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Please see the below article from Brooks Macdonald detailing their daily discussions on markets and fiscal/political headwinds. Received this morning 30/09/2025.

What has happened?

Markets saw a global bond rally yesterday, with 10-year UST yields dipping 3.6 basis points, fuelled by a steep 3.45% decline in WTI crude oil. Signals that OPEC+ may boost production at next week’s meeting eased inflation fears and sparked fresh bets on deeper Fed rate cuts. This lifted most assets: US investment-grade credit spreads tightened 1 basis point to near post-1998 lows, while gold surged 1.96% to a fresh record of $3,834 per ounce. Equities edged higher across the board, as the S&P 500 rose 0.26%, inching within half a percent of last week’s record high. Tech led the charge, with the NASDAQ up 0.48%, but gains were generally broad-based with the equal-weighted S&P climbing 0.32%. In Europe, the STOXX 600 rose 0.18% to a two-week high, and the FTSE 100 added 0.16% to a five-week high.

US government shutdown jitters

With just hours to go, the US government teeters on the edge of shutdown unless a last-minute deal materialises today. The longest shutdown lasted 35 days across the 2018-19 year-end period. Historically, most fizzle out in 2-3 days, with only a few stretching beyond two weeks. Last night’s White House talks with Democratic leaders ended in deadlock, with no follow-ups scheduled. VP Vance hinted at openness to bipartisan fixes for expiring health subsidies (a Democratic priority) but only after reopening the government. Democrats dismissed the offer as too vague. Polymarket odds now peg an 79% chance of shutdown by tomorrow and 85% by year-end.

UK budget blues

In the UK, PM Starmer and Chancellor Reeves are laying groundwork for broader tax hikes, testing Labour’s election vows at the Labour Conference. Long-rumoured fiscal tightening now hints at ditching pledges to freeze income tax, payroll tax, VAT, and corporation tax. Starmer’s Tuesday speech is set to warn that ‘rebuilding Britain won’t come cheap’. Chief Secretary Jones stoked VAT rise chatter, while Reeves sidestepped her no-new-taxes refrain, doubling down on fiscal rules to woo markets. Investors, though, are wary: A Deutsche Bank poll ranks the UK second only to France among major economies for a debt crisis risk in the next two years.

What does Brook Macdonald think?

Amid these fiscal and political headwinds, trade tensions simmered anew as Trump outlined fresh tariffs: a 10% levy on imported timber and lumber. The sting is softened for trade partners with existing deals, whose rates stay capped by prior agreements. Meanwhile, US-China friction escalated with the White House expanding its export blacklist to snare subsidiaries of blacklisted firms, possibly affecting giants like Huawei and SMIC. These measures are likely to sustain uncertainty in global trade and supply chains. As the full effect of tariffs is yet to be captured by the real economy, investors need to stay vigilant ahead.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alex Clare

30/09/2025

Please see below, an article from EPIC Investment Partners analysing recent movements in gold prices and bond yields. Received today – 26/09/2025

Gold has overtaken the Euro as the world’s second central bank reserve asset and the BRICS continue to ‘de-dollarise’. Overseas demand for US Treasuries is being quietly replaced by increasing demand for gold. Gold is not rising in price – it is the Dollar’s purchasing power that continues to fall and an increasing amounts of the currency are required to purchase an ounce of the metal.

The UK’s Monetary Policy Committee has the sole objective of adjusting Base Rate to achieve an annual inflation rate of 2%. The US Federal Reserve has a three-goal mandate from Congress:

• Maximising Employment: The Fed aims to foster economic conditions that promote the highest possible level of employment. 
• Stable Prices: This objective involves controlling inflation to keep the purchasing power of money stable. The Federal Reserve’s longer-run inflation objective is 2%. 
• Moderate Long-Term Interest Rates: The Fed works to keep long-term interest rates at levels that support economic growth and stability. 

