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Category: Wealth

Economic review March 2025

Posted on by Sarah O'Sullivan
Key takeaways
  • The Chancellor cut welfare and departmental spending to restore a fiscal buffer, but risks to forecasts remain high
  • Inflation dipped unexpectedly but is expected to rise again due to higher energy, taxes and wage costs
  • Business and retail activity showed resilience, but weak manufacturing and trade tensions cloud economic prospects
Chancellor trims spending plans

Rachel Reeves delivered her Spring Statement on 26 March, unveiling welfare cuts and spending reductions in order to balance the government’s books in the face of a worsening fiscal outlook.

The new spending plans were required to ensure the Chancellor stays on track to meet her two self-imposed fiscal rules, which she confirmed remain “non-negotiable.” An updated forecast produced by the Office for Budget Responsibility (OBR) had more than wiped out the Chancellor’s previous £9.9bn fiscal buffer announced in last October’s Budget due to a combination of higher debt interest costs and lower economic growth.

Several policy changes announced in the Spring Statement, including welfare reforms and day-to-day departmental spending reductions, restored the buffer back to its October level. The OBR did, however, note that its size remains historically low and that the buffer therefore provides only a small margin of error against the risk of future economic shocks.

Speaking after Ms Reeves delivered her statement, OBR Chair Richard Hughes also acknowledged the precarious nature of economic forecasting and admitted there were many factors that could once again “wipe out” the Chancellor’s fiscal headroom; these include an escalating trade war, a small downgrade to growth forecasts or a rise in interest rates.

This vulnerability was vividly highlighted just hours after the Chancellor finished her speech, with President Trump’s announcement of a new 25% tariff on cars and car parts coming into the US – a move which is widely expected to hit global growth prospects.

Analysis by the Institute for Fiscal Studies (IFS) also concluded that the Chancellor’s headroom is ‘very small.’ IFS Director Paul Johnson added there was a “good chance” economic forecasts would deteriorate significantly before the Autumn Budget which could leave the government facing months of damaging speculation about what taxes might need to be increased.

Inflation dips but fresh climb predicted

While the latest batch of inflation statistics did reveal a larger than expected monthly decline in the headline rate, economists continue to warn that price rises are likely to accelerate again soon.

Figures published last month by the Office for National Statistics (ONS) showed the Consumer Prices Index (CPI) 12-month rate – which compares prices in the current month with the same period a year earlier – dropped to 2.8% in February from 3.0% the previous month. This rate was just below economists’ expectations, with a Reuters poll predicting a reading of 2.9%.

ONS said February’s decline was primarily driven by lower clothing and footwear prices which fell for the first time in over three years, partly due to an unusually high number of sales during the month. This unseasonal clothes discounting offset small price increases from a number of other categories, including alcoholic drinks.

Despite the monthly dip, economists still expect a fresh pick-up in the CPI rate over the coming months. Indeed, a number of near-term price rises, such as energy, Council Tax and water bill increases, are already baked in, while surveys suggest many businesses will look to raise prices in response to April’s National Insurance and Living Wage increases.

Last month also saw interest rates remain on hold, following the latest meeting of the Bank of England’s interest-rate setting committee. At its 19 March meeting, the Bank’s nine-member Monetary Policy Committee (MPC) voted by an 8-1 majority to leave Bank Rate unchanged at 4.5%; the one dissenting voice preferred a 0.25 percentage point reduction.

Commenting after announcing the decision, Bank Governor Andrew Bailey said he still believed rates were on a “gradually declining path” but noted that increasing geopolitical and global trade uncertainties meant the Bank would have to be “careful” when considering future cuts. The next MPC announcement is scheduled for 8 May.

Markets

At the end of March, concerns weighed on financial markets, days before Donald Trump’s tariff plans are due to take effect. Investors are braced for a broad set of tariffs, set to be unveiled on April 2 – described as ‘Liberation Day’ by the President.

In the UK, the FTSE 100 index closed the month on 8,582.81, a loss of 2.58%. The mid-cap focused FTSE 250 closed the month down 4.19% on 19,475.48, while the FTSE AIM closed on 681.99, a loss of 3.10%.

Across the pond, the Dow closed March down 4.20% on 42,001.76, while the tech-orientated NASDAQ closed the month down 8.21% on 17,299.29. On the continent, the Euro Stoxx 50 closed March 3.94% lower on 5,248.39. In Japan, the Nikkei 225 ended the month on 35,617.56, a monthly loss of 4.14%.

On the foreign exchanges, the euro closed the month at €1.19 against sterling. The US dollar closed at $1.29 against sterling and at $1.08 against the euro.

Brent Crude closed March trading at around $74 a barrel, a monthly gain of just over 7.0%. Oil moved higher after Donald Trump suggested that the US could impose secondary tariffs on Russia, a major exporter. The OPEC+ producer’s crude exports hit a five-month high in March. Gold closed the month trading around $3,149 a troy ounce, a monthly gain of almost 10.00%. The gold price reached a trading high on 31 March as concerns intensified over an escalating trade war, prompting investors to flock to the safe-haven asset.

Index
Value (31/03/25)
Movement since 28/02/25
FTSE 100 8,582.81 -2.58%
FTSE 250 19,475.48 -4.19%
FTSE AIM 681.99 -3.10%
Euro Stoxx 50 5,248.39 -3.94%
NASDAQ Composite 17,299.29 -8.21%
Dow Jones 42,001.76 -4.20%
Nikkei 225 35,617.56 -4.14%
Survey reports uptick in business activity

Although the latest monthly economic growth statistics did reveal an unexpected contraction at the start of the year, more recent survey evidence points to a “modest expansion” in March.

Figures published last month by ONS showed the UK economy shrank by 0.1% in January, driven by a sharp decline in manufacturing output; in contrast, a Reuters poll had predicted a monthly growth rate of 0.1%, following December’s 0.4% expansion. While ONS said the economy was still estimated to have grown by 0.2% across the three months to January, it also noted the overall picture was one of ‘weak growth.’

Data from the recently released S&P Global/CIPS UK Purchasing Managers’ Index (PMI) does point to a subsequent pick-up in activity, with March’s preliminary headline growth indicator hitting a six-month high of 52.0. This upturn, though, was driven by only small pockets of growth, most notably in financial services, with manufacturers continuing to struggle.

S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “The signal from the flash PMI is an economy eking out a modest expansion in March, consistent with quarterly GDP growth of just 0.1%. However, just as one swallow does not a summer make, one good PMI doesn’t signal a recovery.”

Retail sales unexpectedly rise

The latest official retail sales statistics showed that sales volumes defied analysts’ expectations by rising in February, while survey evidence points to a continuing modest pick-up in consumer sentiment.

Figures released last month by ONS revealed that retail sales volumes grew by 1.0% in February, with broad-based strength reported across all major categories except food stores sales. This loosening of consumer purse-strings came as a surprise to most analysts, with a Reuters poll of economists actually predicting a 0.4% monthly contraction.

Data from GfK’s most recent consumer confidence survey also reported further modest improvement in the overall level of consumer sentiment. While March’s headline figure remained below the survey’s long-run average of -10, consumer morale was buoyed by greater optimism in economic prospects and ticked up to a three-month high of -19.

Evidence from the latest CBI Distributive Trades Survey, however, shows the retail environment remains challenging. According to the survey, annual sales volumes fell ‘markedly’ in March with retailers predicting a further decline, albeit at a slower pace, in April too. Firms across the retail and wholesale sectors suggested ‘global trade tensions,’ as well as last Autumn’s Budget decisions, were weighing on confidence and leading to a reduction in demand.

All details are correct at the time of writing (01 April 2025)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Tees is a trading name of Tees Financial Limited which is regulated and authorised by the Financial Conduct Authority—registered number 211314.

Tees Financial Limited is registered in England and Wales—registered number 4342506.

Economic Review February 2025

Posted on by Sophie Soraf
Key takeaways:
  • UK economic output unexpectedly rose by 0.1% in the fourth quarter of 2024
  • Bank of England will be ‘careful’ about reducing Bank Rate due to a spike in inflation
  • Retail sales volumes rose by 1.7% in January, bouncing back from December’s 0.6% decline

Growth stronger than expected in late 2024

Data released last month by the Office for National Statistics (ONS) revealed that the UK economy unexpectedly grew in the final three months of last year, although more recent survey evidence still points to a sluggish outlook.

