Investment Insights webinar - Q4 2025

6 November 2025

Listen in as Edward Smith, Co-Chief Investment Officer, and Rebecca Williams, Divisional Lead Financial Planning, explore the key themes shaping the investment landscape in the final quarter of 2025.

Article last updated 7 November 2025.

This recorded webinar offers insight into our latest thinking on the global economy, market outlook, and the key questions facing investors as we approach year-end.

A key focus of the discussion was the UK Autumn Budget - exploring its implications for financial planning, investment strategy and the UK economy.

Webinar transcript

Myron: Hello everyone, and a very warm welcome. I'm delighted to be your host for today's Investment Insights webinar. I'm joined by our co-chief Investment Officer and our financial planning divisional lead. If economic and investment insights were a currency, these two would be trading at a premium. They did pay me to say that.
It's been a remarkable period for global equity markets since our last investment insights webinar in July. Despite a steady drumbeat of geopolitical headlines, tariffs, and other challenges, markets have powered ahead to new highs. But with these record levels, it's only natural to ask, should investors be feeling nervous?

There's certainly been no shortage of chatter about a potential US equity bubble, especially as the so-called Magnificent Seven continued to dominate performance stateside, with Nvidia actually making history as the first company to reach a $5 trillion valuation. Are we in bubble territory, or is there more to this story?

And what about closer to home? This might come as some surprise, but UK equities have actually outperformed global equities over the last 5 years. Is the investment case for the UK strengthening?

In addition to covering the current state of global markets, our special topic today is of course the autumn budget. After a long, long build up, the fiscal event is now just around the corner, and with it, more noise than a toddler with a tambourine. Headlines have been dominated by talk of income tax, pensions, inheritance tax and possible spending cuts. As ever, the budget puts a spotlight on the sustainability of government debt. So there's a lot to unpack. What does it all mean for markets, and more importantly, for your investments? That's exactly what I'll be exploring today, as we aim to cut through the noise. And this is where you come in, so please do send your questions through the chat at any time. I'll be keeping an eye on them throughout, so if something piques your interest or makes you raise an eyebrow, drop it in the chat. We'll also have time for Q&A at the end.
So there's plenty to work through, so let's just dive in and make sense of it all. Welcome and thanks for joining me.

Ed, I'd like to start with you, let's talk global equity markets. So global equity markets continue to hit new highs. Is that a reason for investors to feel nervous?

Ed: Short answer is no. Over the last 5 decades, if you had invested in the global equity benchmark on a day when it had made a record high, your prospective returns, say over the following 3 years, would have been better than if you had invested on any random day. Now markets making new highs with a deteriorating earnings backdrop, that's a red flag, but that's not where we are today. In fact, there's quite a long list of factors supporting markets to new highs. Oil prices, energy costs, they are just off 4-year lows. You've got profit margins making all-time highs. Money is flowing around economies at an accelerating rate again. That's in part because banks are lending more freely to the private sector. But because the private sector has spent the last few years deleveraging, we don't have any general concerns about corporate balance sheet health. We've got macroeconomic data and individual company profit data coming in ahead of expectations and people revising up future expectations as well. In fact, we're about halfway through the US earnings seasons where companies report, and it's actually on track to be an unprecedented to deliver an unprecedented amount of companies beating
expectations if you ignore the immediate period following the COVID pandemic, the bounce back period. So that's really profound. So equity investors shouldn't be fearful of these new highs. There is a fundamental support for them.

Myron: OK. What about specifically talking about US equities? Talk of a US equity bubble has actually increased since the last webinar. My question to you, Ed, is do you think there is a bubble?

