Chris Thorpe, Author at Agile IFA

A recent article published by an influential think tank, the Institute for Fiscal Studies (IFS), has suggested that the Labour government should consider increasing the basic rate of Income Tax in order to boost revenue and curb the amount of money it has to borrow.

Doing this would break a so-called “taboo” as no chancellor has increased the basic rate of Income Tax for 50 years. Indeed, for much of that time, the aim of most chancellors has been to cut the basic rate as a symbol of their commitment to low personal taxation.

In this article, you can discover why the IFS is suggesting the government make this move, and how it could affect your finances.

The basic rate of Income Tax has been gradually reduced over the last 50 years

The last chancellor to increase the basic rate of Income Tax was Dennis Healey in 1975, who raised it from 33% to 35%. At the time, the UK government was facing the combined financial threats of economic weakness at home, together with global uncertainty driven by the oil crisis.

Since that time, the basic rate has only ever been reduced, with the final reduction to its existing rate of 20% made by the former chancellor, Gordon Brown, in 2007.

In reality, however, the freeze in tax thresholds and the Personal Allowance since 2021 has actually resulted in many individuals paying more Income Tax. The Personal Allowance stands at £12,570 and is set to be frozen at this level until 2028, meaning that the more a person earns, the higher their Income Tax is likely to be. This is commonly known as a “stealth tax”.

Previous governments have sought alternatives to Income Tax to raise revenue

Instead of increasing the basic rate, successive governments have used other methods to raise revenue, such as implementing higher taxes on businesses and capital gains.

The rate of VAT has also increased markedly in the last 50 years, from 8% in 1975 to 20% in 2025/26, as chancellors have seen taxing consumption more politically acceptable to the electorate than taxing income.

Previous governments have also put up the rate at which individuals pay National Insurance contributions (NICs) on their income. While having the same effect as an increase in Income Tax, this does seem to be somewhat less emotive. This could be down to the fact that NICs receipts are hypothecated and used to fund the State Pension and other benefits such as Maternity Allowance, so earners understand where their contributions are going.

Election promises have restricted the government’s revenue raising options

During the 2024 general election campaign, the Labour Party manifesto pledged no increases in:

The standard rate of VAT
Employee NICs
Income Tax.

Labour made it clear that the government intends to fund increased public spending through the proceeds of economic growth rather than higher taxes. It has also committed to only increase borrowing to fund growth.

To this end, this government has announced a series of measures, including a massive house-building programme, along with big infrastructure projects such as airport expansion and the Oxford-Cambridge corridor.

However, all those measures will take time to come to fruition and deliver growth. In the meantime, public services, such as the NHS, schools, and local government, remain in need of financial support.

External events have blown government plans off course

As well as internal challenges, the government’s financial position has been made even more precarious by two external events:

The reduction in the US financial and military commitment to Ukraine, which has forced other nations, including the UK, to boost defence spending.
The imposition by President Trump of a 10% tariff on all UK exports to the US.

While increased military expenditure could ultimately be an effective growth driver, it poses an immediate funding problem for the treasury.

Tariffs on UK goods and services entering the US provide a more immediate challenge. A paper issued by the Department for Business and Trade confirmed that these have led to a reduction in business confidence, and a report in the Guardian suggesting that this would hinder the very growth the government is hoping for.

The effect of an Income Tax rise on your income

Clearly, there is no danger of Income Tax rates reverting to the level they were at in 1975.

However, according to the government, just a 1% increase in the basic rate would raise £6.55 billion in 2025/26 and £7.9 billion the following year. Additionally, if the government were to announce an increase of 1% on all Income Tax rates, this would raise £8.1 billion next year.

So, how would an increase in Income Tax affect your take-home pay?

According to Forbes, the UK national average salary is £37,430, as of April 2025.

Assuming you are entitled to the full Personal Allowance of £12,570, the table shows the comparative amounts of Income Tax you would pay.

Annual income £37,430	Income Tax payable
Basic rate of 20%	£4,970.30
Basic rate of 21%	£5,220.60
Annual increase in Income Tax	£250.30

Source: Government website

While any potential increase in Income Tax is likely to be relatively small, it’s clear that this would be controversial, especially given the manifesto commitment the Labour Party made not to take such a step.

However, the government could justifiably argue that it could not have foreseen the issues around defence spending and US tariffs.

As a result, it may be tempted to earmark any Income Tax rise for defence spending, which may well help to increase the public’s acceptance of it.

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.

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 tax planning.

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%.

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.

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.

If you’ve been keeping up with the news recently, you’ll likely know that global economic growth is under increasing pressure.