The August UK Base Rate cut, was agreed by a slender 5:4 majority of the MPC, despite an inflation rate significantly above the 2% target. The August number was 3.8%. The Fed’s mandates currently appear mutually exclusive. US inflation at 2.7% although above target compares favourably with the UK, as does the unemployment number of 4.3% versus the UK’s 4.7%. However, downward revisions of US employment numbers over recent months have increased the likelihood of a September Fed Base Rate cut to a near certainty. 

Rising longer dated UK Gilt yields appear to have interpreted August’s quarter point drop as a surrender to above target inflation. The narrow majority in favour of the cut demonstrates the conflicting influences behind the decision. The narrative acknowledges that inflation will peak at 4% in September before falling ‘back to the 2% target after that’. No forecast of timing and no mention of confidence in this outcome. Despite relatively robust US GDP numbers, 10-year Treasuries have moved in the opposite direction, with yields falling back towards 4%. Gold and silver prices have taken the opposing view. Both cannot be right.

I repeat, the price of gold is not rising – it is the purchasing power of FIAT currencies that is falling. We measure returns from equities and bonds in FIAT currency terms, but if we had invested in the S&P 500 and reinvested our dividends from the end of gold’s backing for the Dollar in 1971, measured in gold, the return from the S&P has been zero. The total sum from the investment in US equities would today buy less gold than in 1971. Returns from monetary assets, cash and bonds, have lagged way behind, with 10-year Treasuries having generated negative real returns for the past 100 years. They will continue to do so.

The US dollar lost 75% of its purchasing power through the 1970s while the gold price rose by almost 2000%. It would be unsurprising in the light of the US debt spiral if this is repeated over the current decade. A yield of 4% from 10-year US$ Treasuries will provide no protection. Remember where Paul Volcker took rates last time the Fed faced a period of stagflation? In 1981 ‘The Volcker Shock’ took rates to 20%, unemployment rose and inflation fell and restored confidence in US economy, eventually contributing to a decline in the price of gold. What odds will you give me on the Fed and the MPC raising rates to 20% to restore confidence in the US and UK economies – and currencies?

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Alex Kitteringham

26^th September 2025

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 23/09/2025.  

The current state of interest rates

Stocks generally rose over the week to Friday. 

Changes to interest rates were largely anticipated, with a cut to U.S. rates and holds in Japan and the UK. Markets are currently anticipating the U.S. will face more rate cuts than the UK and Europe. Interest rates should still rise in Japan, but very slowly.

The main headlines were captured by the slowing of the UK’s quantitative tightening programme. This means that the government’s sale of bonds will slow, which will provide some relief, as it needs to find buyers for substantial bond sales over the coming months.

However, maintaining the stock of bonds for longer will now cost the Treasury, as it must ultimately foot the bill for differences between the returns being made on purchased bonds (at old historically low rates) and the interest rate paid on the reserves used to fund such purchases (at more recent, higher rates).

Currently, markets expect interest rates to remain within a corridor of stability; loose enough in the Eurozone and getting looser in the U.S., but with neither region threatened by an imminent recession.

The current environment could be described as a ‘Goldilocks’ environment where growth is weak enough (and inflation isn’t too high) to allow the Federal Reserve to cut interest rates.

Technology drives equity returns

Contributors to global equity market returns have broadened out, but technology remains a significant driver. Within the technology sector, we’ve seen some dispersion of returns.

Artificial intelligence (AI)-related stocks have been strong performers, but resolving which companies are benefitting from AI and which are threatened remains a source of controversy for the market.

For example, the rise of AI has raised concerns about competition from lower-cost, AI-driven research tools – which could potentially disrupt the business models of companies that provide market insights, research, and strategic frameworks, such as Gartner. In August, Gartner’s stock plummeted by as much as 40% after the company reported a slowdown in growth, citing weaker demand for IT advisory subscriptions and reduced value of federal contracts.

However, not all research companies are suffering. RELX, for example, has seen growth in its scientific, technical and medical (STM), legal and risk segments, thanks in part to the benefits of AI. The company’s ownership of copyright and its control over how its articles are used have allowed it to provide embedded AI tools to researchers, making them more productive.