Ed: Yeah, I mean it's a great question. The problem with the term bubble is that it's so imprecise. I mean, I'm going to spare viewers a lecture on semiotics, but bubble is a metaphor Metaphors -Pretty squishy concept. It's pretty ambiguous, subjective in our opinion. It's got no place in investment decision making, but unhelpfully commentators dropped the word because they know it will get picked up and made into a great soundbite, but they are probably not actually saying very much at all. So let's try and inject a bit of precision into the debate around whether we are in a bubble. Into our mind, a bubble is when the price of something becomes irrationally disconnected. From its fundamentals when there are no rational expectations powering it to new highs, and you could add that, and investors know this and don't care. Now we don't think that's where we are today. The cash flows of companies have grown prodigiously, and the expectations of future cash flows they may turn out to be overoptimistic. They may turn out to be incorrect, but they don't look irrational, and there's a fundamental difference between being incorrect after the event and irrational before the event. Now perhaps to exemplify this a little bit further, I'm going to turn to the video wall and make some comparisons about valuations and fundamentals between now and the last great equity bubble, which was the end of the dot com era in the late 90s, early 2000s. Now if you compare headline valuations, the price to earnings multiple, for example, is as good as any example. On the left-hand side, we've got the price to earnings multiple, and the scale on the left-hand side is the percentile rank. So where does the valuation rank in the historic distribution? If it's at 100%, it's never been more expensive, 0% never been cheaper. Now the blue bars are what it was at the dot com peak. The green bars are where we are today. They are pretty comparable. So, you can forgive people for asking the question, are we in a bubble? But exemplifying that sort of fundamental support point, we have the pair of bars on the right-hand side, and this shows net profit margins. At the peak of the dot com bubble, they were relatively low compared to history. Today they have pretty much never been higher, and that's a really fundamental concept to grasp. I can construct a similar chart. We have constructed a similar chart where on the right-hand side we show balance sheet health again back at the dotcom bubble peak balance sheet health was relatively weak. Today it is well above the norm, and you are seeing the effects of that in companies' behaviours. Companies are behaving in a way that is not consistent with bubbles of the past. For example, they're not clambering all over themselves to raise money in equity markets, cashing in on sky high valuations by listing on the stock exchange, or raising money in the secondary market to go out and buy an even more expensive company. Instead, companies today are buying back shares, some are paying dividends. That's behaviour that you just seldom see at the at the peak of the bubble. So to sum up, we don't think we are in a bubble, but there are some pretty optimistic expectations of what US technology companies deliver. They may well prove right. In fact, our base case is that we want to be invested in them, but we also want to diversify away some of that risk in our other investments.

Myron: And that's interesting, Ed. What about people looking to diversify and actually previously you mentioned UK equities as a way of diversifying from US tech. Is that still your position? What's your views on that? As we mentioned, UK equities have outperformed global markets over the past 5 years.

Ed: Yeah, well, so we have discussed this before on webinars, and let's just sort of highlight again that final point you made that UK equities have beaten global equities over the last 5 years. A lot of investors find that absolutely astonishing. It's completely passed them by. But in sterling total return terms, the FTSE 100 has beaten the FTSE world over the last 5 years. The UK equity market is such a maligned market, no more so than in the UK itself. We love to hate our home market, but it has beaten global equities. Reddit forums, social media, it's full of investors salivating over US technology stocks, exemplified by the Nasdaq, the tech-heavy US benchmark. Now nobody salivates over the FTSE 100, but even though a very significant part of it, UK banks, which is a large weight of the FTSE 100, has delivered triple the return of the NASDAQ over the last 5 years. So people think diversifying into the UK is sort of a, it means giving up a load of returns. That's just not true anymore. Why do we like the UK? Well, two of the key risks to our US equity positions, which geographically the largest part of our portfolios is US equities, but the two key risks are a spike in bond yields either because of fiscal concerns or inflation getting in the way again, and that could hurt the valuations of technology stocks, which is what we saw in 2022 for example, or simply the narrative turns around the AI story itself and perhaps some of those expectations of future return on capital proved to be a little disappointed. So we want to invest within equities in a part of the market that is less sensitive to those two things, US Treasury yields or the US tech factor, and the FTSE100 is out of all the major market cohorts, one of the least sensitive markets to those things, so it's a really attractive home for that diversification capital in our opinion.

Myron: You mentioned spiking bond yields and you know fiscal policy. I think this is a good leeway into our special topic for today, which is the budget. Before I go any further, I think it would be remiss of me not to mention the Chancellor's pre-budget speech that happened this morning actually and Rebecca, I'd like to bring you into a conversation. What are your views of what you heard from the Chancellor this morning?

