News in Review July 2025
Market update
The UK economy contracted for the second consecutive month, shrinking by 0.1% in May following a 0.3% decline in gross domestic product (GDP) in April. These figures raise concerns about potential stagnation and present further political challenges for the Prime Minister and Chancellor.
OBR warning: UK public finances are vulnerable and at growing risk
In their July 2025 report on Fiscal risks and sustainability*, the Office for Budget Responsibility (OBR) said, “Efforts to put the UK’s public finances on a sustainable footing after a series of global shocks have met with only limited and temporary success in recent years, leaving the UK with the sixth-highest debt, fifth-highest deficit, and third-highest borrowing costs among 36 advanced economies. Against this more vulnerable backdrop, the risks to the fiscal outlook are mounting, including: the sustainability of state and private pensions and the sector’s demand for government debt; risks to assets and liabilities on the public balance sheet and the Government’s new net financial liabilities target; and the combined costs of climate damage and the net zero transition.” And the recent reversal of welfare bill reforms, along with restoring winter fuel payments for most claimants, have contributed to further increases in government debt, according to the report. It also highlighted that, due to inflation and earnings volatility over its first two decades in operation, the state pension triple lock is expected to have cost £15.5 billion annually by 2029-30, around three times higher than initial expectations. The triple lock, introduced in 2011, means that the state pension rises each year in line with either inflation, wage increases or 2.5%, whichever is the highest. In response to the report, a Treasury spokesperson said: “We are committed to supporting pensioners and giving them the dignity and security they deserve in retirement”. Chancellor Reeves has said the government will keep the triple lock until the end of the current parliament.
Balancing family needs as well as your own financial security
We often hear about the ‘bank of mum and dad’ – but increasingly, it’s adult children who are stepping in to support their parents. This has been coined ‘the bank of son and daughter’. Some higher earners now find themselves financially supporting both adult children and ageing parents. This situation, often referred to as being ‘sandwiched’ between generations, involves stepping in to help family members with rising costs. While this support is generous, and sometimes unavoidable, it can put a strain on your own long-term financial goals. The balance between helping family and managing your personal financial security can be challenging. If you’ve found yourself in this position, it’s important to plan carefully to avoid compromising your own future. We can help you explore the options so you can support those you care about, without losing sight of your own financial freedom – please get in touch. And if you have friends or family in a similar situation, feel free to pass on my details – I’m here to help.
Less than one in three couples have completely joint finances
How do you manage your finances? Fewer than a third of couples in research commissioned by M&G Wealth Advice^ (29%) have completely joint finances. The most common approach to managing money, as couples, was to have both joint and separate finances (47%). But one in five (20%) keep their money completely separate, with no shared bank accounts or investments. The research found that women are increasingly taking control of family finances, with over half of those in a relationship, managing day-to-day spending (57%) and investments (50%) in their households. Ross Liston, CEO Sandringham Financial Partners, said: “The research suggests that most couples choose not to fully merge their finances. This approach requires strong communication about money, shared aspirations and most importantly, trust that both partners are working towards the same goals. Trust is also fundamental when seeking financial advice. The report reinforces how much investors – particularly women – value advisers who not only understand their ambitions but also provide the guidance and confidence they need to make informed decisions. Great advisers do more than offer financial expertise; they build relationships, empower clients, and help them achieve their long-term financial goals with clarity and certainty.”
* Information included under the terms of the Open Government Licence ^ The research surveyed 1,002 people with £150,000 or more in investable assets or who expect to receive an inheritance of £300,000 or more, between 31 January and 11 February 2025 on behalf of M&G Wealth.
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