In February 2025, the Bank of England halved its forecast for UK growth this year from 1.5% to just 0.75%, the BBC reports.

Meanwhile, the Guardian reveals that US Gross Domestic Product (GDP) shrank by 0.3% in the first quarter of 2025, partly due to uncertainty surrounding Donald Trump’s questionable economic policy.

GDP – which reflects a nation’s total economic output – remains a key measure of financial health. It indicates how much a country produces and whether its economy is growing or contracting.

Two consecutive quarters of negative GDP growth usually signal the start of a recession, a time when incomes tend to fall, the job market is weaker, and – crucially, if you’re planning to retire soon – potential market turbulence occurs.

Several financial organisations seem to take this risk seriously, too.

Indeed, the International Monetary Fund (IMF) recently increased the probability of a global recession from 17% to 30%, while JP Morgan has placed chances even higher at 60%.

Whether a recession actually occurs or not, this could be a sensible moment to consider how prepared you are.

If you’re approaching retirement, the next few years might seem especially uncertain, but you can take several proactive steps to recession-proof your plans. Continue reading to discover four ways of doing so.

1. Assess your current finances

Now could be the ideal time to assess your overall financial health. Even if you already have a retirement plan in place, it’s important to remember that it should evolve as your circumstances change and new challenges, such as the threat of a recession, emerge.

You could start by reviewing your monthly spending, and in doing so, you may identify non-essential costs you could cut back.

Even small reductions can add up, freeing up extra wealth to act as a helpful buffer during times of economic uncertainty.

It might also be prudent to address any outstanding unsecured debt. High-interest debt – such as that from credit cards and overdrafts – can quickly snowball and drain your financial and mental wellbeing.

Clearing these, where possible, could free up funds to act as a financial cushion during any potential global recession.

2. Review the investments in your pension

As markets tend to respond to economic uncertainty, you may find that the value of any investments held within your pension fluctuates more than usual.

While this volatility can be unsettling, it’s vital to remain calm and maintain a long-term view.

Still, it could be wise to review your pension investments now, as doing so could help you feel more confident.

One area to assess is your diversification. If your pension portfolio is spread across various asset classes, sectors, and geographical areas, it might be more likely to withstand periods of downturn in specific areas.

You essentially reduce the risk of being overexposed to any given part of the market, which is especially valuable during a recession.

It’s also worth taking a look at your current risk profile. As retirement draws closer, you may want to think about reducing your exposure to higher-risk investments. Or, you could ensure that your investments still reflect your appetite for risk and your time frame for drawing an income.

3. Maintain a financial safety net in retirement

A financial safety net in the form of an emergency fund is helpful at the best of times, and could be even more so during a recession.

Generally, it’s worth setting aside between three and six months’ worth of essential household expenses in an easy access savings account.

This could protect you from unexpected costs without having to access funds ringfenced for other purposes.

If you’re already retired, it might be prudent to save more, potentially between one and two years of expenses.

Doing so could mean that you don’t have to sell investments at a time when their value is temporarily lower due to recession.

You won’t have to deplete your savings as quick, either, and you will be less likely to be subject to “sequence risk”, when the timing of retirement withdrawals negatively affects your overall returns.

Protection might also be practical, especially critical illness cover. This form of cover pays a tax-free lump sum if you’re diagnosed with a serious condition covered by your provider.

This might allow you to fund your recovery without prematurely exhausting your retirement fund, all while offering some peace of mind at an already challenging financial time.

4. Book a meeting to review your retirement plan

It’s entirely understandable to feel anxious when the media is constantly discussing reports of economic slowdown and market uncertainty. Even the word “recession” might be enough to spark fear.

Yet, staying calm and focused on your long-term plan is essential, and this is where working with a professional can help.

A review with your financial planner could provide the ideal opportunity to step back and assess how your retirement plans hold up to various scenarios.

Your planner could walk you through some of the potential risks, and help you identify whether any adjustments are needed. This might involve rebalancing your investments, assessing your budget, or even ensuring that your financial safety net is adequate.

With a clearer picture of your finances, you could move forward with greater clarity and confidence, even if a global recession does materialise.

Please get in touch with us today if you’d like some support.

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.

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

Note that financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.

Achieving “financial freedom” is an aspiration many people have. Yet, it can mean different things to each person and is influenced by other lifestyle goals, so defining how to measure it for you could help you turn it into a reality.

Securing financial freedom so you can retire with confidence is a common goal.

