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The psychological influences that could affect your relationship with money

5 surprising and unconventional economic indicators

How do you judge whether an economy is sliding into a recession? Some unconventional theories suggest looking at the hemline of skirts or sales of ties could provide valuable insights due to patterns in consumer behaviour.

According to finance corporation JP Morgan, as of the end of May 2025, there was a 40% risk of a US and global recession this year. While these economists are likely to be relying on a wealth of economic indicators, from asset prices to the unemployment rate, read on to discover some surprising potential economic indicators.

1. Hemline index

The hemline index is a theory that fashionable skirt lengths rise and fall alongside stock prices.

For example, during prosperous periods in the 1920s and 1960s, skirts became shorter. In contrast, following the 1929 Wall Street crash, which led to the Great Depression, women tended to wear longer skirts.

There are several reasons why hemlines might be linked to the economy, including confident consumers being more likely to choose a shorter skirt.

Yet, it hasn’t always been accurate. The 1950s, despite being a period of economic expansion, are often associated with long, full skirts.

2. Lipstick effect

If you can’t afford to indulge in large luxury expenses or are worried about the state of the economy, you’re more likely to spend money on small luxuries, the lipstick effect hypothesis suggests.

According to this theory, during a downturn, rather than buying a designer dress, people would buy a small luxury item like a lipstick. The theory can be applied to other areas, such as choosing to treat yourself to an expensive drink or small gadget if you’re no longer feeling comfortable with more extravagant purchases.

As with the hemline index, there are times when the lipstick effect has been proven and unproven. However, what consumers choose to spend their money on could provide valuable insight into how they feel about their economic prospects.

3. Men’s underwear index

In contrast with the lipstick effect, the men’s underwear index suggests that men will cut back on spending on underwear when tightening their belts.

Indeed, according to a May 2022 report published in Business Review at Berkeley, sales of Men’s underwear in Australia fell during the 2008 recession and the Covid-19 pandemic. So, again, the personal items that people purchase could provide useful information about how they feel their finances will fare in the short term.

4. Skyscraper index

You might expect building skyscrapers to be associated with a strong economy. After all, they cost a lot to build and suggest that there’s demand for property. However, the skyscraper index could indicate that the opposite is true.

Indeed, the theory suggests that whenever a skyscraper breaks the record for the world’s tallest building, a recession will follow. This is true of the Empire State Building, which was opened in 1931 during the Great Depression, and the current tallest building, the Burj Khalifa in Dubai, broke the record in 2009 during a global recession.

When you look at the theory more closely, it’s perhaps not surprising. Skyscrapers are often conceived at the height of an economic boom, but as they can take years to complete, economies may take a turn during construction.

5. Necktie index

Ties could indicate confidence in the economy in two ways, according to the necktie index.

First, is that tie sales will increase during an economic downturn as employees want to ensure they appear professional and hard-working.

Second, the style of tie a person chooses could be influenced by their confidence. When the economy is strong, sales are likely to rise for wider and brighter ties, while slim ties and muted colours become more fashionable during a downturn.

So, next time you buy a tie, you might want to consider what your selection could say about your economic outlook.

You can be prepared for economic uncertainty

While there’s plenty of data economists can use to predict economic output, there are numerous factors that can affect it, including some that can’t be foreseen.

While it’s difficult to predict how an economy will fare, it is often possible to make this uncertainty part of your financial plan. By considering how economic ups and downs might affect your goals, you could take steps to keep them on track. Please get in touch to talk about your financial plan.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

5 valuable reasons to consult a solicitor when writing your will

Writing your will should give you confidence that your assets will be distributed in line with your wishes when you pass away. Yet, for an increasing number of people, this might not be the case as they overlook the value of working with a professional.

You don’t need to use a solicitor when writing your will, but it could be useful, especially if your affairs are complex.

As well as taking a DIY approach, research published by Today’s Wills & Probate in May 2025 found that people are also turning to AI. Indeed, 47% of survey respondents said they’d feel comfortable outsourcing the writing of a will to an AI-powered system.

While writing your will yourself or using AI may seem like an easy way to complete this task, it might not be the most efficient in the long run.

Read on to discover some of the reasons why you could benefit from working with a solicitor.

1. A solicitor could spot mistakes

Even if your wishes are relatively straightforward, it can be easy to make mistakes if you write your will yourself.