While AI may have driven strong returns from the technology sector overall, many software companies have started to see it as more of a threat. One of the primary reasons for this is the changing spending environment in the tech industry. Already limited IT budgets now needing to incorporate AI spending has resulted in a decrease in spending on traditional software solutions.

The poor spending environment, combined with the rise of AI and the emergence of new technologies like vibe coding (coding using natural language prompts and AI), has led to concerns that traditional applications will be replaced.

A winning model

Companies with user-based revenue models (where the amount you pay is dependent on how many users are accessing the product or service), such as Adobe, are feeling the most pain. They face competition from lower-cost alternatives and struggle to maintain premium price points.

In contrast, services that are sold on a usage basis (rather than per user), such as cloud or database services, have been prospering. They require less commitment from customers, and their costs tends to be more related to their value, making them well-suited to the field of AI, where demand is difficult to forecast. Providers of this type of service are benefitting from the capital spending on AI from startups.

Microsoft and Palantir are two exceptions to this. Microsoft has a so-called ‘seat-based’ business (a pricing model where customers pay for individual licenses, or ‘seats’, that grant them access to a software or service). However, this forms part of a much more complete business that extends beyond software into infrastructure through its Azure cloud computing platform. This leaves it well positioned to benefit from AI adoption.

Historically, Microsoft’s Office package has been difficult to disrupt and its barriers to competitors remain robust. However, over the summer, Elon Musk announced that he would launch Macrohard to rival Microsoft. It will do this by using a fleet of specialised AI agents to handle all aspects of software development, including code generation, testing, and management. Although Musk is a formidable challenger, Microsoft has shown itself to be agile enough to meet such challenges in the past.

Ultimately, the future success of software vendors will depend on their ability to expand their existing customer base and adapt to changing user behaviours. Companies with strong research and development capabilities, and products that can fit around evolving user needs, will be better positioned for growth.

While this is theoretical, it highlights the importance of infrastructure players and the challenges faced by application vendors in the current software landscape. The emergence of Macrohard and other AI-powered initiatives will only add to the complexity and uncertainty of the software market, making it essential for companies to stay ahead of the curve and innovate to remain relevant.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Andrew Lloyd

24/09/2025

Please see the below article from Brooks Macdonald detailing their discussions on markets and Central Bank policy. Received this afternoon 23/09/2025.

What has happened

Risk assets powered higher over the past 24 hours, with the S&P 500 climbing 0.44% to a fresh record high. Tech stocks led the charge, fuelled by Nvidia’s blockbuster announcement of a potential $100 billion investment in OpenAI to bolster AI infrastructure, including new data centres. This propelled Nvidia’s shares up 3.93%, lifting the NASDAQ (+0.70%) and the Magnificent 7 (+0.75%) to new highs, with the Mag-7 now boasting a 20.43% gain year-to-date. In contrast, European markets took a breather, with the STOXX 600 dipping 0.13%. UK assets, however, showed resilience, as the FTSE 100 gained 0.11% and 10-year gilts rallied slightly.

Fed signals a hawkish tilt?

Rates markets took a slightly hawkish turn as Fed speakers weighed in. Atlanta Fed President Bostic expressed caution, pencilling in just one rate cut for 2025 and citing persistent inflation. St. Louis Fed President Musalem echoed this, warning against overly accommodative policy, while Cleveland’s Hammack called current policy only ‘mildly restrictive.’ Governor Miran’s dovish push for a lower fed funds rate was largely shrugged off, given his outlier vote for a 50bp cut at the last meeting. As a result, markets trimmed expectations for rate cuts. Treasury yields ticked up, with the 2-year at 3.60% (+3.1bps) and the 10-year at 4.15% (+2.0bps). Investors await Fed Chair Powell’s comments today.

What does Brooks Macdonald think?

