Finance in the News: What does it all mean?
Hi! I know that keeping up with the latest financial news can feel overwhelming- especially when you’re juggling family life, work and everything else in-between. BUT… understanding these developments can help you make informed decisions for your family’s future. Let’s break down the key financial updates as of May 2025 and see how they might affect you.
📈 Inflation
In April 2025, UK inflation rose to 3.5%, the highest in over a year, driven by increases in water bills, energy costs and council tax. This means that everyday expenses, from utility bills to the big shop, might be a bit more expensive.
What this means for you: Budgeting becomes even more crucial. Consider reviewing your monthly expenses and looking for areas to save. Small changes (like meal planning or reducing energy usage) can add up over time.
🏠 Mortgage Rates: a welcome decline
The Bank of England has cut the base interest rate to 4.25% as of May 2025, following previous cuts in August and November 2024 and February 2025. This reduction aims to stimulate economic growth and has led to more affordable mortgage options. Phewph!
What this means for you: If you have a tracker mortgage, you might see a decrease in your monthly payments. For those looking to remortgage or buy a home, lower interest rates could make borrowing more affordable.
🏡 Housing Market: a surge in activity
The UK housing market is experiencing its strongest activity since the post- lockdown boom of 2021. Falling mortgage rates and improved affordability have led to a 6% increase in sales compared to this time in 2024. The average UK house price has risen by 1.6% over the past year to £268,250.
What this means for you: If you’re considering buying or selling a home, now might be a good time to do it. Increased property listings mean more options for buyers, and competitive prices are good news for sellers.
🌍 Global Trade Tensions
Ahh, Trump. Some might have thought having Trump back in office would be a good thing for the economy, but at the moment his tariffs mean higher costs for British businesses which feeds inflation. This means cost cutting and job losses in those industries (for example, the automotive industry is currently taking a particular beating!)
Also, the US dollar is weakening, which in turn increases costs of imported goods. For us, that means… you guessed it, higher prices!
The International Monetary Fund (IMF) has warned that these US tariffs could reduce the UK’s economic growth by 0.3% next year- an £8.5 billion hit!
What this means for you: While these decisions overseas might feel distant, they can influence our job markets and cost of living. Staying informed can help you anticipate and adapt to potential changes.
If you have any investments, they might not be looking particularly pretty at the moment. If in doubt, give your financial adviser a call. They might suggest some tweaks, or they might be confident in your position and suggest all you need to do is ride it out. Remember, some fluctuation with investments is normal and a “dip” isn’t necessarily a cause for concern, especially if your objective (what you have planned for that money) is longer term.
👶 Childcare costs
Support for childcare costs is improving and more help is on its way- as of September 2025, 30 “free hours” will be available for working families with children from 9 months old. However- BE CAREFUL! The system is convoluted and full of traps so make sure you are well-informed so you can make the most of this scheme. This is going to be a wholeeee other blog post- coming Friday 13th June!
💡 Tips for navigating all of this!
Review your budget. With inflation on the rise, reassess your monthly expenses to identify areas where you can save. The 50/30/20 rule is often a good place to start (50% of your income on needs, 30% on wants and 20% investments or savings.) However, with living costs as they are this might look a bit more like 60/30/10, for example. You can adapt this idea to fit your family’s needs.
Explore mortgage options. If you’re considering buying a home or remortgaging, do your research or consult with a financial adviser to find the best mortgage rates available.
Stay informed. Keep an eye on government policy changes that might affect taxes or public services. Websites like MoneySavingExpert are helpful, and there are also some good podcasts to listen to (if you can find the time! 🙃) eg. Money box (Radio 4) has short and sweet episodes with clear explanations. Clever About Cash (BBC Scotland) has a more family-focussed approach.
Plan for the future. Consider setting up or increasing contributions to savings accounts to build a financial cushion. If you are experiencing drops in mortgage payments, why not consider doing something smart with that extra money? Savings? Invest it?
See my Instagram post on Emergency Funds here 👇👌
https://www.instagram.com/p/DJjxfDcsito/?igsh=YWU5bnF0MG1qbmVp
Monitor inflation and savings rates. Seek savings accounts that offer competitive rates to protect your savings’ value. For example, the Tembo Cash ISA is offering 4.8% interest and you only need a minimum deposit of £1!
Remember, staying informed and being proactive can help you navigate these financial changes with confidence. 👊
If you have specific questions or need personalised advice, why not reach out? Drop me a message for a free consultation meeting, it won’t cost you anything to see if I can help you are not. 😊
Until next time,
Katie
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