Some common will mistakes include:

Not getting the will witnessed correctly
Forgetting to appoint an executor
Not addressing all assets
Ambiguous language.

Mistakes could lead to delays and, in the worst-case scenario, might invalidate your will. If your will is invalid, your estate may be distributed according to the wishes set out in a previous will or follow intestacy rules, which might not align with your plans.

2. A legal professional could highlight where potential disputes may arise

Someone contesting your will could lead to potentially lengthy and costly disputes. Depending on the outcome, it might also mean your assets don’t go to your intended beneficiaries.

Indeed, according to a Guardian article from February 2024, as many as 10,000 people in England and Wales are disputing wills every year, and the number is rising.

So, taking some time to understand if your will could be disputed and how you might mitigate it could be valuable. A solicitor could provide guidance in this area.

3. A solicitor could identify other ways to pass on wealth

A will is used to pass on assets when you pass away, but there might be other ways to distribute your wealth as well. For instance, establishing a trust could be valuable if you want to pass on assets to young children or vulnerable adults, reduce a potential Inheritance Tax (IHT) bill, or ensure wealth stays within your family.

Tailored legal advice could allow you to explore other options and understand what’s right for you.

4. A professional could make probate simpler for your family

Probate refers to the process of establishing the validity of a will, and then distributing assets in line with it. Not all estates need to go through probate. For instance, if you leave your entire estate to your spouse or civil partner and the assets are jointly owned, probate may not be necessary.

Working with a solicitor could make probate easier for your family and potentially reduce waiting times. Not only could this reduce stress at an already difficult time, but it may be particularly important if your loved ones will be reliant on your assets to cover essential outgoings.

According to a government report published in February 2025, it takes four weeks, on average, for probate applications to be granted. However, once the application has been granted, it can take months for the executor of the will to handle the estate and distribute assets.

5. A solicitor can work with your financial planner

There may be benefits to considering your financial plan when deciding how to distribute your assets. For example, you might want to use your will to reduce a potential IHT bill.

A solicitor could work with us on your behalf to ensure your wishes are reflected in both your will and long-term financial plan.

Please get in touch if you have any questions about your estate plan or writing your will.

The Financial Conduct Authority does not regulate will writing, trusts, Inheritance Tax planning, or estate planning.

The age you can access your pension may rise. Could it affect your retirement?

In April 2028, the age you can usually access your pension, known as the “normal minimum pension age” (NMPA), will rise from 55 to 57. So, if you hope to retire at 55, you might need to update your retirement plan.

Even if your planned retirement date seems far away, creating a plan now could help you bridge a potential shortfall so you’re still able to give up work when you’re ready to.

As well as the NMPA, the State Pension Age is set to rise. From 6 May 2026, the age you can claim the State Pension will gradually increase from 66 to 67 in 2028 for both men and women. So, you might also need to factor in creating a larger income from your pension or other assets for an additional year before you can claim the State Pension.

Understanding your potential later-life income could help keep your retirement on track, even when policy changes.

Thousands of retirees could be affected by the change to the normal minimum pension age

According to government figures published in October 2024, the median expected age to retire in the UK is 65. If you’re among those who expect to retire at this age, the change to the NMPA may not affect you.

However, with around 10% expecting to retire before the age of 60, thousands of workers could find they need to delay their retirement if they can’t access their pension when they expect.

So, if you hope to retire at 55 or even earlier, here are four important steps that might allow you to do so.

4 steps you could take to prepare for the pension change

1. Check the details of your pension

While the NMPA applies to most pensions, there are some exceptions.

If you have an older workplace or personal pension, it may have a “protected pension age”, which might give you the right to access your savings earlier. So, it’s worth checking the details of your pensions before you make changes to your retirement plan.

2. Calculate your retirement income needs

The retirement lifestyle you want will affect how much income you need, and at what point you can afford to retire.

Thinking about your desired retirement lifestyle now could help you assess how you might retire at 55 if you cannot create an income from your pension straight away.

You might also want to consider how you’ll retire. More people are choosing to phase into retirement by gradually reducing working hours or moving to a role with greater flexibility.

According to a September 2024 article published by Global Recruiter, almost half of workers aged over 50 start to phase into retirement. Most of these workers plan to phase into retirement over a long period, such as 10 years.

A phased retirement might mean you’re able to move away from your current role sooner, so you have more time to focus on what’s important to you.