A familiar pattern is emerging in US equities, reminiscent of 2023 and 2024, where gains are heavily concentrated in a handful of stocks. The S&P 500 is up an impressive 13.81% year-to-date, but the equal-weighted index lags at 7.65%, highlighting the outsized role of the Magnificent 7. While tech’s dominance drives headlines, the broader market’s steadier performance suggests a need for diversification to navigate potential risks in this top-heavy rally.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alex Clare

23/09/2025

Please see below, an article from Tatton Investment Management, analysing the key factors currently affecting global investment markets. Received this morning – 22/09/2025

Slowdown? What Slowdown?

The weekend’s domestic and international political events continue to be a source of risk but Monday’s markets continue close to Friday’s closing levels. Last week saw rate cuts but higher longer bond yields, and record highs for some equity markets.

The Federal Reserve cut interest rates and signalled more before the year end. The Bank of England didn’t – but its reduction in quantitative tightening. Dovish central bank actions are usually positive for bond prices (meaning yields would fall). It may seem of odd then that US, UK and most developed market long maturity yields rose.

The US yield rise on Thursday came from expectations of stronger growth, following the Fed’s switch to supporting employment over containing inflation. Investors are more confident about the world’s largest economy, so long-term US rate expectations actually moved up. If current rates are ‘neutral’ and the Fed cuts further, stronger US growth will require higher rates in the future.

The Fed turned dovish after weak jobs data, but rumours of a ‘weak’ US economy are exaggerated. There’s no sign of credit stress and households are arguably beneficiaries of higher rates, thanks to savings built up during the pandemic. For all the talk of tariff recession, corporate profit margins are expanding and companies are confident enough to pass on costs to consumers (hence US inflation currently running hot). The Fed thinks tariff inflation will be ‘transitory’ and they’re probably right – so a rate cut isn’t unreasonable – but neither the US nor global economy were crying out for support.

Notwithstanding Thursday’s spike, bond yields and corporate credit spreads have come down recently – meaning easier borrowing conditions and a boost for price-to-earnings valuations. Underlying earnings are improving too, not just in the US but everywhere. This is potent fuel for stock markets.

Why profit margins are expanding is slightly confusing, considering tariff warnings and weaker employment. The most plausible conclusion is that productivity is improving – perhaps from the AI efficiencies long promised. We hope so, since productivity growth is the only sustainable source of long-term real growth.

Autumn 2025 market outlook– Overview

We expect risk assets to keep steadily climbing in the months ahead, but there are risks to the outlook.

US tariffs have dominated the narrative this year, and have led to an underperformance of US stocks through a weaker dollar. The full effects haven’t been felt yet (further deadlines and inventory depletion will come) but the US economy is clearly more resilient than feared. A recession is highly unlikely in the medium-term and company earnings forecasts are improving.

The dollar has substantially weakened, which effectively makes global trade and finance cheaper (as the currency of global trade) and thereby boosts global liquidity. The Federal Reserve’s interest rate cuts should also support liquidity, but counteracting this is the rebuilding of the US Treasury General Account (TGA) balance – tapering off a liquidity flow that has supported markets in 2025. Investors will have to generate their own liquidity from here.

Tariff impacts have been milder than feared in April, and markets have ignored multiple geopolitical risks. But the dollar’s weakness and gold’s strength are signs of lingering anxiety. Background geopolitical risks can make downturns worse if and when they come. We hope the rumours of US capital controls are just that.

Regional Outlook

UK stocks are among the best performers in 2025 and the economy isn’t as weak as coverage suggests. The jobs market is improving, Britons have high savings and long-term gilt yields have fallen from their highs. Stubborn inflation has stopped the Bank of England from cutting interest rates but we expect that to change in the coming months, supporting UK markets.

US stocks are well supported but will struggle to outperform other regions as they have in the past. Interest rates and bond yields are falling, supporting smaller businesses. Corporate earning have held up well as tariffs work their way through the economy. Inflation will stay elevated, as demand is strong enough to pass on tariff costs to consumers, but the Fed thinks labour market weakness will prevent a wage-price-spiral. Large cap valuations are still higher than other regions, while earnings forecasts look broadly similar.

