The UK Autumn Budget in November introduced significant tax rises and extended freezes on income tax bands, expected to generate substantial revenue but impact consumer spending. The FTSE 100 remained resilient, edging closer to 10,000, whilst the labour market showed mixed signals with rising unemployment.

Sector performance diverged, with mining and healthcare leading gains, and gilt yields fell following budget clarity. Globally, the European Central Bank (ECB) kept rates steady amid sticky inflation, Japan’s market gained on political optimism, and the US showed strength despite credit market concerns. Investors navigated a complex environment of persistent inflation, geopolitical uncertainty and cautious central bank policies worldwide.

UK policy

The big UK political event in November was the Autumn Budget (delivered on the 26th), in which the Chancellor outlined tax rises, tax increases and more government borrowing.

Analysts are still digesting the Budget, but a range of fiscal policy changes are likely to have significant knock-on effects on the broader economy.

Depending on income, some taxpayers could see their tax bills rise by a few hundred to over a thousand pounds over the next few years as inflation and wage growth push them into higher bands.

The policy is expected to result in an extra 5.2m taxpayers as average wages go up over the coming years, and more people exit the tax-free Personal Allowance (£12,570). Moreover, an estimated extra 920,000 people could end up paying the 40% higher rate.

This is just scratching the surface of the budget, and our advisers will have plenty more to say about it in the coming months to help clients navigate the complexities for their financial plans.

The UK economy

The Chancellor painted a mixed picture of the UK’s growth prospects in 2025, claiming that the country was on course for a 1.5% rise in GDP. However, the OBR downgraded its 2026 forecast to 1.4% – partly due to lower productivity growth.

Inflation (Consumer Prices Index – CPI) is still hovering above the Bank of England (BoE) target at around 3.4% this year. This is the highest in the G7 – a trend the International Monetary Fund (IMF) expects to continue into next year.

However, the budget deficit is arguably on a more positive course. The IMF expects UK public sector net borrowing to be £112.1bn (3.5% of GDP) in 2026-27. The year after, it should fall to 3%. Then 2.6% (28-29), 1.9% (29-30) and 1.9% (30-31).

The Chancellor estimates that 450,000 children will be lifted out of poverty by 2029-30 due to her decision to scrap the two-child benefit limit. Moreover, £150 is forecast to be taken off energy bills from next year (e.g. due to the ending of the Energy Company Obligation).

The UK market

The FTSE 100 performed robustly in November, maintaining gains seen since October and edging closer to the 10,000 mark. The market reaction to the Autumn Budget was somewhat positive, with investors still digesting the Chancellor’s balanced approach to fiscal tightening while avoiding shock market disruptions seen in prior years.

The extended freeze on income tax bands and planned tax rises pose further risks to consumer spending (possibly dampening growth). However, the UK labour market shows resilience, with employment up but rising unemployment pushing the rate to 5%.

Sector performance diverged: mining and healthcare led gains, supported by higher gold prices and government contracts, while consumer discretionary sectors showed caution amid mixed retail footfall data.

Equity markets remained more attractive than gilts, as bond yields retreated following budget clarity. Gilt yields fell on expectations of slower borrowing growth ahead.

Overall, UK markets balance cautious optimism on fiscal policy with ongoing inflation pressures and productivity challenges shaping investor strategy.

The Global Outlook

Global equity markets were mixed in November amid varied regional dynamics. The ECB held rates steady but signalled potential hikes if inflationary pressures persist, as Eurozone inflation remains sticky around 4%.

Japan’s stock market gained momentum following the historic election of its first female prime minister, boosting market confidence and growth expectations.

In contrast, the US market showed robust performance despite concerns over credit market instability and slowing economic data. The tech and AI sectors continued to lead gains in the US, while earnings reports remained generally positive.

Global inflation concerns linger, influencing central bank policies worldwide. Emerging markets showed pockets of strength, benefiting from easing monetary policies and stable commodity prices.

Overall, investors navigated a landscape of geopolitical uncertainty and cautious central bank messaging, looking for selective opportunities amid a complex global economic backdrop.

The content in this article was correct on 03/12/2025.

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