A January 2025 Legal & General survey asked people what their perfect retirement would look like. The top answer was “living stress-free without financial worries”. Correspondingly, the biggest barrier to retirement was financial concerns, which ranked higher than potential health issues and fear of boredom.

Some modern money trends have arisen from the desire to achieve financial freedom too.

For example, FIRE, which stands for “financial independence, retire early”, involves workers devoting large portions of their income to savings and investments. Followers of the movement aim to retire from traditional work as soon as possible and live off the passive income their assets generate.

The common theme among people working towards financial freedom is to live the lifestyle they want, including giving up work if they choose, while maintaining their financial security. However, how much you need to do this can vary enormously.

So, setting out what financial freedom would look like to you could be useful. Answering these two questions may provide a useful starting point.

What do you want the freedom to do?
What do you want to be free from?

Read on to find out what you might consider when reflecting on these questions and how financial planning could help you create an effective road map to financial freedom.

Setting out the lifestyle you want to enjoy

To calculate how much you need to secure financial freedom, you need to understand how much your desired lifestyle will cost. This is where you think about what you want the freedom to do.

Some people would prefer to live more frugally if it meant they could step back from work sooner, while others might be looking forward to a more luxurious lifestyle. From how often you’d like to eat out to what holidays you’d like to take, setting out lifestyle expectations is an essential step.

So, answering questions like those below may help you define what financial freedom means for you.

What would your day-to-day lifestyle and spending look like?
How could your income needs change during your life?
Are there one-off costs you need to consider?

It may be useful to break down your income needs into essential and non-essential spending. This way, you could understand how adjusting your lifestyle might mean you’re able to reach financial freedom sooner – would you choose a lifestyle that involves spending less if you could retire earlier than expected?

Understanding your worries is important for financial freedom

To fully enjoy the lifestyle you want, you often need to have confidence in your finances. So, when you’re thinking about what you want to be free from, concerns and worries are common.

For example, to make the most of financial freedom, you might benefit from being free from worrying about:

The potential long-term effects of inflation
How you’d cope if you faced a financial shock
How periods of investment volatility could affect your income
If your partner would be financially secure if you passed away first.

Addressing these concerns when you’re setting out what financial freedom means to you could help you take steps to protect your long-term financial security and ease your mind.

Modelling your finances could demonstrate how you could achieve financial freedom

Armed with your answers to the above questions, your financial planner can work with you to create a financial plan that focuses on securing financial freedom.

As you’ll typically need to consider the long-term effects of saving, investing, spending, and more, a cashflow model may be a valuable tool. Cashflow modelling could help you visualise how the value of your assets might change over time.

For example, you could see how the value of your investment portfolio might rise over the next decade as you divert more of your income to it. Once you give up work, you might draw an income from your investments. A cashflow model could show how the value would change depending on the withdrawal rate, investment returns, and how long it’ll be used to create an income.

As a result, cashflow modelling could help you calculate how much you need to be financially secure.

You can also model different scenarios on a cashflow model, which may be useful for addressing the concerns you want to be free from. For instance, you might adjust expected investment returns to understand how a period of volatility could affect your long-term finances.

Being aware of the potential risks often gives you an opportunity to create a financial buffer or take other steps to mitigate the effects. So, cashflow modelling could mean you’re able to enjoy your financial freedom, rather than worrying about what’s around the corner.

It’s important to note that the outcomes of a cashflow model cannot be guaranteed, but the information can provide valuable insights and help you make more informed financial decisions.

Get in touch to talk about what financial freedom means for you

If you’d like to talk to one of our team about your financial plan or how we could help you reach your goals, please get in touch.

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

The Financial Conduct Authority does not regulate cashflow modelling.

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.

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

This guest blog was written by Chris Budd who wrote the original Financial Wellbeing Book, and also the Four Cornerstones of Financial Wellbeing. He founded the Institute for Financial Wellbeing and has written more than 100 episodes of the Financial Wellbeing Podcast.

Each of us has a set of beliefs, borne out of our experiences. Are these beliefs right? Are they helping us make great financial decisions?

Right and wrong

I recently saw a book review posted on X (formerly Twitter). The person reported they found the book to be inspirational and that it provided credible insight into the topic.

Scrolling down my feed, I came across another review, coincidentally for the same book. This reviewer thought the book was complete nonsense and they were annoyed that they had wasted their time reading it.

Who was right?

And what might this tell us about our own beliefs around money?

Right or wrong

The point that struck me about these two reviews is that the book had not changed. It was the same words, the same ideas, the same conclusions.

The difference between the two reviews was the belief system that each reviewer had brought to reading the book. Their view of the world through which they processed what they had read.