The latest gross domestic product (GDP) statistics showed that economic output rose by 0.1% in the fourth quarter of 2024, after flatlining across the previous three-month period. While the figure still only represents a relatively lacklustre rate of expansion, it was significantly stronger than economists had been expecting, with the consensus forecast in a Reuters poll predicting a 0.1% contraction during the final three months of the year.

A monthly breakdown showed that the final quarter GDP figure was lifted by a strong performance in December, which saw a 0.4% expansion. This reflected robust service sector growth, with ONS noting that wholesalers, film distributors, pubs and bars all did particularly well, while machinery manufacturers and pharmaceutical companies performed strongly too. In addition, however, it was noted that December’s growth relied on government spending and a potentially temporary build-up in firms’ inventories.

Data from a recently released economic survey also suggests growth in the first two months of 2025 has been tepid. February’s flash headline growth indicator from the S&P Global/CIPS UK Purchasing Managers’ Index (PMI) dipped to 50.5 from 50.6 in January, leaving the index only marginally above the 50.0 no change threshold, implying the UK economy has seen little growth so far this year.

S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “Early PMI survey data for February indicate that business activity remained largely stalled. While marginal output growth was eked out in February, order books deteriorated at a rate not seen since August 2023 to hint at likely cuts to business activity in the coming months unless demand revives.”

Interest rates cut; inflation jumps

Last month, the Bank of England (BoE) sanctioned a further cut in interest rates but said it would be ‘careful’ about future reductions in the face of an expected spike in inflation and global uncertainty.

Following its latest meeting, which concluded on 5 February, the BoE’s nine-member Monetary Policy Committee (MPC) voted by a 7-2 majority to reduce rates by 0.25 percentage points, taking Bank Rate down to 4.5%. The two dissenting voices both voted for a larger cut of 0.5 percentage points.

Alongside the rate announcement, the Bank unveiled its latest economic projections, which included a halving of its 2025 growth forecast to 0.75%. The updated outlook also predicts inflation will rise to nearly double the Bank’s 2% target level, peaking at 3.7% in the third quarter of this year and not return to target until the end of 2027.

Commenting after announcing the MPC’s decision, BoE Governor Andrew Bailey reaffirmed his expectation that rates would continue on a downward trajectory, but added “We will have to judge meeting by meeting, how far and how fast.” Mr Bailey also stressed the need to remain “gradual and careful” when reducing rates further because “we live in an uncertain world and the road ahead will have bumps on it.”

This bumpy road was vividly highlighted two weeks later when the official inflation statistics were published, with the annual headline rate jumping to 3.0% in January from 2.5% in December. ONS said this higher-than-expected increase was driven by rising food prices, a smaller-than-usual drop in air fares and an increase in private school fees.

January’s data leaves inflation at a 10-month high with analysts predicting further rises to come. April in particular is likely to see a notable jump, with energy, water and council tax bills all set to rise during that month.

Markets

At the end of February, global markets remained under pressure as investors reacted to economic uncertainty, with Trump’s trade policies continuing to weigh on sentiment.

US stocks fell after the Trump-Zelensky Oval Office exchange on Friday 28 February, before moving higher in the afternoon session. The Dow closed February 1.58% lower on 43,840.91, while the tech-orientated NASDAQ closed February down 3.97% on 18,847.28.

In the UK, the internationally focused blue-chip FTSE 100 index closed the month on 8,809.74, a gain of 1.57%. At month end the index rose as hopes increased of a potential trade deal between the UK and the US, following a week of crunch talks in Washington. The mid-cap focused FTSE 250 closed February down 2.98% on 20,326.38, while the FTSE AIM closed on 703.83, a loss of 1.99%.

On the continent, the Euro Stoxx 50 closed February 3.46% higher on 5,463.54. In Japan, the Nikkei 225 ended February on 37,155.50, a monthly loss of 6.11%.

On the foreign exchanges, the euro closed the month at €1.21 against sterling. The US dollar closed at $1.25 against sterling and at $1.03 against the euro.

Gold closed February trading around $2,863 a troy ounce, a small monthly gain of 0.44%. At month end, the gold price fell as concerns escalated over Trump’s sweeping tariff strategy and a stronger dollar put pressure on the precious metal. Brent Crude closed the month trading at around $69.91 a barrel, a monthly loss of just over 4.0%, as concerns about the risks posed by tariffs to the global economy and demand for fuel weigh on sentiment.

Index

Value (28/02/205)

Movement since 31/01/25
FTSE 100 8,809.74 +1.57%
FTSE 250 20,326.38 -2.98%
FTSE AIM 703.83 -1.99%
Euro Stoxx 50 5,463.54 +3.46%
NASDAQ Composite 18,847.28 -3.97%
Dow Jones 43,840.91 -1.58%
Nikkei 225 37,155.50 -6.11%

Pay growth accelerates; vacancies still falling

The latest batch of labour market statistics showed that UK wage growth remained strong in late 2024, while surveys suggest companies are planning to cut jobs or recruit fewer people over the coming months.

Figures published by ONS last month showed that average weekly earnings excluding bonuses rose at an annual rate of 5.9% across the final quarter of last year. This figure was up from 5.6% in the previous three-month period and represents the strongest reading since the three months to April 2024.

The data release also revealed yet another decline in the overall number of job vacancies. In total, ONS said there were 9,000 fewer vacancies reported between November and January 2025, the 31st consecutive monthly fall. And survey evidence suggests this decline is likely to continue as firms look to cut headcounts and freeze hiring as a result of higher employment costs associated with changes announced in the Autumn Budget.

A Chartered Institute of Personnel and Development survey released last month, for instance, found that around one in three firms are planning to reduce their headcount through redundancies or by recruiting fewer workers ahead of April’s National Insurance contributions hike and the uplift in the minimum wage.

Retail sales grew strongly in January

Official retail sales statistics released last month showed that sales volumes rebounded sharply in the first month of this year, while survey evidence points to a modest pick-up in consumer sentiment during February.

According to the latest ONS data, retail sales volumes rose by 1.7% in January, a strong bounce back from December’s 0.6% decline. The figure was also higher than all estimates submitted to a Reuters poll of economists which had pointed to growth of just 0.3%. ONS did, however, note that the increase was largely due to strong food sales, with other sectors, such as clothing and household goods, recording a more ‘lacklustre’ performance.

Encouragingly for the retail sector, data from GfK’s most recent consumer confidence index also reported a modest improvement in consumer sentiment. Overall, February’s headline confidence figure rose to -20 from -22 the previous month, with all five of the survey’s components improving, led by a four-point gain in personal finance expectations.

Evidence from the latest CBI Distributive Trades Survey, though, found that retailers remain ‘downbeat’ about their future business situation, with the data pointing to a sharp sales downturn in March, partly due to the later timing of Easter compared to last year.

All details are correct at the time of writing (03 March 2025)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Tees is a trading name of Tees Financial Limited which is regulated and authorised by the Financial Conduct Authority—registered number 211314.

Tees Financial Limited is registered in England and Wales—registered number 4342506.

December 2024: Inflation rises, growth stalls, markets shift

Posted on by Sophie Soraf
Headline inflation at eight-month high

Release of the latest inflation statistics showed consumer prices are now rising at their fastest rate since March 2024, while last month also saw Bank of England (BoE) policymakers become more divided over the need to cut interest rates.

Data published by the Office for National Statistics (ONS) showed the Consumer Prices Index (CPI) 12-month rate – which compares prices in the current month with the same period a year earlier – rose from 2.3% in October to 2.6% in November. ONS said the rise was primarily driven by an increase in motor fuel and clothing prices, which was only partially offset by a drop in air fares.

November’s CPI rise was, though, in line with expectations expressed in a Reuters poll of economists. Additionally, there was some relief in relation to underlying price pressures, with services inflation – a measure closely monitored by the BoE – remaining unchanged at 5.0%.

The latest decision of the BoE’s interest-rate setting body was announced a day after the inflation release, with the nine-member Monetary Policy Committee (MPC) voting by a 6-3 majority to maintain Bank Rate at 4.75%. The three dissenting voices each preferred an immediate 0.25 percentage point reduction in order to boost growth, but the six-strong majority, which included BoE Governor Andrew Bailey, expressed concern about wage growth and ‘inflation persistence.’