Rebecca: So perfect timing, right, this morning. We've had quite an unexpected speech, I think quite unusual for the Chancellor to stand up and make a speech like that with only 3 weeks to go before the budget. She talked a lot about doing the right thing, about necessary choices, didn't necessarily tell us what those choices are though, or whether that means that she will break her manifesto pledge not to raise those three main taxes. So you know we've come out this morning, I think, maybe primed for some tax rises but still not knowing where they might come from.

Myron: And Ed, how have markets responded to the Chancellor's speech?
Ed: So relatively tamely, sterling is off a little bit, gilt yields are a little bit lower. I think because the market is interpreting that as we are going to get some tax hikes, that's likely to be slightly growth negative, perhaps slightly inflation negative, which means the Bank of England can do more to cut interest rates, and I think that's what we're seeing working. To put this in context, if you looked at today's move on a long-term chart of the sterling exchange rate, you wouldn't really know anything had gone on today.

Myron: You mentioned tax hikes. I think that's been in the minds of many people, many investors in recent weeks, because that's the speculation on increasing income tax has increased in recent weeks. And I suppose if this happens this will be a break of the manifesto pledge. Rebecca, I'd like to come to you. What could it mean from a financial planning point of view?

Rebecca: If you just take a step back, we're talking about the manifesto pledge. We're talking about the promise not to raise the three big taxes. So we're talking about income tax, national insurance, and VAT, and those are the big three because they make up around 2/3 of the tax base. So, if the Chancellor hadn't restricted herself in this way, they would be probably the go to for raising revenue. So I think the implication from this morning is that maybe there will be some kind of change with income tax potentially and the chancellor has previously promised not to raise taxes on working people. The definition of working people is up for debate, but arguably you could say that that is people kind of basic rate taxpayers, the 20% tax-paying band. So it's looking more likely that the Chancellor's focus will be on that broad-shouldered part of the taxpaying base, so we're talking about higher rate taxpayers, those paying tax at 40% and 45%. And if you're already paying tax at 45%, so broadly your income's over 125,000 pounds, you've already taken another hit which is losing your personal income tax allowance, which is about 12,500 roughly, so that's your kind of tax-free allowance. You start to lose that over 100,000 pounds worth of income, and, and so you know you've got a kind of a double whammy there. So that's one place where she could look in terms of income tax rates. There isn't a huge amount that we can do about that without knowing what exactly she's going to do. The other thing that the previous government actually did is they've frozen income tax thresholds. And what that does is gradually over time as the thresholds freeze but earnings creep up, more and more people are dragged into those higher rate tax bands, it's called fiscal drag, so you get more and more people paying 40% and 45% tax rates. They're already frozen till 2028, but we could see them frozen for longer, say till the end of the parliament 2030, and that would also raise quite significant sums for the Chancellor. So you know in terms of maybe other things that she could tweak, not technically not income tax, but like income tax at the moment if you're above state pension age you don't pay national insurance on your earnings, and there has been a suggestion that pensioners would now be subject to national insurance on earnings too, so that's also something else that potentially could come along. In terms of, you know what you can do about that, how you can kind of mitigate income tax, it's basics, you know, look at your exemptions and your allowances. If you're a married couple, look at the allowances between you and how you're structuring your finances jointly. You can mitigate income tax by doing things like using your ISA allowance, making pension contributions. There are some other more sophisticated investments that you might consider things like enterprise investment schemes and venture capital trusts. Although I would caveat those by saying they are high risk. Ed's smiling at me, they're high risk. So advice definitely needed, they are not for everybody. There's only so much that we can plan for without actually knowing what these necessary choices are going to be in a few weeks' time.

Myron: Ed, how would increased income tax impact the economy and also markets more broadly?