Does this mean they were both right? Or that they were both wrong?

Both of the reviewers of that book used the ideas within it to further entrench themselves and confirm their existing ideas.

We do this all the time. A Conservative voter will tend to read the Daily Mail or the Telegraph, and a Labour voter the Mirror or the Observer. These papers propagate a certain viewpoint, one that readers want to hear as it confirms their beliefs to be correct. This is a process called“confirmation bias”.

Self-limiting beliefs

Asking which of these reviews about the book was right is not a very helpful question. Ideas don’t have to be right or wrong. They can exist to engage us, entertain us, and provoke thoughts. Hearing about a belief that we disagree with doesn’t make that belief wrong.

As a student, I once sat in a pub watching two friends argue about music. One argued Pink Floyd was the better band, and the other insisted it was Go West. It was a pointless argument because it was about opinions.

The only time that beliefs can be seen as being wrong is when they lead to bad outcomes. Some of our beliefs will lead to good outcomes (“good” in this case being defined by outcomes which align with personal values). Sometimes, however, our beliefs can lead to poor outcomes.

We call these “self-limiting beliefs”.

Money self-limiting beliefs

This can be seen very clearly when it comes to our relationship with money.

We see many of these self-limiting beliefs in the study of financial wellbeing (which is a broad topic including anything relating to the relationship between money and happiness).

For example, there is a general belief in our society that more money will make you more happy. This is most certainly true – give a homeless person enough money for shelter and food, and their wellbeing will almost certainly increase.

However, the impact of incremental increases in wellbeing are reduced significantly as we get wealthier, and the wellbeing that could be obtained from other sources becomes much greater. Understanding where you lie on this axis is a key part of a financial plan.

Challenging self-limiting beliefs

There are many types of self-limiting beliefs around money. For example, “I’m not very good with money” or “Investing in the stock market isn’t for me”.

Once we realise that we all have these money beliefs, there is a key conclusion to be reached.

Beliefs are not truths.

Just because someone believes that Go West are superior to Pink Floyd doesn’t necessarily make it true.

What are your beliefs about money? Are they helping you, or are they leading to poor outcomes?

Try this exercise. Write down sayings that you use about money over some time.

If you tell your children that money doesn’t grow on trees, make a note. If you find yourself having an opinion, make a note of it. Perhaps you see someone drive past with a personalised number plate on an expensive car – Are you envious? Do you sneer? Do you barely notice?

These notes will enable you to build up a picture about your money beliefs, and allow you to ask yourself this crucial question: are my money beliefs helping me make good financial decisions?

Remember, these beliefs are not right or wrong, and they are not truths. But they are you.

Bring these realisations to your next meeting with your financial planner. There’s a good chance they will have seen these before and can help you to understand how you might improve your beliefs, and thereby make better financial decisions.

This guest blog was written by Chris Budd who wrote the original Financial Wellbeing Book, and also the Four Cornerstones of Financial Wellbeing. He has written more than 115 episodes of the Financial Wellbeing Podcast and founded the Institute for Financial Wellbeing.

Whether money makes someone happy is a question that provokes many different opinions. Some will say yes; just look at people who have nothing and compare their happiness with people who have lots.

Others will say no; some of the poorest areas of the world show the greatest happiness, and some of the richest people are unhappy.

Research tells us that, as with most things in life, the answer is a bit of both. Understanding this interaction between increasing wealth and wellbeing is an important part of financial planning.

Maslow’s hierarchy of needs

There is a psychological theory about motivations called “Maslow’s hierarchy of needs”.

This theory states that our basic needs must be met (food, shelter) before we can think about our psychological needs (love and belonging). Those psychological needs must then be met before we can find self-esteem and be creative (Maslow describes this final stage as “self-actualisation”).

This has been a very popular model but it is, of course, flawed (as Maslow himself admitted). Life does not present itself in a series of stages, each of which is only accessible when the previous stage has been completed. For example, it is possible to be creative without feeling 100% secure.

Instead of seeing these needs as a hierarchy that we pass through, we could view the development of wellbeing as similar to building a house. We don’t build one side at a time; rather, we work on all aspects simultaneously.

Money and Maslow

So, how does money link with the hierarchy of needs? Maslow himself did not see money as a need, but a tool to be used to satisfy some of the lower needs on the hierarchy.

Although money can help feed us and make us feel secure, it doesn’t have much to do with love and a sense of belonging.

As we travel up the hierarchy, we find that money can actually work against self-esteem. If we judge ourselves by how wealthy we are, then this requires a judgment based on how wealthy other people are. As Theodore Roosevelt is reported to have said: “Comparison is the thief of joy”.