Commenting after announcing the Committee’s decision, Mr Bailey said he still believed the path for interest rates was “downwards.” However, he added, “We think a gradual approach to future interest rate cuts remains right, but with the heightened uncertainty in the economy we can’t commit to when or by how much we will cut rates in the coming year.”

The next MPC meeting is scheduled for early next month, with the outcome of the Committee’s deliberations due to be announced on 6 February.

UK economy has ‘largely stalled’

Figures released last month by ONS showed the UK economy shrank for a second successive month in October, while more recent survey evidence suggests it remained ‘largely stalled’ as 2024 drew to an end.

The latest official monthly gross domestic product (GDP) statistics revealed that economic output declined by 0.1% in October, defying analysts’ expectations for a small monthly expansion. October’s decline followed a similar-sized contraction in September and represents the first consecutive monthly drop in GDP since March and April 2020.

Revised data subsequently released by ONS also revealed that the economy performed worse than previously thought during earlier parts of last year. The updated statistics showed a growth rate of 0.4% across the second quarter, down from a previously published figure of 0.5%, while the economy is now estimated to have produced zero growth in the third quarter of 2024, down from an initial estimate of 0.1%.

The current economic malaise was also highlighted in updated growth projections published last month by the BoE. The Bank now estimates the UK will have seen no growth during the final three months of 2024.

Preliminary data from the latest S&P Global/CIPS UK Purchasing Managers’ Index (PMI) also points to a loss of economic momentum. While December’s flash headline growth indicator did remain at November’s 50.5 level, this left the Index only marginally above the 50.0 no change threshold.

S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “The flash PMI data for December indicate the UK economy remained largely stalled at the end of 2024. New orders fell in December for the first time in over a year, reflecting a deterioration in demand as a deepening downturn in manufacturing shows growing signs of spreading to the services economy.”

Markets (Data compiled by TOMD)

Although most major indices closed 2024 higher year-on-year, trading at month end was mixed.

US markets outperformed Europe in 2024. In the US, major indices registered double-digit annual gains, supported by interest rate cuts, Trump’s return to the White House and enthusiasm for AI. The Dow closed the year over 12% higher on 42,544.22, while the tech-orientated NASDAQ closed the year up over 28% on 19,310.79.

Meanwhile, the Euro Stoxx 50 closed the year over 8% higher on 4,895.98. In Japan, the Nikkei 225 ended the year on 39,894.54, gaining over 19% in 2024, despite retreating on the last trading day of the year from a five-month high reached the previous session.

In the UK, the blue-chip FTSE 100 index closed December on 8,173.02, a gain of just under 6% for 2024 as a whole, locking in gains for a fourth straight year. The domestically focused FTSE 250 closed the year just under 5% higher on 20,622.61, while the FTSE AIM closed on 719.63, a loss of over 5% in the year.

On the foreign exchanges, the euro closed the month at €1.20 against sterling. The US dollar closed at $1.25 against sterling and at $1.03 against the euro.

Gold closed the year trading around $2,637 a troy ounce, an annual gain of over 26%, its strongest since 2010. The price was supported by various factors including central bank reserve purchases and rising geopolitical tensions, prompting investors to seek safe haven assets. Brent crude closed the year trading at around $74 a barrel, an annual loss of over 2%. At year end, robust economic data from China and a weakening US dollar supported the oil price.

Index

Value (31/12/24)

Movement since 29/11/24
FTSE 100 8,173.02 -1.38%
FTSE 250 20,622.61 -0.72%
FTSE AIM 719.63 -1.76%
Euro Stoxx 50 4,895.98 +1.91%
NASDAQ Composite 19,310.79 +0.48%
Dow Jones 42,544.22 -5.27%
Nikkei 225 39,894.54 +4.41%

*Closing value 30/12/24 (market was closed 31/12/24)

Retail sales post small November rise

Official retail sales data released last month showed a small rise in sales volumes during November, although more recent survey evidence continues to show a tough retail environment despite another modest rise in consumer sentiment.

Figures released last month by ONS revealed that retail sales volumes rose by 0.2% in November. While this did represent a bounce back from October’s 0.7% decline, the figure was below economists’ expectations and left sales in the three months to November up by only 0.3%, the weakest performance according to this measure since the three months to June 2024.

Evidence from the recently released CBI Distributive Trades Survey also suggests retailers had a relatively weak run-up to Christmas. The CBI said retailers had ‘endured a gloomy festive period’ and looking ahead, they expected ‘sales to fall again in January’ with wholesalers and motor traders ‘braced for sharper sales declines.’

Data from GfK’s latest consumer confidence index, however, did offer the retail sector some hope for the new year, with the long-running survey showing households becoming modestly more cheery about their finances for the year ahead. Overall, December’s headline sentiment figure rose to -17 from -18 in November, lifting consumer morale to a four-month high.

Wage growth surprise: vacancies fall again

The latest batch of labour market statistics revealed a surprise pick-up in pay growth as well as a fall in both the level of job vacancies and the number of staff on payrolls.

According to the latest ONS data, average weekly earnings excluding bonuses rose at an annual rate of 5.2% in the three months to October 2024; this was up from 4.9% across the preceding three-month period and higher than a consensus forecast of 5.0% from a Reuters poll of economists. ONS Director of Statistics Liz McKeown commented, “After slowing steadily for over a year, growth in pay excluding bonuses increased slightly in the latest period driven by stronger growth in private sector pay.”

Job vacancies, however, fell once again, with 31,000 fewer reported in the September–November period compared to the previous three months. The latest release also revealed a drop in the number of people on payrolls, with provisional data indicating a 35,000 decline in November.

Last month, Reed Chief Executive Officer, James Reed, also noted that his firm had seen a “significant decline” in the number of jobs being advertised, while a number of surveys highlighted a slowdown in recruitment activity in the face of rising employers’ National Insurance Contributions.

Key takeaways:

  • Data from the ONS shows the CPI 12-month rate rose from 2.3% in October to 2.6% in November
  • UK economic output declined 0.1% in October, defying analysts’ expectations for a small monthly expansion.
  • Retailers ‘endured a gloomy festive period’ according to the CBI, who expect ‘sales to fall again in January’

All details are correct at the time of writing (02 January 2025)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from, taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Tees is a trading name of Tees Financial Limited which is regulated and authorised by the Financial Conduct Authority—registered number 211314.

Tees Financial Limited is registered in England and Wales—registered number 4342506.

10 great financial advice tips for efficient money management

Posted on by Sophie Soraf
As wealth management specialists, we are often asked, ‘Where and how do I start with my money?’ or told, ‘I never seem to have money when I need it’. Understanding how to hold and manage our hard-earned wealth is key to ensuring that we always have funds when needed.

Understanding the basics of money management is the key to finding financial freedom. Our funds fall into three main categories:

  • Short-term, hands-on money required for day-to-day expenses
  • An easily accessible ‘rainy day’ fund to cover unforeseen costs, or nice-to-have things like holidays
  • Long-term investments for life events, for example, saving for retirement, buying a house or paying for a child’s wedding

So, if you would like to manage your money better, read on to find out our 10 top tips for efficient money management.

1. Have a financial plan

Let’s consider the three categories of funds outlined above. Without a financial plan, how will you know how much you need in your current account to cover daily living expenses, how much you can afford to save or invest, or how much you can afford to pay towards your pension each month?

Common components of a financial plan will include:

  • Financial goals and objectives – where do you want to be in X years?
  • Income and outgoings – what are you bringing in and paying out? How much can you afford to spend without running out of money?
  • Protection needs – have you planned for life’s unexpected events, such as losing your job or being too ill to work for more than a few months?
  • Savings & investments – how much of your money do you have in savings accounts and investment portfolios? Are your savings and investments still offering strong returns? What changes might need to be made?
  • Retirement – are you currently saving enough for retirement?
  • Issues and problems – are there any weaknesses or problems that could affect your financial situation? How might these be rectified?

