesses and infrastructure.
Further reforms are under consideration, with ministers indicating they are reviewing how ISAs might be simplified and made more flexible. There has been speculation about whether the cash ISA allowance may be reduced to favour equity investment, but no formal proposals have yet been confirmed. We expect further announcements may be made in the Budget in the autumn.
How has the UK’s global position shifted?
At the same time, the government has been working to reshape the UK’s international position. New trade agreements have been signed with India, the EU, and the United States. These deals aim to cut tariffs on goods such as steel, food and vehicles, and to simplify cross-border procedures for businesses. The India agreement, finalised in May, is expected to benefit over £4 billion in UK exports. A limited US deal has removed some duties on cars and food imports, while the new EU agreement focuses on smoothing post-Brexit border friction.
The Chancellor has also announced deeper financial cooperation with the US, EU, China and Switzerland, intended to boost the UK’s role in global finance and encourage inward investment. This could support longer-term market confidence, even if short-term effects remain modest.
What are the wider risks and pressures?
These shifts in trade and financial policy reflect a broader effort to project the UK as open for business. But they come against a global backdrop that remains unsettled. The return of Donald Trump to the White House in January has brought a sharp change in tone to US trade policy. Questions remain about future tariffs and the potential for further disruption to global supply chains. Meanwhile, central banks continue to signal caution, and the wider investment environment has yet to show strong momentum.
So, what should clients focus on?
For many clients, this combination of political change and policy uncertainty creates a familiar feeling: things are moving, but it is not always clear in which direction. Markets have largely held steady over the last year, and many portfolios have recovered ground lost during the pandemic and its aftermath. Yet concerns about taxation, spending and future regulation remain.
The key is to plan for change, rather than trying to predict it. A financial strategy built around long-term goals can accommodate political shifts without needing to be rebuilt each time a new policy is announced. We continue to track developments in tax, pensions, ISAs and global markets, so that clients can make informed decisions based on what matters most to them.
If you would like to review your financial plan or discuss how the last twelve months have affected your position, we are here to help:
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