What will the history books say about 2025 in finance? The best guess is that President Trump’s trade tariffs will be at the top of the list.
While the tariff turmoil undoubtedly dominated headlines for a while, other financial events also saw the markets react and had a direct impact on the cost of living.
Here, we’ll journey through the past 12 months, highlighting the financial milestones that shaped the year, and exploring what these could mean for your personal finances.
Q1: Inflation and the Spring Statement
It was a fairly uninspiring start to the year, with the Office for National Statistics (ONS) reporting that inflation rose to 3.0% in January, up from 2.5% in December 2024 and remaining well above the Bank of England’s (BoE) target of 2%.
In terms of your personal finances, high inflation dents your purchasing power. Fixed income won’t stretch as far, and you may have found you’ve had to draw down more of your pension to account for increases in everyday expenditure.
High inflation is also bad news for cash savings, quickly reducing their value. Although there is an argument to keep some cash reserves for emergencies or quick access, investing your wealth is often a smarter way to outpace inflation.
The chancellor’s Spring Statement was also somewhat unremarkable. Preceded by the usual gossip and speculation, the Statement contained no announcements regarding immediate changes to pensions or significant tax increases. The chancellor declared a crackdown on tax evasion, an acceleration of the Making Tax Digital (MTD) requirements for sole traders and landlords, and an increase in defence spending.
Talk to us about creating a well-balanced, diversified portfolio that includes cash options if you’d like them, as well as investments that align with your preferred personal approach.
Q2: Tariffs and turmoil
This quarter brought a large spike in financial drama in the shape of President Trump’s trade tariffs. His announcements on 2 April, which he dubbed “Liberation Day” for America, sent shockwaves rippling across the global economy.
This presented an immediate issue for the UK, as the London School of Economics (LSE) reports that the US is the UK’s largest single export destination, receiving around 22% of all exports.
However, President Trump quickly paused the tariffs, and the UK renegotiated a deal, with a 10% tariff now applied to many UK exports to the US.
The markets went into a tailspin after the announcements. According to ABC News, the Dow Jones Industrial Average dropped nearly 4%, the S&P 500 fell 4.8%, and the Nasdaq dropped by 6%. Here in the UK, FTAdviser reported that the FTSE fell by almost 6%.
From a personal finance perspective, this was a time to keep calm and remember a lesson from history: keeping wealth invested is almost always the wisest course of action in the long term.
This was quickly proved, as the markets rallied fairly swiftly and President Trump moved towards agreeing bespoke trade deals.
While it can be tempting to sell out when the markets are volatile, you’re exposing your wealth to the eroding effects of inflation. Markets will always rise and fall, and having a balanced, diversified portfolio can help you ride out uncertainty.
Q3: The calm after the storm
After the tariff drama of the previous quarter, Q3 was much quieter and calmer, but without any tangible good news either.
Inflation stabilised somewhat, although it remained well above the BoE’s target, leading to some speculation about the impact on interest rates. Tariffs continued to cause market upsets, with new announcements resulting in sharp swings.
On a personal finance note, potential rises in interest rates are a good signal to review your mortgage. If you’re approaching the end of a fixed- or tracker-rate deal, it’s prudent to start researching what to do next.
At your regular financial review, we’ll also talk to you about inflation-adjusted planning, updating your retirement spending forecasts in line with rising living costs.
Q4: The Autumn Budget
The start of this quarter was dominated by a frenzy of budget speculation, with commentators having a free-for-all with conjecture and theories.
The Budget itself was somewhat overshadowed by an error from the Office for Budget Responsibility (OBR), which inadvertently released a key document detailing the Budget well before Rachel Reeves started her announcements.
Key takeaways from the Budget included:
- Income Tax thresholds frozen for a further three years, until April 2031
- Inheritance Tax (IHT) thresholds frozen until 2031
- Individual Savings Account (ISA) changes for under-65s. Of the £20,000 annual ISA allowance, adults can now only contribute up to £12,000 into a Cash ISA, with the remaining £8,000 reserved for a Stocks and Shares ISA. Over-65s can continue to pay the entire £20,000 into a Cash ISA if they wish.
- New “mansion tax” on high-value properties, with an incremental surcharge to be applied to properties valued over £2 million.
While your Income Tax and IHT bills won’t necessarily rise, the frozen thresholds will likely cause “fiscal drag”, meaning more of your wealth could be brought into the scope of these taxes over time.
Effective financial planning can help to keep your liability to a minimum. We can talk to you about creating, developing, or reviewing a financial plan with this in mind.
Get in touch
If you’d like to start thinking about your financial planning for 2026, we’re here to help. Please get in touch by emailing hello@fingerprintfp.co.uk or calling 03452 100 100.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
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 Financial Conduct Authority does not regulate cashflow planning or tax planning.
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.