2. Draw up a budget

A budget is the answer if you’re continually running out of money before payday. Starting with your take-home income, first list the bare essentials – i.e., what must be paid out to keep your family sheltered, fed and warm – before moving on to those outgoings that are not so strictly necessary. In order of priority, these are the typical outgoings that feature on most budgets:

  • Housing costs – such as your rent or mortgage, bills and home insurance
  • Groceries – how much do you need to feed your family each month?
  • Other essential outgoings include shoes and clothing, school uniforms, car insurance and road tax, commuting costs, paying off debt, etc.
  • Savings – once you have prioritised your essential expenses, it is important to budget for savings, such as your emergency savings fund and pension contributions, before you budget for other daily expenses
  • ‘Nice-to-haves’ – this category can include expenses such as eating out, leisure activities, hobbies or holidays

3. Focus on paying off debt

Nothing can derail your finances faster than accumulating high-interest debt, for example, on credit or store cards. If you use a credit card, it is essential to prioritise paying it off on time to avoid spiralling debt that can seriously harm your credit score.

To avoid debt, stick closely to your budget. If your budget says you don’t have the money to buy something this month, don’t use your credit card to do so. The repayments will eat into next month’s money and make it increasingly challenging to stay on track.

4. Save for the future

Setting aside any savings before moving on to non-essential expenses is important. To help you prioritise your savings, consider what would happen if you faced an unforeseen expense. Could you afford to pay out for a new boiler if yours broke down? Or a large veterinary bill? What if you lost your job? A general rule of thumb is to build up three months’ worth of essential outgoings in an instant access savings account for emergencies.

However, instant access accounts typically offer lower interest rates, meaning the return on your money will be minimal. If you already have sufficient emergency savings, it may be worth putting further savings away in a fixed-term savings account, which offers higher interest in exchange for locking your money away for a set period or looking into investment.

5. Invest for higher returns

With interest rates at rock bottom, savings accounts offer minimal interest on savers’ hard-earned cash. Investing is a way of getting higher returns in exchange for a certain level of risk. Stock markets can go up and down, so your investments can fall and rise; however, a financial adviser can assist you in building an investment portfolio that reflects your risk profile. This means you can choose the level of risk you want to accept (although lower risk often means lower returns).

6. Protect your loved ones

According to Royal London, just two in five people say they’d be able to cope for more than three months if they lost their income. If your situation is similar, then it’s important to put in place protection policies, such as life insurance (which pays out a lump sum to your family if you die), critical illness cover (which pays out if you develop a serious or terminal illness) or income protection insurance (which pays a percentage of your monthly income if you are too unwell to work), to safeguard your loved ones against unexpected financial blows.

7. Start contributing to your pension as soon as you start work

When you start work in your late teens or early 20s, retirement seems a lifetime away. But with living expenses rising and even the full State Pension inadequate to fund a comfortable retirement, the sooner you start saving, the more opportunity your investments will have to grow.

According to research, savers, on average earnings, will need to build a pension pot of at least £300,000 to retire well – which is likely to increase. With all employers now obliged to offer a workplace pension under the auto-enrolment scheme and to make contributions for all employees, it’s never been easier to start saving. Your contributions will be taken out of your salary along with tax and national insurance contributions, so you won’t have to worry about making space in your budget. If you are self-employed, you must contribute into a personal pension to avoid a compromised financial situation later in life.

8. Take full advantage of tax allowances

You can keep more of your hard-earned money by making the most of your yearly tax allowances. For example, you can save up to £20,000 annually into an Individual Savings Account (ISA) and pay no Income Tax on the interest or dividends received. You will not have to pay any capital gains tax on profits from investments in a stock and shares ISA. You can also pay up to £60,000 per year into your pension and benefit from pension tax relief.

Other useful tax allowances include:

  • Tax-free allowances on financial gifts
  • Capital Gains Tax annual allowance
  • Personal Savings Allowance

9. Make a Will

We work closely with our legal team to ensure all clients have a valid, up-to-date Will in place, recording how you would like your assets, such as property, savings and investments, to be distributed when you die. If you die intestate (i.e., without a Will), your assets will be distributed according to intestacy law, a set of rules that dictates how assets should be dealt with without a Will. If you are not married to your partner, for example, they may be unable to inherit. Having a Will also means you can plan to pass down your money in the most tax-efficient way possible.

10. Seek professional financial advice

There’s a great deal to consider when dealing effectively with your finances, so it’s no wonder many people feel overwhelmed. Seeking professional financial advice will help you manage your money better on a day-to-day basis and help you with life’s big financial decisions. Picking the best mortgage for your circumstances; putting in place adequate protection cover to keep your family safe; calculating the retirement income you’ll need and ensuring you have a solid plan in place to achieve it; helping you clear your debt and get your finances in better shape for the future… a financial adviser can help you achieve all of this and more.

To contact our financial specialists, please call 0808 231 1320, and we will be delighted to assist you.

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Past performance is not a reliable indicator of future returns and all investments involve risks including the risk of possible loss of capital. Some information quoted was obtained from external sources we consider to be reliable.

Tees is a trading name of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered number 211314. Tees Financial Limited is registered in England and Wales. Registered number 4342506.

The biggest financial asset: Protection

Posted on by Sophie Soraf
What comes to mind when considering an individual’s biggest financial asset? A house? Investments? Perhaps a classic car like the Ferrari 250 GTO? Surprisingly, the most significant financial asset is often overlooked: yourself! For business owners and employees alike, the knowledge, skills, and effort you bring to the table are what drive your income and wealth. As the saying goes, “knowledge is power,” and protecting yourself is essential.

The cornerstone of any financial plan rests on the individual generating the income. Safeguarding your income is crucial—because if it disappears, what then? All financial stability starts with a solid foundation.

To put this in perspective, consider data from the Office of National Statistics (ONS), which estimates that in 2022, the average UK worker aged 16 to 65 could earn up to £606,000 in their lifetime. Despite this, a worrying trend emerges; in 2022, only 35% of the UK population has a life policy in place. This leaves 65% of people unprotected in the event of illness, injury, or worse.

In an unpredictable world, planning for the unexpected is not just prudent; it’s essential. A well-designed protection policy can offer peace of mind and financial security for you and your loved ones.

Whether you’re looking to safeguard your family, secure your income, or provide for future needs, understanding the different  policies and what they protect can help you make informed decisions and seek professional help.

There are four types of protection policies we will talk about:

  1. Life insurance
  2. Income protection
  3. Family income benefit
  4. Critical illness cover

The Importance of Protection:

Life is full of uncertainties. Whilst we cannot predict the future, we can prepare for it. Setting up a protection policy ensures that when life takes an unexpected turn, whether due to illness, injury, or an untimely death, your financial obligations remain covered. Bills still need to be paid, food still needs to be bought, and life must go on.

Protection policies are an essential part of a robust financial plan. They provide support for income loss, cover medical expenses, and ensure that loved ones remain financially secure. Let’s explore the different types of protection available.

Life insurance:

Life insurance is more than just a policy; it’s a promise. It ensures that if the policyholder passes away during the policy term, a lump sum will be paid to their chosen beneficiaries. These proceeds can help alleviate financial hardships during an already difficult time.

Life insurance is especially beneficial for those with dependents, such as children, a partner, or relatives who rely on their income. It can cover significant expenses like:

  • Mortgage repayments
  • Funeral costs
  • Children’s education fees
  • Day-to-day living expenses

The lump sum payout is tax-free and can be used however the beneficiaries see fit. This gives policyholders peace of mind, knowing that their family will remain financially stable even in their absence. For families facing the dual challenges of emotional loss and financial strain, life insurance is a vital safeguard.

Income Protection:

Have you ever considered how you would manage your finances if you could not work due to illness or injury? For most of us in the UK, our income is the greatest financial asset. It pays for the essentials: housing, bills, and food whilst simultaneously enabling us to enjoy life’s luxuries.

According to the ONS, the average gross annual earnings for full-time employees in 2024 was £37,430, so protecting this income for life essentials is vital. However, life is unpredictable, and unforeseen events can disrupt your ability to work.

Income protection insurance provides a safety net in such scenarios. If you are unable to work due to illness, injury, or other circumstances, the policy pays out a regular income—typically between 50% to 70% of your pre-tax earnings. These tax-free payments continue until you recover, retire, or reach the end of the policy term.

This type of coverage supports your everyday expenses and protects other financial assets, such as investments and savings, which you might otherwise need to dip into. Many assume they can rely on savings or family support during tough times, but this isn’t always feasible.