3. Consider all your assets when making a retirement plan

Often, when you think about creating a retirement income, your focus is on your pension. However, other assets, such as savings, investments held outside of a pension, and property, may be useful, especially if you want to retire before the NMPA.

As your financial planner, we could work with you to create a long-term financial plan that brings together different assets to support you in reaching your retirement goals.

4. Schedule regular reviews

There are two key reasons why regular retirement plan reviews are important.

First, your circumstances and goals might change. Second, further changes in government policy could affect your retirement plans in the future.

Regular reviews provide an opportunity to ensure your plan is still appropriate and reflects your wishes and pension policy.

A retirement plan could keep your finances on track

Changes to the NMPA don’t automatically mean you need to update your retirement plan. However, being informed could offer peace of mind as you move towards the exciting milestone.

Working with a financial planner could help you assess how you’ll create an income once you step back from work and identify potential gaps. Please contact us to talk to one of our team about your retirement.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only and is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Investment market update: June 2025

Trade tariffs continued to affect investment markets in June 2025, though uncertainty did start to ease. However, rising tensions in the Middle East may have affected the performance of your investments. Read on to find out more.

Remember, it’s often wise to take a long-term view of your investments when reviewing returns, rather than focusing on short-term market movements.

In June, the Organisation for Economic Co-operation and Development (OECD) cut its global growth forecast to 2.9% in 2025 and 2026, down from 3.1% and 3% respectively, on the assumption that tariff rates in mid-May are sustained.

The OECD said: “Substantial increases in barriers to trade, tighter financial conditions, weaker business and consumer confidence and heightened policy uncertainty will all have marked adverse effects on growth prospects if they persist.”

Similarly, the World Bank lowered its growth forecasts for nearly 70% of all economies. It estimates that the 2020s are on course to be the weakest decade for the global economy since the 1960s.

Trade tensions ease, but uncertainty in the Middle East leads to volatility

On 2 June, a European market sell-off started in early trading as investors continued to react to the trade war. Stock indices, which track the largest companies listed on each stock exchange, were down, including Germany’s DAX (-0.25%), France’s CAC (-0.5%), and the UK’s FTSE 100 (-0.27%). Markets in the US also opened lower, including the S&P 500 dropping 0.3%.

However, there was some good news in the UK. Following the announcement of a new defence review, stocks in the sector jumped, with Babcock, one of the largest Ministry of Defence contractors, leading the way with a rise of 3.8%.

Germany’s sluggish economy received a boost on 4 June when a tax relief package worth €46 billion between 2025 and 2029 was unveiled. It led to the DAX rising 0.9%.

After weeks of tit-for-tat tariffs between the US and China, a trade deal was struck on 11 June. The US said a 55% tariff, inclusive of pre-existing levies, would be placed on China. The deal led to Chinese stocks rising. Indeed, the CSI 300 index, which tracks the largest stocks on the Shanghai and Shenzhen markets, was up around 0.88%.

Despite poor economic data from the UK, the FTSE 100 closed at a record high on 12 June. Among the top risers were health and safety device maker Halma (2.8%) and Tesco (1.8%).

In contrast, European markets dipped, with the DAX (-1.35%) and CAC (-1%) both falling.

The Iran-Israel crisis led to stock markets falling when they opened on 13 June. In London, the FTSE 100 was down 0.56% and almost every blue-chip share was in the red. It was a similar picture in Europe and the US, with indices dipping.

On 24 June, Donald Trump, president of the US, declared there was a ceasefire between Iran and Israel. It led to geopolitical fears easing and markets rallying around the world. However, some fears remain.

UK

UK economic data released in June was weak.

Data from the Office for National Statistics (ONS) shows the UK economy shrank by 0.3% in April. This was partly linked to trade tariffs as exports of UK goods to the US fell by around £2 billion.

In addition, the ONS revealed the rate of inflation remained above the 2% target at 2.4% in the 12 months to May. The news led to the Bank of England’s Monetary Policy Committee voting to hold interest rates.

However, think tank the Institute for Public Policy Committee said the central bank was harming households by not cutting the base interest rate. It also added that GDP was lower than expected because interest rates have been kept too high for too long.

A Purchasing Managers’ Index (PMI) involves surveying companies to create an economic indicator. A reading above 50 suggests a sector is growing.