Ed: Yeah, so I'll answer that question by setting up a hypothetical. So if you were to increase the basic rate of income tax, which perhaps this Labour government wouldn't do, but just for the sake of this answer, let's say that was increased by 1% point and the higher rate of income tax was increased by 1% point. And the thresholds at which you cross into the various income tax brackets, as Rebecca said, are frozen for longer. That would raise about 20 billion pounds. So, it goes, yeah, income tax goes, small changes and income tax go a very long way. That's so in that scenario that would likely shave off about a 0.25% point of GDP growth over the next 2 to 3 years, which isn't enormous, not insignificant, but not enormous, and it would likely have a small downward effect on inflation, but possibly a trivial one depending on how we're modelling this, So a slight negative effect, not enormous in terms of the distortions that this could inject into the economy and the long term potential growth rate of the UK economy. Income tax isn't hugely distortionary compared to things like corporation tax or potentially introducing wealth taxes. And so therefore I think it's fair to say that it is the most positive tax hike of any tax hike for or major tax hike at least for the gilt market. Because it has a small downward effect on growth, it doesn't do much to inflation, and doesn't lead to further problems down the road, which could mean this vicious spiral of tax hikes, lower growth, meaning that the fiscal sustainability is still not fixed, leading to more tax hikes, etc. So it avoids that. So it's probably the one that is more welcoming in gilt markets in terms of equity markets. The FTSE 100 is largely an international index. 70-80% of revenue is made overseas, so small changes to UK income tax aren't going to mean that. Much to it, of course, more consumer facing names within the equity market could be hurt. On the other side, if gilt yields fall a little bit because of expectations of looser Bank of England policy or because the term premium, the extra risk that the market is demanding for compensation for fiscal sustainability questions gets lowered because they are plugging this black hole, then that could see rate sensitive parts of the equity markets do better. So real estate, for example, all other things being equal, tends to rise. When interest rates or gilt yields fall.

Myron: Sure, what about VAT? I ask because we have a question from a viewer. Please keep your questions coming in. Thank you for it. What's most likely to be raised in the budget on the 26th, VAT or income tax. So from, from what you said, Ed, what are your views?

Ed: I think VAT is pretty unlikely because it's a regressive tax. It sort of falls more heavily on the shoulders of people who are poorer or earn less money. Unless you exempt certain things, but, then you get, then it becomes more complicated. So I think VAT relatively unlikely income tax, as Rebecca said, probably on wealthier people is more likely. I would say that lower and middle earners in the UK are actually relatively lightly taxed in terms of income tax compared to other economies worldwide, especially if you factor in the income tax that employers pay on their behalf, so employer National Insurance contributions. So there definitely is scope to do that, but politically I think it's probably unlikely.

Rebecca: It's probably easier to target the income tax rises as well as Ed said, so the VAT will affect such a broader base, but with the income tax she can be more specific about who she's targeting and those with those broader shoulders that we keep mentioning.

Myron: On income tax, maybe let's zoom out just a little bit for a moment. So the budget always brings government debt into the spotlight. So Ed, are you concerned about the sustainability of that debt and what might it mean for investors?

Ed: Yes, sure, debt has increased very significantly over the last 20 years, and we've got another chart on that which will help us exemplify why. So this shows general government budget balances relative to the size of the. Economy for a variety of different major countries. This blue line here in the bright blue line in the in the Rathbones blue is the UK. But look, they all sort of broadly move together. So debt to GDP hugely increased in the aftermath of the financial crisis due to the policy response, the government stood up. And then 12 or 13 years later, again due to the policy response in the COVID pandemic. There are also a couple of structural factors which are pushing up government debt, and that's because countries in the West tend to be ageing economies and ageing populations are more expensive fiscally unless the government makes unpopular policy. Choices and then latterly there is also extra pressure on government spending from the need to spend more on defence and defence related infrastructure, particularly since Russia invaded Ukraine and what Trump is trying to do to galvanise more global defence pending. Let's look at the UK's position relative to the rest of the world, because there's obviously been a lot of newspaper headlines this year making out as though the UK is going to hell in a handbasket and about to go cap in hand to the IMF for a bailout. You can see that the UK is not in a particularly unique position. This chart shows the Budget balance. If we looked at the stock of debt, so the debt to ratio, the UK is completely in the middle of the pack, and if you compare it to the really large economies, our G7 peers, the UK has either the 2nd or 3rd lowest debt to ratio, depending on how you're measuring government debt. In terms of the overall fiscal position, bringing that into bringing in interest costs and government budget balances again the UK is not an outlier. France and the US are materially worse, for example. And look at what's happening towards the right hand side of this chart. So right of this vertical line here is the forecast for what the budget balance is likely to be over the next few years, and this is before anything that Rachel Reeves stands up in November. You can see that the UK is the only major indebted. Economy forecast to be shrinking its deficit. Rachel Reeves' problem is that she's not shrinking as fast as she said she would, she committed to, but the budget is still the budget balance is still shrinking, and that's often missed in a lot of the noise that Myron was talking about in his introduction. So it is far fetched to think that the UK is headed for a bailout. You can see that the sterling exchange rate has strengthened this year. When countries are heading for a bailout, you tend to get an absolute plunging of the currency. We don't think a bailout is likely for any major economy and we don't think that major Western economies look like emerging markets in the 80s or 90s or the eurozone economies in the early 2010s. Also, governments and central banks are much more willing to intervene in debt markets these days to calm. Many market dislocations that could have in the past led to something of a debt or a currency crisis. Now those interventions aren't costless for the investors. They do have long term effects on growth and potentially the volatility of inflation, but that's a very different matter than a debt crisis for investors.