Family Income Benefit:

Family income benefit is a type of life insurance policy aimed towards families and those with dependants, such as children, parents, partners or siblings. It is designed to pay a regular tax-free income to your family if you were to pass away during the term of the policy.

Now what is the difference between Life insurance and Family Income Benefit? They both payout on your death, right?

Yes, however, a family income benefit pays out an ongoing monthly tax-free income, compared to a life insurance that pays out a tax-free lump sum payment.

This can provide stability for the beneficiaries who receive a steady income rather than having to manage a lump sum payout.

This policy ensures a steady cash flow to help your family with daily expenses up until the stated term period. For example, you might choose a 30-year term with a monthly payout of £1,000. If you were to pass away 10 years after taking out the policy, your beneficiaries would receive a tax-free income of £1,000 per month for the next 20 years.

Critical Illness Cover:

Critical illness cover is designed to pay out a tax-free lump sum if you were to get diagnosed with a listed “critical illness” that the policy covers, such as cancer, heart attack or stroke. Treatment for such conditions can be prolonged with the added burden of financial, emotional, physical and mental strain.

You will be entitled to receive the lump sum once you have been diagnosed with a specific illness listed under the policy. Upon receiving the lump-sum payment, it is up to you as to how you use the money, whether you want to pay off the mortgage, daily expenses, home alterations or a health-related cost. This can relieve some, if not all, financial burdens that you can face during a challenging time.

It is always important to remember that with all policies, you are paying for peace of mind for yourself and/or loved ones if the worse were to happen.

If we insure our homes and cars, why would we not insure our lives? By protecting the foundation of our financial structure, which is ourselves, this ensures you and/or loved ones have a level of financial security no matter what challenges life throws at you. You don’t build a house on loose foundations, do you?

Protect yourself – it’s the most valuable thing you can do!

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Past performance is not a reliable indicator of future returns and all investments involve risks including the risk of possible loss of capital. Some information quoted was obtained from external sources we consider to be reliable.

Tees is a trading name of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered number 211314. 

Tees Financial Limited is registered in England and Wales. Registered number 4342506.

Economic review – November 2024: Gradual shifts amid growing challenges

Posted on by Sophie Soraf
Interest rates set to fall more gradually

Last month, the Bank of England (BoE) cut interest rates for only the second time since 2020 but also warned future reductions were likely to be more gradual due to the prospect of inflation creeping higher next year. 

Following its latest meeting, which concluded on 6 November, the BoE’s nine-member Monetary Policy Committee (MPC) voted by an 8-1 majority to reduce rates by 0.25 percentage points, bringing the Bank Rate down to 4.75%.

Commenting after announcing the news, BoE Governor Andrew Bailey suggested rates were likely to “continue to fall gradually from here”. However, he did caution that they would not be reduced “too quickly or by too much.” Mr Bailey was also at pains to emphasise the word “gradual” and added that the reason for such an approach was that “there are a lot of risks out there in the world at large and also domestically.”

Alongside the rate announcement, the governor unveiled the BoE’s latest economic forecast, which takes into account the Chancellor’s budget measures. The updated projections suggest the policies announced in the Budget are likely to boost the headline rate of inflation by almost half a percentage point at its peak in just over two years’ time and result in it taking a year longer for inflation to return to the Bank’s 2% target level.

The latest inflation data published by the Office for National Statistics (ONS) two weeks after the MPC announcement revealed that the annual headline rate jumped from 1.7% in September to 2.3% in October. While this sharp increase was largely driven by October’s energy price hike, the figure did come in slightly ahead of analysts’ expectations. This overshoot, combined with the Governor’s comments, has undoubtedly increased the prospect of interest rates remaining unchanged following the MPC’s final meeting on 19 December.

UK economy losing momentum

ONS released gross domestic product (GDP) statistics last month showing the economy barely grew between July and September, while more recent survey evidence points to a further loss of economic momentum.

The latest GDP figures revealed that UK economic output rose by just 0.1% across the whole of the third quarter. This figure was weaker than economists had expected and represents a sharp slowdown from the 0.5% growth rate recorded during the second quarter of the year.

A monthly breakdown of the data also showed the economy actually contracted by 0.1% during September alone, with ONS reporting a significant drop in manufacturing output while the services sector flatlined. A number of economists blamed September’s weakness on Budget uncertainty which was felt to have impacted the behaviour of both firms and households.

Data from a recently released economic survey also suggests business optimism continued to slide in the weeks following October’s Budget. Indeed, the flash headline growth indicator from the S&P Global/CIPS UK Purchasing Managers’ Index (PMI) fell to 49.9 in November from 51.8 in October, the first time in 13 months the figure had dipped below the 50 threshold, denoting a contraction in private sector output.

S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “The first survey on the health of the economy after the Budget makes for gloomy reading. Although only marginal, the downturn in output represents a marked contrast to the robust growth rates seen back in the summer and are accompanied by deepening concern about prospects for the year ahead.”

Last month also saw the BoE publish revised economic growth projections. While the Bank did trim this year’s forecast from 1.25% to 1.0%, it is now predicting a stronger 2025, with next year’s projected growth figure upped to 1.5% from a previous forecast of 1.0%.

Markets (Data compiled by TOMD)

At the end of November, investors closely monitored the threat of possible US tariffs and the ongoing political turmoil in France. On the last trading day of the month, European markets closed slightly higher as inflation estimates met expectations, while the FTSE 100 was flat. Meanwhile, across the Atlantic, US stocks tempered from record highs reached earlier in the week. 

In the UK, the FTSE 100 index closed the month on 8,287.30, a gain of 2.18%, while the FTSE 250 closed November 1.88% higher on 20,771.57. The FTSE AIM closed on 732.49, a loss of 0.63% in the month. The Euro Stoxx 50 closed November on 4,804.40, down 0.48%. In Japan, the Nikkei 225 closed the month on 38,208.03, a monthly loss of 2.23%.

In the US, President-elect Donald Trump has outlined plans to place levies on imports from Canada, Mexico and China, with concerns that his plans could extend to other regions. The Dow Jones closed November up 7.54% on 44,910.65, while the tech-orientated NASDAQ closed the month up 6.21% on 19,218.17.

On the foreign exchanges, the euro closed the month at €1.20 against sterling. The US dollar closed at $1.26 against sterling and at $1.05 against the euro.

Brent crude closed November trading at around $68 a barrel, a loss over the month of 5.40%. Oil prices fluctuated at month end as speculation over OPEC+’s production plans heightened in advance of their December meeting. Gold closed the month trading at around $2,683 a troy ounce, a monthly loss of 1.84%.

*****

Index

Value

Movement since 31/10/24
FTSE 100 8,287.30 +2.18%
FTSE 250 20,771.57 +1.88%
FTSE AIM 732.49 -1.63%
Euro Stoxx 50 4,804.40 -0.48%
NASDAQ Composite 19,218.17 +6.21%
Dow Jones 44,910.65 +7.54%
Nikkei 225 38,208.03 -2.23%

Unemployment rate rises

Official figures published last month revealed a rise in the rate of unemployment, although ONS has warned that the data should be treated with some caution due to smaller survey sample sizes increasing data volatility.

The latest ONS labour market release showed the unemployment rate stood at 4.3% between July to September 2024; this compares to 4.0% for the previous three-month period. The data also revealed that the number of payrolled employees decreased by 9,000 in the three months to September, with early estimates suggesting the figure dropped by a further 5,000 in October.

Job vacancies also fell again, with 35,000 fewer reported in the August–October period compared to the previous three months. Overall, the statistics agency said that the latest batch of data points to a ‘continued easing of the labour market.’

ONS is currently in the process of overhauling the statistical methodology used to calculate its labour market figures – research released last month by the Resolution Foundation highlighted the current problems surrounding data reliability. According to the think tank’s analysis of tax office, self-employment and new population data, the official statistics may currently be failing to count as many as a million people who are believed to be in work.

Retail sales fall by more than expected

The latest official retail sales figures showed sales volumes declined ahead of October’s Budget, while more recent survey data points to ‘disappointing’ sales in November, too.