In June, PMI readings for May show the manufacturing and construction sectors were contracting, but they had improved when compared to a month earlier, leading to hopes that a corner has been turned. In addition, the composite PMI, which combines service and manufacturing surveys, moved back into growth.

Europe

Eurostat figures show the rate of inflation across the eurozone fell to 1.9% in May, down from 2.2% in April, taking it below the European Central Bank’s (ECB) 2% target for the first time since September 2024.

In response, the ECB lowered its three key interest rates for the eighth time in the last 12 months.

There was also positive news from PMI data. The eurozone continues to hover just above the 50 mark that indicates growth, and German business activity returned to growth in June. As the largest economy in the eurozone, German activity is important to the bloc, and factory orders were also higher than expected.

Ireland is leading the EU in terms of growth. The country had expected its GDP to grow by 3.2% in the first quarter of 2025, but exceeded this with an impressive 9.7% boost. The jump was linked to strong exports in pharmaceuticals and other key sectors as companies tried to get ahead of tariffs.

US

In the 12 months to May 2025, the rate of inflation in the US increased slightly to 2.4% and remains above the Federal Reserve’s target of 2%.

A PMI conducted by the Institute of Supply Management shows the US manufacturing sector is slipping due to tariff uncertainty. Indeed, 57% of the sector’s GDP contracted in May, up from 41% in April.

The data from the service sector was also negative, with figures showing it contracted in May for the first time in June 2024, and new orders fell at the fastest rate since December 2022.

However, separate data suggests that businesses are feeling more optimistic about the future.

The National Federation of Independent Business’s Small Business Optimism Index increased three points in May. It was the first rise since Trump took office at the start of the year thanks to trade talks taking place between the US and China throughout June.

The US economy also added 139,000 in May. The number was slightly higher than forecast and could suggest that businesses feel confident enough to expand their workforce.

Asia

Data from China showed it wasn’t immune to the effects of the trade war.

China’s National Bureau of Statistics data shows inflation was -0.1% in May as prices dropped. Deflation affecting the country highlighted the importance of the US and China reaching a trade deal.

In addition, manufacturing activity in May shrank at the fastest pace in two and a half years. Firms were hit by falls in new orders and wealth export demand. The PMI reading was 48.5, down from 50.4 in April.

The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

4 steps that could recession-proof your retirement

How technology could be harming your investment decisions

Technology has made it easier than ever to invest and review the performance of your portfolio. Yet, it could also be harming your decision-making skills and the way you approach managing your finances.

Understanding when and how technology has the potential to negatively affect your investments could mean you’re better able to spot and then prevent it.

Here are five reasons why technology might not be good for your investment strategy.

1. Technology gives you the opportunity to make snap decisions

When you invest, it’s often wise to do so with a long-term goal in mind. A longer investment time frame provides a chance for short-term market movements to smooth out and, hopefully, deliver returns.

So, having a long-term mindset when making investment decisions is often valuable.

Yet, with the ability to change your investments with just a few taps on your phone, it’s easy to make snap decisions based on emotions or your current circumstances. Instead of considering how your action could affect your finances in a decade, technology could allow you to invest in a way that reflects your situation now.

2. The 24/7 news cycle can provoke investor emotions

The world is more connected than ever. In many cases, this is positive, but it means there’s now a 24/7 news cycle that you can access almost anywhere.

Decades ago, you might read about short-term market movements in the morning newspaper. Now, you can track investment volatility minute-by-minute, and find numerous, sometimes conflicting, views on what it means.

This may lead to investors experiencing emotions that result in them acting in a way that doesn’t align with their investment strategy.

For instance, seeing the markets steadily decline throughout the day could make a nervous investor fearful, which results in them selling assets because they’re worried about the value of their investments falling further. Yet, by reacting to the news, they’ve turned paper losses into real ones and may miss out on a potential recovery.

The 24/7 news cycle doesn’t just provoke negative emotions in investors either. For example, you might watch a news segment about the “best” shares and excitedly purchase them.

3. Technology can amplify the urge to check investments frequently

For many individuals, a long-term approach to investing makes sense. So, when reviewing performance, you often want to assess returns over years rather than weeks or months.

While annual or quarterly reviews are useful for keeping your investment goals on track, many investors feel the urge to check their investments frequently. Having access to investment apps on your phone can amplify this and mean it’s simple to check how values have changed several times a day.