Europe is benefitting from a generational fiscal boost, but markets have front-run much of that boost. The euro’s strength tells us the US-to-Europe rotation continues – and is now backed up by a catch-up in European earnings expectations. Equity valuations should catch up with the US, which can only happen if Europe outperforms.

Japan is now seeing the benefits of its globally competitive workforce and corporate reforms. Our long-term positivity on Japanese equity remains.

China has significant upside but global investors should, as ever, be cautious. Chinese stocks are the world’s strongest in 2025 despite continued economic weakness. Investors think a turnaround will come from significant government support and a strong liquidity flow from domestic buyers. Chinese tech is a bright spot, but tariffs and geopolitical tensions mean there’s a risk of stranded capital.

Emerging Markets (EMs) should benefit from a weaker dollar. The Shanghai Cooperation Organisation foretells greater EM reliance on China and less on the US – but that could lead to tensions with the US.

Asset Classes

Bonds have room for more yield falls. The recent spike in long-term yields wasn’t a debt panic (it was a move up in real yields) and it has now reversed. With interest rates falling, that could continue. But recently improving growth and the long-term increase in the supply of bonds relative to overall asset markets limit how low yields can go.

Equities should benefit from improving profit margins and business sentiment. Cap size has become a bigger differentiator than region, and smaller caps are now faring better thanks to lower interest rate expectations. Global liquidity has tapered off, meaning bank lending is needed for further gains. But with businesses feeling positive, investor optimism is well-founded.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Marcus Blenkinsop

22^nd September 2025

Please see below, Brooks Macdonald’s Daily Investment Bulletin which provides a brief analysis of the key factors currently affecting global investment markets. Received today – 19/09/2025

What has happened?

The S&P 500 (+0.48%) notched another record high, powered by a tech stock rally. Intel soared (+22.77%) after Nvidia’s $5 billion investment, following the US government’s 10% stake acquisition in August. Chipmakers dominated, lifting the Philadelphia Semiconductor Index (+3.60%) and the NASDAQ (+0.94%) to new peaks. The small-cap Russell 2000 (+2.51%) also hit its first record since late 2021, signalling broad market strength. However, US Treasuries faced pressure as yields climbed across the curve, tempering their earlier rally.

Bank of England stays steady

The Bank of England held its policy rate at 4%, as expected, and reaffirmed a ‘gradual and careful’ approach to future rate cuts. The BoE slowed its quantitative tightening (QT) pace, planning to reduce its balance sheet by £70 billion over the next year, down from £100 billion, with £21 billion in active sales and the rest from maturing debt. Notably, only 20% of sales will now involve long-dated gilts. Markets see a less than 30% chance of a 25-bps cut by year-end, aligning with Governor Bailey’s comments that the rate-cutting cycle continues but at a measured pace.

What does Brooks Macdonald think?

The market rally over the past two days has been largely driven by the Federal Reserve’s first interest rate cut of the year. Since the current easing cycle began in September 2024, rates have been reduced by a total of 125 bps. The last time the Fed cut rates this aggressively in a non-recessionary environment was back in the 1980s. Both the dot plot and market pricing now suggest there could be two more rate cuts before the end of the year. Historically, equities have performed well when the Fed eases policy into a soft landing. However, whether a soft landing is achievable remains under scrutiny, with labour market data likely to play a pivotal role.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Alex Kitteringham

19^th September 2025

Please see below the daily update article from EPIC Investment Partners, received this morning – 18/09/2025

The Fed’s decision to cut interest rates by 25bps, to a range of 4.00-4.25%, marks a clear dovish pivot, with policymakers signalling a greater focus on the labour market. The first reduction of the year was nearly unanimous, with the sole dissent coming from newly installed Governor Stephen Miran, a close ally of Donald Trump, who (surprise, surprise) advocated for a more aggressive half-point cut. 