Figures released last month by ONS revealed that retail sales volumes fell by 0.7% in October, following a period of growth across the previous three months. While analysts had predicted a sales dip, October’s decline was larger than expected. ONS said the fall was driven by a ‘notably poor month for clothing stores’ but also noted that retailers across the board reported consumers holding back spending ahead of the Budget.

Data from GfK’s latest consumer confidence index did offer the retail sector some cheer, though, with the long-running survey reporting less pessimism post-Budget. November’s headline figure rose to its highest level since August, with growth recorded across all five components of the survey, suggesting consumers may have more appetite for spending in the run-up to Christmas.

November’s CBI Distributive Trades Survey, however, found retailers expect trading conditions to remain tough. While the survey did acknowledge ‘some improvement’ in the retail environment since the middle of the year, it also reported ‘disappointing sales’ in November with volumes expected to remain below seasonal norms in December too.

All details are correct at the time of writing (2 December 2024)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Tees is a trading name of Tees Financial Limited which is regulated and authorised by the Financial Conduct Authority—registered number 211314.

Tees Financial Limited is registered in England and Wales—registered number 4342506.

Tees Financial Ltd Wealth Specialist wins Later Life Adviser of the Year

Posted on by Sarah O'Sullivan
A Wealth Specialist at Tees Financial Ltd has won a prestigious Women’s Recognition Award hosted by The Financial Reporter.

Toni Chalmers-Smith has worked in the financial services industry for over 30 years and specialises in advising clients requiring later years’ advice, including later life lending, equity release and care fees planning. She was delighted to recently accept The Later Life Adviser of the Year Award.

Launched in 2018, the awards aim to support the growing momentum for a more diverse and equal financial services community.

Toni understands that organising immediate or potential care funding for yourself or a loved one can be a complicated financial, legal, and emotional process. As an accredited member of the Society of Later Life Advisers (SOLLA), Toni can provide advice on care costs and is an expert in navigating the complex funding assessment process.

As a member of The Equity Release Council, Toni is committed to providing the very best independent advice to see if equity release is the right choice for you and, if so, to select the right product from the many available on the market.

Tees listen to what you want to achieve and clearly explain all the options available to you, minimising costs and helping you understand your choices and future financial implications.

On winning the award, Toni Chalmers-Smith said: “We believe financial and legal advice should take you to the stage where you can make clear and informed decisions, happy in the knowledge that you have received all the information and options needed to reach those very decisions.

I honestly believe at Tees, we don’t just give advice for now, but so you can truly have a better future in your retirement and later years.

I had a great night at the awards ceremony, and I’m pleased to have been recognised with this award, but I am even prouder to be part of Tees.”

Toni works closely with all colleagues across the Wealth team and law firm, providing specialist care fees planning and equity release advice to clients.

The Women’s Recognition Awards took place on Tuesday 22 October 2024, in London.

If you’d like advice, contact Toni Chalmers-Smith any time.

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Tees is a trading name of Tees Financial Limited which is regulated and authorised by the Financial Conduct Authority. Registered number 211314.

Tees Financial Limited is registered in England and Wales. Registered number 4342506.

Economy set for short term Budget boost

Posted on by Sophie Soraf
Economic review October 2024

New economic projections produced by the Office for Budget Responsibility (OBR) suggest the Labour administration’s first Budget will provide only a ‘temporary boost’ to UK economic output. 

Chancellor Rachel Reeves revealed the independent fiscal watchdog’s latest forecast during her Autumn Budget delivered to the House of Commons on 30 October. The updated figures predict the economy will expand by 1.1% this year and 2.0% in 2025, slightly higher than the OBR’s March forecast, with growth then falling back across the remainder of this Parliament. The OBR concludes that the Budget’s overall impact will leave ‘the level of output broadly unchanged at the forecast horizon.’

Before the Budget, the latest monthly gross domestic product (GDP) data released revealed that the UK economy returned to growth after two consecutive months of stagnation. The Office for National Statistics (ONS) figures showed the economy expanded by 0.2% in August, with all major sectors posting some growth. Despite August’s pick up, ONS warned that the broader picture in recent months was one of ‘slowing growth’ compared to the year’s first half.

This loss of momentum was also highlighted in the latest S&P Global/CIPS UK Purchasing Managers’ Index (PMI), with its preliminary headline growth indicator falling to 51.7 in October from 52.6 the previous month. While remaining above the 50 threshold that denotes expansion in private sector output, this latest reading was the lowest since last November.

Commenting on the survey, S&P Global Market Intelligence’s Chief Business Economist Chris Williamson said, “Business activity growth has slumped to its lowest for nearly a year in October as gloomy government rhetoric and uncertainty ahead of the Budget dampened business confidence and spending. The early PMI data are indicative of the economy growing at a meagre 0.1% quarterly rate in October.”

UK inflation falls sharply

Official consumer price statistics released last month revealed a larger-than-expected fall in inflation, potentially paving the way for further interest rate cuts in the coming months.

ONS data showed the annual headline rate of inflation dropped from 2.2% in August to 1.7% in September. The fall, which took the rate to its lowest level since April 2021, was primarily driven by lower airfares and petrol prices.

The decline was more significant than economists had anticipated, with the consensus forecast in a Reuters poll predicting a September reading of 1.9%. It also took the figure decisively below the Bank of England’s (BoE) 2% target, and further fuelled market expectations for more interest rate cuts this year.

Last month, however, two of the BoE’s nine-member rate-setting Monetary Policy Committee (MPC) advocated the continuation of a cautious approach to monetary easing. Megan Greene, for instance, suggested volatile components had driven September’s sharp inflation fall and again stated her preference for rate cuts to be gradual, while Catherine Mann said the cooling of price growth still had “a long way to go” for the Bank to hit its 2% target over the medium term.

In early October, though, BoE Governor Andrew Bailey (another MPC member) told the Guardian that, provided there was further welcome news on the inflation front, he felt the Bank could become “a bit more aggressive” in its rate-cutting approach. In a recent Reuters survey, 72 economists said they believe a quarter-point rate reduction would be announced after this month’s MPC meeting on 7 November.

Market expectations for the speed of monetary easing over the coming 12 months, however, eased back after the Budget, as the Chancellor’s big spending plans raised fears of a pick-up in inflationary pressures next year.

Markets (Data compiled by TOMD)

UK indices moved lower on the last day of October as markets continued to digest the Budget announcement, during which Chancellor Rachel Reeves unveiled £40bn of tax rises. On 31 October, the Institute for Fiscal Studies (IFS) warned about the likelihood of further tax rises following the Budget.

The FTSE 100 index closed October on 8,110.10, a loss of 1.54%, while the mid cap focused FTSE 250 closed the month 3.16% lower on 20,388.96. The FTSE AIM closed on 737.10, a loss of 0.45% in the month. The Euro Stoxx 50 closed the month on 4,827.63, down 3.46%. At month end, the Bank of Japan retained interest rates at their ultra-low level as it monitors global economic developments and potential risks to domestic recovery. The Nikkei 225 closed October on 39,081.25, a monthly gain of 3.06%.

With voters poised to take to polling stations stateside, robust economic data at month end confused the backdrop for imminent Federal Reserve rate cuts, as US stocks and government bonds fell. The Dow Jones closed the month down 1.34% on 41,763.46. The tech-orientated NASDAQ closed the month down 0.52% on 18,095.15.

On the foreign exchanges, the euro closed the month at €1.18 against sterling. The US dollar closed at $1.28 against sterling and at $1.08 against the euro.

Gold closed October trading at $2,734.15 a troy ounce, a monthly gain of 3.96%. Towards the end of the month, the precious metal traded higher as demand surged ahead of Diwali and the US election; uncertainty over the election outcome has made investors focus on the safe haven asset. Brent crude closed the month trading at $72.62 a barrel, a gain over the month of 1.35%. Oil prices stabilised at month end after rallying due to robust fuel demand in the US and reports that OPEC+ may delay an increase in output.

Index

Value (31/10/24)

Movement since 30/09/24
FTSE 100 8,110.10 -1.54%
FTSE 250 20,388.96 -3.16%
FTSE AIM 737.10 -0.45%
Euro Stoxx 50 4,827.63 -3.46%
NASDAQ Composite 18,095.15 -0.52%
Dow Jones 41,763.46 -1.34%
Nikkei 225 39,081.25 +3.06%

Retail sales rise for third successive month

Recently published ONS statistics showed that retail sales rose for the third month in a row in September, although more up-to-date survey data does point to a recent slowdown as consumers paused spending ahead of the Budget.