Much like the news, having access to this information isn’t automatically bad. However, it can lead to knee-jerk investment decisions that aren’t right for you because you respond based on short-term emotions.

4. Too much choice can feel overwhelming

Investors today can invest in a wide range of assets around the world. On one hand, greater choice means you have more opportunities to find investments that are right for your goals. On the other hand, too much choice can feel overwhelming.

Clearly outlining your goals and understanding the types of investments that are right for you can make the decision feel less daunting. This is a step a financial planner could help you with and then provide ongoing support, so you have someone to turn to if you have questions or can even take a step back from making decisions if you choose.

5. You could be more vulnerable to scams

Fraudsters have always tried to part victims with their money. However, they now have technology at their disposal that could make scams even harder to spot.

From cloning the phone number of a legitimate firm to using AI to create convincing sales materials, it isn’t always easy to spot the red flags. In addition, technology means you can be targeted while you’re on the go. You might be less likely to pay attention to the small details if you open an email on your phone or take a call while walking.

It isn’t always possible to recover losses if you’ve been targeted by a scam, so being vigilant is important. Remember, if you’re unsure if the person you’re communicating with is genuine or you have any doubt about an opportunity, take a step back to reassess.

Get in touch to talk about your investments

If you’d like our support when managing your investments, from understanding if investing is right for you to providing regular reviews, please get in touch. Our tailored financial plan could help you overcome some of the challenges technology might present.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Investment market update: May 2025

Uncertainty continued to lead to market volatility in May 2025. However, there was some good news for investors as some markets recovered the losses they experienced in April 2025. Read on to find out more and what factors may have influenced your portfolio’s performance recently.

While market movements may be worrisome, remember, it’s a normal part of investing. Keep your long-term goals and strategy in mind when you review how the value of your investments has changed.

Tariff announcements continued to affect markets towards the end of May 2025

The month got off to a good start for investors – the FTSE 100, an index of the largest 100 companies listed on the London Stock Exchange, recorded its longest-ever winning streak. On 3 May, the index had made gains for 15 consecutive days and almost recovered all the losses that followed tariff announcements in April.

The European markets experienced some volatility at the start of the month as Friedrich Merz lost the vote to become Germany’s chancellor. It led to some calling for a fresh election, and also uncertainty – on 6 May, the German index DAX fell 1.9%.

After a tit-for-tat trade war sparked investor fear in April, many were optimistic when trade discussions between the US and China began on 7 May. Combined with the People’s Bank of China cutting interest rates by half a percentage point, this led to Asian stocks lifting. Indeed, the Shanghai Composite rose by almost 0.5%.

This was followed by Donald Trump, president of the US, announcing a “full and comprehensive” trade deal with the UK. When markets opened on 8 May, Wall Street was up 0.6%.

Hope that other countries will also reach agreements with the US lifted European markets. The DAX in Germany increased by 0.6% to reach a record high, while France’s CAC was up 0.5% on 9 May.

Wall Street surged on 12 May when it was revealed the US and China had agreed to a 90-day pause on tariffs. The Dow Jones Industrial Average (2.3%), S&P 500 (2.6%), and Nasdaq (3.6%) all rallied.

Similarly, when markets opened in Asia, Chinese indices jumped, particularly technology and financial stocks.

However, the positive news didn’t last throughout the month.

On 19 May, credit ratings firm Moody’s downgraded the US’s rating from triple-A to Aa1. The decision was linked to the growing US national debt, which is around $36 trillion (£26.6 trillion) and rising interest costs. The announcement led to global volatility.

What’s more, on 23 May, Trump threatened further tariffs, which led to markets falling.

In a bid to encourage technology giant Apple to make its iPhone in the US, Trump suggested the company could face a 25% tariff. Apple’s shares fell by around 3% before markets opened after the comments were made.

Trump also said EU imports would face a 50% tariff from the start of June. He added he wasn’t looking to make a deal with the bloc, but instead wanted EU businesses to build plants in the US. The news led to falls across European markets, including the DAX (-1.9%), FTSE 100 (-1.1%) and Italy’s FTSE MIB (-2%).

However, just a few days later, on 28 May, Trump agreed to delay EU tariffs and suggested meetings would be arranged to discuss a trade deal.

UK

The Bank of England (BoE) decided to cut its base interest rate by a quarter of a percentage point to 4.25% – the lowest rate in two years – at the start of the month.