This move highlights a notable divergence in views in the outlook for rates. The latest “dot plot” projections show the median view for two more cuts this year, a more aggressive stance than previously held. However, a significant number of officials still see no further cuts this year, underscoring deep divisions on the committee and a stark disconnect from the Trump administration’s public calls to “get interest rates down to ZERO, or less”. 

At his presser, Fed Chair Powell, acknowledged the difficult trade-offs facing the central bank, stating, “It’s challenging to know what to do,” and “There are no risk-free paths now.” This shift, from a previous focus on combating tariff-driven inflation to addressing a weakening employment picture, represents a significant change in the Fed’s “reaction function”. 

The focus now shifts to the Bank of England’s (BoE) meeting later today. While a hold is widely anticipated, the recent economic data presents a mixed and challenging picture for policymakers. August’s UK inflation rate held steady at 3.8%, well above the central bank’s 2% target, driven by a pick-up in food and services inflation. At the same time, the labour market has shown signs of softening, with the unemployment rate standing at 4.7% and wage growth remaining elevated. The BoE has already embarked on a “gradual and careful” rate-cutting path, with the most recent 25bps cut in August bringing the rate to 4%. The MPC is now faced with a similar dilemma to the Fed, balancing the risk of a weakening economy against the need to bring persistent inflation under control. 

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Andrew Lloyd

18/09/2025

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 16/09/2025.  

U.S. interest rates expected to fall

Guy Foster, Chief Strategist, discusses the implications of a Federal Reserve interest rate cut. Plus, our Head of Market Analysis, Janet Mui, breaks down the latest U.S. inflation data.

Key highlights

• Stocks go up: Equities rallied as the first U.S. interest rate cut of 2025 – and the first of the second Trump administration – approaches.
• U.S. inflation: Latest figures put U.S. Consumer Price Index inflation at 2.9% in August, which indicates that Personal Consumption Expenditure figures will exceed the Federal Reserve’s target of 2% when released later this month.
• Europe holds rates: The European Central Bank held interest rates last week and the Bank of England is expected to follow suit on Thursday.

Stocks go up, rates come down

Source: LSEG Datastream

Stocks performed well last week, cheered on by the fact that the first U.S. interest rate cut of 2025 – or, perhaps more significantly, of the second Trump administration – is almost upon us.

Last week’s data removed any lingering doubt that rates will be cut this week, despite inflation seeming to move further above the Federal Reserve (the Fed)’s 2% target for Personal Consumption Expenditure (PCE) inflation. Last week’s Consumer Price Index data showed the rate of price growth accelerating to 2.9% per annum, indicating that the PCE will also have accelerated when it’s released later this month. 

Source: LSEG Datastream

The Fed has a dual mandate to maintain price stability and employment. Inflation is expected to remain above target, but employment growth is slowing. The Fed is expected to prioritise heading off recession risk over the risks associated with inflation staying above target for a fourth consecutive year.

That judgement has been accompanied by an unusual amount of political pressure. President Trump’s nominee for governor of the Federal Reserve, Stephen Miran, was confirmed on Monday by the U.S. Senate. He will simultaneously retain his position as chair of the Council of Economic Advisers. Miran’s expected to take part in the Federal Open Market Committee’s meeting, which is being held over the next two days.

The increase in inflation was driven by a few factors. Cars, clothes and appliances all saw increases, suggesting the possible passthrough of tariffs. However, medical goods, toys and technology saw price falls. The data was not therefore conclusive on the speed with which tariffs are being passed through. If they are, there’s a convincing argument for the Fed to overlook tariffs as a source of inflation, and to consider them a one-off rather than a recurring source of price increases.

Will Europe see rate cuts?

Outside the U.S., the outlook for interest rates is steadier.

The European Central Bank (ECB) left rates on hold in its most recent meeting, and the Bank of England is expected to hold rates this week as well. For the ECB, the cuts made so far seem to have been successful in prompting an uptick in loan demand.