The latest official retail sales figures revealed that total sales volumes rose by 0.3% in September, with ONS saying tech stores were the main driver of growth, reflecting a sales boost from the new iPhone launch. September’s growth defied economists’ expectations for a monthly 0.3% decline and, combined with July and August’s strong gains, resulted in sales volumes rising by 1.9% across the whole of the third quarter, the joint largest increase since mid-2021.

More recent survey evidence, however, does suggest consumers became more cautious in the run-up to the Budget. The latest GfK Consumer Confidence index, for instance, found that sentiment fell to a seven-month low in October as concerns over possible tax hikes hit confidence.

Data from last month’s CBI Distributive Trades Survey also points to a recent dip in consumer spending. The CBI noted that retail sales volumes ‘slipped back slightly in October,’ adding that some retailers had highlighted ‘increased consumer caution’ ahead of the Autumn Budget.

More signs of a cooling jobs market

The latest batch of labour market numbers revealed fresh evidence of a softening in the UK jobs market with both an easing in pay growth and a further fall in the overall level of vacancies.

Statistics released by ONS last month showed that average weekly earnings excluding bonuses rose at an annual rate of 4.9% in the three months to the end of August. This figure was down from 5.1% in the previous three-month period and represents the slowest rate of pay growth for over two years.

Adding to signs of a cooling jobs market, the release also revealed another decline in the level of vacancies. In total, ONS said there were 34,000 fewer job vacancies reported between July and September 2024 compared to the previous three-month period; this represents the 27th consecutive monthly fall in the number of vacancies.

Last month also saw a number of recruitment firms report a more recent slowdown. Robert Walters, for instance, noted a pause in jobs market activity in the run-up to the Autumn Budget, while James Reed, CEO of recruitment consultancy Reed, said the UK labour market was experiencing “a slow-motion car crash” with firms lacking the confidence to hire new staff.

All details are correct at the time of writing (1 November 2024)

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor. No part of this document may be reproduced in any manner without prior permission.

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Tees is a trading name of Tees Financial Limited which is regulated and authorised by the Financial Conduct Authority. Registered number 211314.

Tees Financial Limited is registered in England and Wales. Registered number 4342506.

Chancellor Rachel Reeves’ first budget: New policies to boost UK economy

Posted on by Sophie Soraf
“Our mission to grow the economy”

Chancellor of the Exchequer, Rachel Reeves, delivered the Labour government’s first Budget on 30 October with a promise to “restore economic stability” and “invest, invest, invest” to promote growth. In her statement, she outlined a number of new tax and spending measures that she said would create “an economy that is growing, creating wealth and opportunity for all.” In total, the Budget will see taxes rise by £40bn.

Economic forecasts

The Chancellor stressed that every Budget she delivers “will be focused on our mission to grow the economy” and outlined seven pillars that will form the government’s growth policy priorities. Key among these is restoring economic stability and increasing investment, while other areas include boosting regional growth, improving skills across the workforce, creating an industrial strategy, driving innovation and transitioning to Net Zero.

Ms Reeves then unveiled the Office for Budget Responsibility’s (OBR’s) latest economic projections, which suggest the economy will expand slightly faster than previously expected both this year and next, before easing off from 2026 onwards. The new forecast predicts the economy will grow by 1.1% in 2024 and 2.0% next year, before falling back to 1.6% by the end of this Parliament. Overall, the OBR noted that, although the policies in the Budget will ‘temporarily boost’ the economy, the overall level of output will be ‘broadly unchanged’ over the five-year forecast period. Inflation is predicted to average 2.5% this year and 2.6% in 2025.

Cost-of-living measures

The Chancellor acknowledged the burden that the cost-of-living crisis has placed on working people, and committed to:

  • Increasing the National Living Wage (NLW) from £11.44 to £12.21 per hour from April 2025 – a 6.7% increase
  • Increasing the minimum for 18 to 20-year-olds from £8.60 to £10 per hour (over time, the intention is to create a single adult NLW rate)
  • Freezing fuel duty for one year and extending the temporary 5p cut to 22 March 2026
  • Increasing the weekly earnings limit for Carer’s Allowance to equate to 16 hours at the NLW rate
  • Providing £1bn for local authorities to support those in immediate hardship and crisis.

Personal taxation, savings and pensions

As pledged in the Labour manifesto, there are to be no changes to the basic, higher or additional rates of Income Tax, employee National Insurance contributions (NICs) or VAT.

As previously announced, the government has committed to maintain the State Pension Triple Lock for the duration of this Parliament, meaning that the basic and new State Pensions will increase by 4.1% in 2025-26, in line with earnings growth. This means £230.30 a week for the full, new flat-rate State Pension (for those who reached State Pension age after April 2016) and £176.45 a week for the full, old basic State Pension (for those who reached State Pension age before April 2016).

The lower and higher main rates of Capital Gains Tax (CGT) will increase to 18% and 24% respectively for disposals made on or after 30 October 2024. The rate for Business Asset Disposal Relief and Investors’ Relief will increase to 14% from 6 April 2025 and then to 18% from 6 April 2026. The lifetime limit for Investors’ Relief will be reduced to £1m for all qualifying disposals made on or after 30 October 2024, matching the lifetime limit for Business Asset Disposal Relief.

Inheritance Tax (IHT) nil-rate bands will stay at current levels until 5 April 2030 (previously 2028). The nil-rate band remains at £325,000, residence nil-rate band at £175,000, and the residence nil-rate band taper starts at £2m. Unused pension funds and death benefits payable from a pension will be subject to IHT from 6 April 2027.

The government intends to reform Agricultural Property Relief and Business Property Relief from 6 April 2026. In addition to existing nil-rate bands and exemptions, the current 100% rates of relief will continue for the first £1m of combined agricultural and business property. Thereafter, the rate of relief will be 50%, including for quoted shares which are ‘not listed’ on the markets of recognised stock exchanges, such as AIM. From 6 April 2025, Agricultural Property Relief will be extended to land managed under an environmental agreement with, or on behalf of, the UK government, devolved governments, public bodies, local authorities, or approved responsible bodies.

The concept of domicile status is to be removed from the tax system and replaced with a residence-based regime from 6 April 2025. This includes ending the use of offshore trusts to shelter assets from IHT and scrapping the planned 50% tax reduction for foreign income in the first year of the new regime. Individuals who opt in to the regime will not pay UK tax on foreign income and gains (FIG) for the first four years of tax residence.

In England, higher rates of Stamp Duty Land Tax (SDLT) which apply to purchases of second homes, buy-to-let residential properties and companies purchasing residential property, increase from 3% to 5% above the standard residential rates, effective 31 October 2024. The single rate of SDLT that is charged on the purchase of dwellings costing more than £500,000 by corporate bodies will also be increased by two percentage points, from 15% to 17%.

In addition:

  • Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2030. The government will not proceed with the British ISA due to mixed responses to the consultation launched in March 2024
  • The Enterprise Investment Scheme and Venture Capital Trust schemes are extended to 2035
  • The Income Tax Personal Allowance and higher rate threshold remain at £12,570 and £50,270 respectively until April 2028. From April 2028, these personal tax thresholds will be uprated in line with inflation (rates and thresholds may differ for taxpayers in parts of the UK where Income Tax is devolved)
  • Working age benefits will be uprated in full in 2025-26 by the September 2024 Consumer Prices Index (CPI) inflation rate of 1.7%
  • The starting rate for savings will be retained at £5,000 for 2025-26.

Business measures

In her speech, Ms Reeves said, “we are asking businesses to contribute more” to raise revenues required to fund public services. She added, “I do not take this decision lightly,” before announcing:

  • An increase in employers’ National Insurance Contributions (NICs) by 1.2 percentage points to 15% from April 2025
  • A reduction of the secondary threshold from £9,100 per year to £5,000 per year
  • An increase to the Employment Allowance from £5,000 to £10,500
  • The introduction of two permanently lower business rates for retail, leisure and hospitality businesses from 2026-27, funded by a higher multiplier for the most valuable properties
  • £1.9bn of support to small business and the high street in the form of a freeze on the small business multiplier and 40% rates relief for retail, hospitality and leisure properties (capped at £110,000)
  • £250m in funding for the British Business Bank’s small business loans programmes
  • The headline rate of Corporation Tax will be capped at 25%.