However, inflation data may raise concerns for the BoE. While inflation was expected to rise, it was higher than predicted. In the 12 months to April 2025, inflation was 3.5%, with increasing energy costs playing a key role in the rise.

GDP data was positive. The UK grew by 0.7% in the first quarter of 2025, making it the fastest-growing G7 economy. Yet, the think tank Resolution Foundation warned a rebound is unlikely, and it expected April data to be weaker.

The UK unveiled a trade deal with India, covering a range of products from cosmetics to food. The agreement represents the biggest trade deal since Brexit in 2020 and is expected to increase bilateral trade by more than £25 billion over the long term.

While many businesses are worried about the potential effects of trade tariffs, aerospace and defence firm Rolls-Royce said it could offset the impact. CEO Tufan Erginbilgic said the company expected to deliver an underlying operating profit of between £2.7 billion and £2.9 billion in 2025 on 1 May, which led to share prices increasing by 2.7%.

The firm benefited from a further boost of 4% on 8 May when the UK-US trade deal was announced.

However, other firms aren’t expected to fare as well.

Drinks company Diageo, which produces around 40% of all Scotch whisky, predicts it will lose around £150 million due to tariffs.

Europe

Inflation in the eurozone continued to hover above the 2% target at 2.2% for the 12 months to April 2025.

Eurostat lowered its estimate for economic growth in the eurozone in the first three months of the year to 0.3%. In the first quarter of 2025, Ireland boasts the fastest-rising GDP (3.2%), while contractions were measured in Slovenia, Portugal, and Hungary.

Unsurprisingly, the European Commission also cut its growth forecast for the eurozone in 2025 from 1.3% to 0.9%. It said this was “largely due to the increased tariffs and the heightened uncertainty caused by recent abrupt changes in US trade policy”.

HCOB’s PMI output index for the eurozone fell from 50.9 to 50.4 in April – a reading above 50 indicates growth. While still growing overall, it’s notable that France’s private sector contracted for the eighth consecutive month and Germany’s output barely rose. However, there was a strong increase in Ireland, and Spain and Italy also expanded.

There is potentially good news on the horizon. Germany’s factory orders jumped by 3.6% in March as companies tried to get ahead of tariffs.

US

Trump’s tariffs, which aim to reduce the trade deficit, have initially, at least, had the opposite effect.

As businesses tried to stock up before new tariffs were imposed on goods from abroad, the US trade deficit reached a record high in April. The deficit increased by $17.3 billion (£12.8 billion) to $140.5 billion (£104 billion).

GDP data also suggests Trump’s policies are having a negative effect on the economy. In the first three months of 2025, GDP fell by 0.3%; this is in stark contrast to the 2.4% rate of growth recorded in the final quarter of 2024. It marks the first time the US economy has shrunk in three years.

The University of Michigan’s index of consumer sentiment indicates households are worried about their finances. Americans are concerned about potentially weakening incomes, with the index falling 26% year-on-year.

Tariffs are expected to affect a range of businesses, including the car manufacturing sector.

The three big US car manufacturers – General Motors, Ford, and Stellantis – all have some manufacturing facilities in Mexico or Canada that serve the US market and are likely to be affected by trade tariffs.

General Motors expects tariffs to cost the company as much as $5 billion (£3.7 billion) this year. Similarly, Ford has said tariffs will cost around $1.5 billion (£1.1 billion) in profits this financial year and has suspended its guidance while it seeks to understand the full impact of consumer reaction and competitive response.

Asia

At the start of the month, the Bank of Japan cut its economic growth forecast for the fiscal year ending March 2026 from 1.1% to 0.5%. The bank cited trade policies as the reason for the fall.

Indeed, GDP for the first quarter shows Japan’s economy contracted by 0.7% due to a decline in exports and private consumption as households cut back their spending.

Trade between China and the US fell sharply in April. Shipments to the US fell 21% year-on-year, and imports declined by 14%. However, the data suggests that Chinese manufacturers have found alternative markets. Overall exports jumped by 8.1% compared to the forecast rise of 1.9%.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Investment market update: April 2025

Once again, US president Donald Trump’s trade tariffs have affected investment markets throughout April 2025 and could have far-reaching implications over the coming months.

Indeed, UN Trade and Development now predicts that global growth will slow to 2.3% in 2025, compared to 2.8% last year.