Finally, money has little to do with self-actualisation and creativity. Having more money can create more options around how we spend our time, it is true, but this is often a case of priorities.

Money and happiness

So, do we need more money to be happier? The evidence is clear: not really.

In his book The Antidote, Oliver Berkman describes the second-largest slum in Africa – Kibera in Nairobi. One would imagine it to be a place of great misery – but research shows it to actually be a place of great happiness.

We could point to a homeless person on the street in comparison with that same person with a roof, a job and some income. Of course, they will be happier.

And yet, give that same person lots of money, and they may become less happy again (there are examples of lottery winners who became miserable after their windfall).

We could also point to relative happiness. A person living in a two-bedroom semi-detached house with wonderful neighbours and a strong sense of community might be extremely happy. Until they hear that an old school friend is living in a four-bedroom detached house in an expensive area of town!

My happy challenge

The question you might wish to ask yourself is this: what are the sources of joy in your life? And how does money affect those sources – positively, negatively, or not at all? How might these change in the future?

The next step is to consider the answers to these questions in the context of your financial plan. What objectives does your financial plan aim to fulfil? Will achieving these objectives increase your wellbeing? In what ways? Are there any other objectives that you would like to include?

Perhaps you could discuss these questions with your financial adviser. The answers could help you to create a financial plan that will make you happier, not just wealthier.

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.

According to the Belonging Study 2025, around 3 in 10 adults in the UK say they feel lonely often or some of the time, and a further 27% experience it occasionally. It’s something many people will experience at some point in their life and it can be difficult to overcome.

Loneliness Awareness Week, between 9 and 15 June 2025, aims to reduce the stigma of this natural human emotion and encourage people to connect.

Loneliness is defined as a perceived mismatch between the quality and quantity of social connections that a person has, and what they would like to have. So, a person who feels lonely isn’t necessarily alone. There might be people in your life who feel lonely who you would not expect to.

Loneliness can harm your health

While you might think of loneliness as an emotional state, it may have a more complicated effect on your health.

According to the NHS, it’s linked to conditions like anxiety, depression, and poor mental health. It’s also associated with physical conditions, like dementia. What’s more, a 2016 British Heart Foundation study found that social isolation was linked to a 29% increased risk of coronary heart disease and a 32% increased risk of having a stroke.

Whether you feel lonely or know someone who might, starting a conversation could change your outlook and have a positive impact on your life.

4 useful rules that could help you tackle difficult conversations about loneliness

1. View loneliness as a normal emotion

While it can feel strange at first, try to normalise loneliness. It’s something many people feel and if you share your experiences, it’s likely the person you’re speaking to can relate in some way.

Approaching loneliness like it’s a taboo subject can make it feel far scarier, and lead to feeling more isolated than ever. So, approach talking about loneliness with your family and friends the same way you would other day-to-day topics where possible.

2. Avoid negative words and phrases

The language you use can be powerful and affect how a conversation feels. So, avoiding negative words and phrases could make those difficult conversations far more productive and valuable.

For example, rather than saying someone is “suffering” from loneliness, you might say they are “experiencing” it instead. Suffering implies that something is wrong, so it’s a subtle change that helps people feel like they’re in control.

Similarly, when you want to talk about your feelings, you might automatically say, “I am lonely”. While you can describe your experiences in a way that feels most comfortable to you, this phrase can make it seem like loneliness is a permanent state of being, and that it’s part of who you are.

In contrast, “I feel lonely” suggests your feelings are something you can change and improve.

3. Use questions that invite reflection but aren’t judgemental

When you’re having a challenging conversation, it may be difficult not to come across as judgemental even when your intention is the opposite.

For example, if someone tells you they feel lonely, you might ask, “Have you tried joining a social club?” without giving it much thought. Your intention may be to provide a solution, but the person coming to you for help may feel like you’re accusing them of not doing enough.

Instead, try asking questions that invite reflection. You might ask, “Have you been feeling supported lately?”, which provides an opportunity for them to tell you what they need.

4. Leave conversations open

It can take some time to get used to talking about feeling lonely or wider mental health challenges. So, make sure the conversation remains open if you feel like you could benefit from talking to the person again.

Letting the person know how valuable you found their company or that you’d like to catch up again could mean loneliness is an easier topic to broach next time, or even prompt the other person to initiate it.

If you’re talking to someone who is lonely or you think could be struggling with their mental health, leaving conversations open-ended or with an invitation may be useful.

It could be as simple as saying “you can always talk to me” to let them know you’re there for them should they need you.