The central bank seems quite confident on the outlook for inflation and was able to upgrade estimates of current growth despite being hit by tariffs on exports to the U.S.

How’s the UK economy faring?

The UK still suffers from persistently high inflation but as we’re seeing signs of the labour market slowing, this should diminish over the coming months. Growth during July was estimated to have stagnated after a strong start to the year, and the housing market has slowed despite improving affordability. The obvious headwind to UK growth is concern over taxation as the Autumn Budget approaches.

In fact, UK borrowing costs are the highest in the G7 (which consists of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) and most developing markets. This is often seen as a sign that the markets are concerned about UK creditworthiness but in reality, the UK’s need to raise taxes is a function of its fiscal rules, designed to ensure that its creditworthiness stays intact.

The UK isn’t struggling to finance itself despite having some of the highest bond yields among developed markets. The average interest rate the UK is paying on its debt is 2.3%, well below current yields.

Bond yields reflect the cost of debt the government will pay on its next borrowing, but most UK debt was issued when interest rates were much lower. This means the UK is currently paying less for its debt than other countries, despite having higher bond yields.

Source: LSEG Datastream

However, that situation won’t last forever. As the UK’s need for new borrowing catches up with its current high yields, its borrowing costs will drift upwards, so there’s good reason to get the fiscal books in order.

That will be difficult as the government won power on promises to enhance public services while committing to not raise most major taxes.

The situation is much less acute than in France though. France’s current debt is more expensive, its budget shortfall is greater, it has no apparent plan to resolve the issue and its parliament is divided.

After the fall of François Bayrou and Michel Barnier’s governments, French President Emmanuel Macron has appointed Sébastien Lecornu as the new prime minister and tasked him with getting agreement on a budget to begin to restore France’s economic credibility.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

17/09/2025

Please see the below article from EPIC Investment Partners detailing their discussions on China’s Hydro Infrastructure project. Received this morning 16/09/2025.

Construction officially began in July on what is likely to be the biggest infrastructure project in history. Beijing first laid out definitive proposals for the dam back in 2021.

The Yarlung Tsangpo river flows from the melting glaciers of the Tibetan Plateau, cutting a sharp U-turn around Namcha Barwa, the highest peak in Nyingchi prefecture, before plunging more than 2,000 meters over a 50-kilometer stretch forming one of the world’s deepest canyons and an irresistible source of hydropower potential. Engineers plan to drill tunnels from the top of the bend to the bottom, channelling water through multiple turbines before sending it back into its natural course. It is a system designed to minimize upstream and downstream disruption. The project should significantly cut China’s dependence on coal which still powers more than half the national grid.

To put the size of the project into context, the project will consume sixty times the cement of the Hoover Dam, more steel than over one hundred Empire State Buildings and enough concrete to build a two-lane highway around the Earth five times. Another way to understand the full scale of this $167bn project is to compare it to the $37 billion Three Gorges Dam – the world’s largest power plant. The hydropower project, with a potential capacity as high as seventy gigawatts, could generate three hundred terawatt-hours a year (roughly equivalent to the UK’s total annual electricity consumption).

There are several difficulties. The project lies in a seismically volatile region. The 1950 8.6 magnitude Assam-Tibet earthquake, one of the strongest ever recorded on land, happened just 150 miles away from Nyingchi. Engineers plan to drill tunnels from the top of the bend to the bottom, channelling water through turbines before sending it back into its natural course. This raises multiple ecological issues, not least the impact on water flows to the Indian subcontinent.

The economic impact to the Tibet region will be considerable. Hundreds of thousands of jobs will be created while it is estimated that project will add perhaps 0.2% to China’s GDP each year. Construction of transmission lines will allow the plant to serve China’s industrial east coast and southern regions like Hong Kong as well as poorer western areas such as Tibet itself.

It is an audacious project but carries considerable economic and environmental risks.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alex Clare

16/09/2025