While experiencing volatility can be daunting as an investor, remember to take a long-term view. Historically, markets have recovered from periods of downturn. However, it’s important to note that investment returns cannot be guaranteed.

Trade tariffs and their effect on the market in April 2025

Since Trump took office in January, uncertainty around trade policies has affected global markets, and these announcements continued to have an effect in April.

On 2 April, markets prepared for key tariff announcements from the US, dubbed “Liberation Day” by the White House.

The speculation led to a European stock sell-off gathering pace, with pharmaceutical shares being particularly affected. The Stoxx 600 healthcare index, which is composed of European businesses in the healthcare sector, fell by around 2.5%.

On “Liberation Day”, Trump announced sweeping two-tier tariffs. A baseline 10% tariff was applied universally to imports from all countries (except Mexico and Canada) and then additional country-specific “reciprocal” tariffs were also applied.

As a result, on 3 April, markets around the world plummeted when they opened – from Tokyo’s Nikkei (-3.4%) to London’s FTSE 100 (-1.4%). In fact, Wall Street recorded its worst day since 2020 as the S&P 500, which tracks 500 leading companies in the US, closed 4.9% lower.

On 4 April, Beijing retaliated and announced 34% tariffs on the US.

As the market continued to fall, it didn’t stop there, with both the US and China increasing their tariffs several times. By 11 April, China’s tariff had reached 125% and the US’s was 145%.

Amid this tit-for-tat trade war, Trump announced a 90-day pause on reciprocal tariffs for most countries, which led to markets rallying.

Despite the uncertainty experienced throughout April, the market began to settle towards the end of the month. On 24 April, the FTSE 100 closed 0.65% higher than it opened and was back to the level it was on 3 April before the tariff volatility. It was a similarly positive day for the main indices in Germany and France.

UK

Headline data was mixed for the UK in April.

Figures from the Office for National Statistics show the economy unexpectedly grew by 0.5% in February. While this will certainly be welcome news for chancellor Rachel Reeves, experts predict a downturn in March due to the tariffs.

Inflation also fell in line with expectations to 2.6% in the 12 months to March 2025, compared to 2.8% a month earlier. The Bank of England hinted it could cut the base interest rate at the next Monetary Policy Committee meeting in May.

However, readings from S&P Global’s Purchasing Managers Index (PMI), which provides an insight into the health of businesses, aren’t optimistic.

The PMI indicated manufacturing production fell at a faster pace in March as new orders declined at the sharpest rate in 19 months.

In addition, the private sector went into decline for the first time since October 2023 due to exports falling at the fastest pace in almost five years.

Europe

Eurostat data shows inflation was down across the eurozone to 2.2% in the 12 months to March. There was a significant variance between countries, from France (0.9%) to Romania (5.1%).

The figures paved the way for the European Central Bank to make its seventh cut to interest rates in the last 12 months. The main interest rate fell from 2.5% to 2.25%.

PMI data was more positive for the eurozone than the UK.

Factory output increased for the third consecutive month and crossed the threshold that indicates growth for the first time in two years. This boost is linked to orders rising as businesses tried to beat incoming tariffs.

Perhaps unsurprisingly given market volatility, a survey from the ZEW Economic Research Institute found German investor morale plunged to the lowest level since the start of the war in Ukraine. The president of the institute pointed to the “erratic change in US trade policy” as a reason.

US

There could be difficult months ahead for the US. The International Monetary Fund increased the probability of a US recession occurring in 2025 from 25% to 37%.

Tariffs affected more than the markets too. Uncertainty around trade policy led to factory production stalling, according to S&P Global’s PMI. However, at 50.2, the reading remained just above the 50 mark that indicates growth.

Similarly, the PMI showed US business activity fell to a 16-month low.

Some of the largest businesses in the US have suffered a setback due to the tariffs.

On 3 April, Apple shares were down by 9%, wiping $300 billion (£225 billion) from the company’s value. The business relies on imports from Asia and is likely to face higher costs as a result.

Tesla’s quarterly sales also indicated challenges as they slumped 13% in the first three months of the year. The fall was linked to strong competition from rivals and owner Elon Musk’s involvement with Trump’s presidential campaign.

Asia

Exports from China climbed by 12.4% year-on-year in March – a five-month high. The jump was caused by factories rushing to get shipments out before tariffs took effect.