Health and education

To round off her inaugural Budget, Ms Reeves turned her attention to “two final areas in which investment is so badly needed to repair the fabric of our nation.”

As indicated in the Party’s election manifesto, the Chancellor confirmed plans to introduce VAT on private school fees (except for children below compulsory school age) from January 2025, and to remove private schools’ business rates relief from April 2025.

Funding for the state school system is set to increase by £11.2bn from 2023-2024 levels – a 3.5% real terms increase. This includes:

  • Increasing funding for day-to-day school spending by £2.3bn, £1bn of which is earmarked for pupils with special educational needs and disabilities (SEND)
  • £1.8bn to continue the expansion of government-funded childcare
  • £30m to fund thousands more breakfast clubs in primary schools
  • Investing in new teachers for core subjects
  • £300m for further education.

Ms Reeves also announced a £6.7bn capital funding package for education in England in 2025-26, a real terms increase of 19% from 2024-25, including £1.4bn towards rebuilding over 500 schools in the greatest need.

Lastly, the Chancellor tackled her plans for the National Health Service, announcing:

  • A 10-year plan for the NHS, to be published in the spring
  • A £22.6bn increase in the day-to-day health budget to deliver on the government’s 18-week waiting time target
  • £3.1bn increase in the capital budget over this year and the next.

Other key points

  • Help to Save scheme – extended until April 2027
  • Alcohol duty – tax on non-draught alcoholic drinks to increase by the usually higher RPI measure of inflation, tax on draught drinks cut by 1.7%
  • Vaping products duty – new tax of £2.20 per 10ml of vaping liquid introduced from October 2026
  • Tobacco duty – to increase by 2% above RPI on all tobacco products and 10% above inflation for hand-rolling tobacco with immediate effect
  • Bus fares – £2 cap on single fares in England to rise to £3 from January 2025
  • Clean energy sector – £3.9bn of funding in 2025-26
  • Air Passenger Duty (APD) – increased for 2026-27, £1 more for domestic economy flights, £2 more for short-haul economy flights and £12 more for long-haul destinations. The higher rate applicable to private jets will rise by 50% in 2026-27
  • Devolved government funding – to receive an additional £6.6bn through the operation of the Barnett formula in 2025-26 (£3.4bn for the Scottish Government, £1.7bn for the Welsh Government and £1.5bn for the Northern Ireland Executive)
  • Expanding government-funded childcare support – an additional £1.8bn pledged for working parents in England, bringing total spending on childcare to over £8bn in 2025-26.

Closing comments

Rachel Reeves signed off her Budget saying, “I have made my choices, the responsible choices, to restore stability to our country, to protect working people… Fixing the foundations of our economy. Investing in our future. Delivering change. Rebuilding Britain.”

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding of the Budget, taxation and HMRC rules and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK; please ask for details. We cannot assume legal liability for any errors or omissions it might contain. Levels and bases of, and reliefs from taxation are those currently applying or proposed and are subject to change; their value depends on the individual circumstances of the investor.

All details are believed to be correct at the time of writing (30 October 2024)

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Tees is a trading name of Tees Financial Limited which is regulated and authorised by the Financial Conduct Authority. Registered number 211314.

Tees Financial Limited is registered in England and Wales. Registered number 4342506.

A smart way to invest a business sale in your retirement plans

Posted on by Sarah O'Sullivan
How One Business Owner Benefited from a Family Investment Company

Putting the money from the sale of his business into a Family Investment Company was a natural choice for David*, with the benefit of substantial tax savings.

David had run a successful business in the manufacturing sector and was making plans for his retirement. As a long-standing corporate and commercial client of Tees, he opted to use our in-house Wealth Management service to advise him.

David had several existing assets, including savings and two pension funds, along with the sale of the business, which raised over £10 million. While some of the money was invested in pensions, an ISA and investment bonds, the majority went into a Family Investment Company.

Adam Hildred, Senior Wealth Planner at Tees, explained that Family Investment Companies are one of the least-used financial products available in the marketplace. However, for clients like David with corporate and commercial experience, it was something he could easily understand and, therefore, a natural choice.

“If we had put all of these assets into a standard investment area, with capital gains tax and dividend allowances coming right down, David would be paying a lot of tax on that money. The Family Investment Company provides a completely different structure, being under corporation tax rates, you are paying 25% tax instead of potentially 45%, and at the same time you can offset your fees and interest on the loan made into the structure against whatever profit you make.

The Family Investment Company fits a wide range of potential. Whether the amount to be invested is £1 million or £100 million is irrelevant; the recommendation will be pretty much the same. Full accounting advice is always required.”

Clients are advised to start their planning long before a business is actually sold.

Adam continued, “Tees is one of the few legal firms with our own Wealth Management advisers. We take a holistic approach to looking after our clients’ often complex needs, which includes input from several different experts.

At Tees, we have all the expertise under one roof, so if a client chooses, we can look after the legal aspects of their retirement plan, such as wills and lasting power of attorney (LPA) which we did in David’s case.”

*Names have been changed to protect the privacy of our clients. 

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Past performance is not a reliable indicator of future returns and all investments involve risks. Some information quoted was obtained from external sources we consider to be reliable.

Tees is a trading name of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered number 211314. Tees Financial Limited is registered in England and Wales. Registered number 4342506.

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All legal services provided by Tees are regulated by the Solicitors Regulation Authority. Tees is a trading name of Stanley Tee LLP is authorised and regulated by the Solicitors Regulation Authority (SRA Number 464615) and is registered in England and Wales number OC327874.

All financial services provided by Tees are regulated by the Financial Conduct Authority. Tees and Tees Wealth are trading names of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales number 4342506. Registered office address Tees House, 95 London Road, Bishop’s Stortford CM23 3GW.

Copyright © 2025 Tees Law. All rights reserved.

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Office locations
Bishop’s Stortford
Brentwood
Cambridge
Chelmsford
North Herts
Saffron Walden

Financial services:
Legal notices | Privacy notice

Legal services: Legal notices | Privacy notice

Fee information | Cookie Policy

Linkedin Facebook Youtube

All legal services provided by Tees are regulated by the Solicitors Regulation Authority. Tees is a trading name of Stanley Tee LLP is authorised and regulated by the Solicitors Regulation Authority (SRA Number 464615) and is registered in England and Wales number OC327874.

All financial services provided by Tees are regulated by the Financial Conduct Authority. Tees and Tees Wealth are trading names of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales number 4342506. Registered office address Tees House, 95 London Road, Bishop’s Stortford CM23 3GW.

Copyright © 2025 Tees Law. All rights reserved.

tees-logo-v1

Financial services: Legal notices | Privacy notice
Legal services: Legal notices | Privacy notice
Fee information | Cookie Policy

Office locations
Bishop’s Stortford
Brentwood
Cambridge
Chelmsford
North Herts
Saffron Walden

Linkedin Facebook Youtube

All legal services provided by Tees are regulated by the Solicitors Regulation Authority. Tees is a trading name of Stanley Tee LLP is authorised and regulated by the Solicitors Regulation Authority (SRA Number 464615) and is registered in England and Wales number OC327874.

All financial services provided by Tees are regulated by the Financial Conduct Authority. Tees and Tees Wealth are trading names of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales number 4342506. Registered office address Tees House, 95 London Road, Bishop’s Stortford CM23 3GW.

Copyright © 2025 Tees Law. All rights reserved.

tees-logo

0800 0131165

Linkedin Facebook Youtube

Financial services:
Legal notices | Privacy notice
Legal services:
Legal notices | Privacy notice

All legal services provided by Tees are regulated by the Solicitors Regulation Authority. Tees is a trading name of Stanley Tee LLP is authorised and regulated by the Solicitors Regulation Authority (SRA Number 464615) and is registered in England and Wales number OC327874.

All financial services provided by Tees are regulated by the Financial Conduct Authority. Tees and Tees Wealth are trading names of Tees Financial Limited which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales number 4342506. Registered office address Tees House, 95 London Road, Bishop’s Stortford CM23 3GW.

Copyright © 2025 Tees Law. All rights reserved.

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