There was a blow to China when Fitch downgraded its credit rating from A+ to A. The organisation said the decision was made before tariffs were considered and is due to China’s rising debt and deteriorating public finances.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

4 useful insights from a decade of Pension Freedoms

A decade ago, the introduction of Pension Freedoms shook up retirement planning and gave retirees more options than ever.

Before 2015, if you had a defined contribution (DC) pension, the common route was to use the money accumulated to purchase an annuity. The annuity would then provide you with a regular income, usually for the rest of your life.

While an annuity can be valuable in some circumstances, it isn’t flexible.

To give retirees more choice, Pension Freedoms were introduced in 2015. If you choose, you can still purchase an annuity, but you might also opt to withdraw lump sums from your pension or take a flexible income that you’re in control of.

You may also mix the options. For instance, you may take an initial lump sum to kickstart retirement, purchase an annuity to create a base income, and withdraw a flexible income when you need to.

So, with a decade of Pension Freedoms data and experiences to draw from, what insights could be valuable when planning for your retirement?

1. Pensioners could be missing out on returns by withdrawing a tax-free lump sum

One of the key changes in 2015 was the ability to withdraw 25% of your pension tax-free (up to £268,275 in 2025/26) when you turn 55, rising to 57 in 2028.

The good news is that, despite fears of reckless spending, figures suggest most retirees aren’t immediately withdrawing this lump sum. According to Royal London data published in March 2025, just 8% of people took their tax-free lump sum within six months of turning 55.

However, more than half of retirees choose to withdraw the lump sum at some point. The most common reason was to pay off a mortgage or reduce other debt, which could provide greater financial security over the long term.

Yet, around a quarter of people taking the tax-free cash simply deposited the money in the bank.

While having accessible cash might feel reassuring, leaving it in your pension, where it’s likely to be invested, could yield higher returns over a long-term time frame when compared to a savings account.

You don’t need to withdraw the 25% lump sum in one go to benefit from the tax-free cash. You can also spread it across multiple withdrawals. So, if you don’t have a clear plan to spend a lump sum, leaving it in your pension might make financial sense.

2. Over-50s are worried about running out of money in retirement

As you’re in control of how you access your pension savings, there is a risk that you could withdraw too much too soon, either by taking a large lump sum or withdrawing an unsustainable regular income.

While figures suggest most retirees are taking a measured approach, 42% of over-50s told Royal London that they worry about running out of money in retirement.

There are several ways to alleviate your fears and have confidence in your retirement finances.

One option might be to purchase an annuity to create a base income.

According to statistics from the Financial Conduct Authority (FCA), retirees are often choosing flexi-access drawdown over purchasing an annuity.

Indeed, in 2023/24, 68% of retirees accessing a pension worth between £100,000 and £249,999 did so by taking a flexible income. In contrast, just under 20% purchased an annuity. While an annuity isn’t right for everyone, it could offer peace of mind.

Another option is to work with a financial planner when you take a flexible income. We could help you assess your pension and other assets to understand what a sustainable income is for you.

3. Retirees could face an unexpected tax bill

While you may have retired, you could still benefit from considering your tax liability, including Income Tax.

If your total income, including withdrawals from your pension and the income you receive from the State Pension, exceeds the Personal Allowance (£12,570 in 2025/26), you may be liable for Income Tax. Managing your withdrawals could help you avoid an unexpected tax bill or being pushed into a higher tax bracket.

Yet, the Royal London research found just 4 in 10 people considered the tax implications of withdrawing a taxable lump sum from their pension.

4. Most retirees aren’t seeking advice or guidance

The FCA data indicates that just 30% of people accessing their pension for the first time took regulated financial advice.

In addition, the Royal London survey suggests that 1 in 5 people didn’t speak to anyone about their pension or use any tools, such as income or tax calculators, before they made a withdrawal.

While retirement is an exciting milestone and you may feel confident handling your finances, it’s important to remember that the decisions you make now could affect your financial security for the rest of your life.

Seeking professional advice or guidance could help you make choices that are right for you, identify potential risks, and put your mind at ease as you enjoy the next chapter of your life.

Working with a financial planner may help you navigate Pension Freedoms

Pension Freedoms mean you have far more flexibility than previous generations, but they may also come with additional responsibility, such as ensuring you don’t run out of money. A retirement plan could help you manage your finances as you prepare for the milestone and once you give up work.

Please get in touch to speak to one of our team about your options for creating an income when you retire.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.