Myron: Thanks, Ed. Can we talk pensions, Rebecca, pensions, this is something seemingly that the world and his dog have been talking about in the lead up, the long lead up to the budget, and actually we, we do have a question on this, so, and the question is. How likely do you think it is that the Chancellor will make a change in the value of the pension tax free um lump sum allowance from a pension pot? Assuming it's imminent anyway, would you advise trying to take it ahead of the budget if you can, and this is something we've heard, this is a question we've heard over and over again at Rathbones leading up to the budget. What do you make of it?

Rebecca: Speculation about tax-free cash is just at fever pitch, and it was last year and it has just continued because we've had such a long lead up to this budget, so there's been so much time for these rumours to grow and they've just run, so I think it's probably important to say that just go back at it, you can ordinarily at the moment take up to 25% of your pension fund as a tax-free lump sum. There's a cap on that at the moment, so that's just over 268,000. The rumours that are swirling are that perhaps that would be removed completely, so to remove tax-free cash completely, I think that would be incredibly unlikely and very, very unpopular. Tax-free cash is one of the best known parts of the pension landscape, and people rely upon. At retirement they pay off debt, mortgages, they go on holidays. They don't buy Lamborghinis so much, but or they give it to children, you know, to help children get on the property ladder or whatever it might do, you know the tax-free cash is a really central part of retirement planning, so it's really important. The other kind of speculation is that this, this cap might reduce, so we might have a 100,000 pounds cap on, on your tax-free lump sum, for example, and again. That would really hit people with bigger pension savings obviously hardest, so most people, for most people, a 100,000 pounds cap is probably not going to make a huge difference to them in terms of the amount of tax-free cash that they can take. But for the wealthier, for people who have saved into their pensions, that would have that would have a big effect. So we have been having these conversations with clients for several months now about take tax free cash, don't take tax free cash. It's really individual to your circumstances. I would say that last year a lot of people rushed to take tax-free cash out of their pensions before the budget. It was, you know, the panic was rife then too and what happened was that nothing changed last year in terms of tax-free cash limits, so then a lot of people were left with really material sums of money that they'd taken out of a very tax efficient pension wrapper and can't put back in, so you can't take it out and if the rules don't change, put it back into your pension again, so then you have to do something with that money which you, you've taken out of a tax sufficient environment so you know, if you've got a planner, we're already chatting to our clients, but if you've got a financial planner, you should be talking to them, you should be thinking about your own personal situation and whether it's a good idea to take money out or not, because it won't always be a good idea to do that.

Myron: Actually I want to pick on one of the points you mentioned, Rebecca, about the regrets. So, last year we commissioned research into this, and of those who regret, making the financial decision ahead of the budget, taking money and using the pension tax-free lump sum was their biggest regret, I suppose, and just more broadly, why do you think this is something that comes around year after year, you know, is it a case of this will plug the multi-billion pound fiscal black hole today, or, you know, would it be, you know, plugging the gaps more long term, you know, with increased longevity, something that people have been speaking about?

Rebecca: So I mean I've been in the industry for over 20 years now and I think this has been a rumour every single budget that I've seen, and pension legislation has changed massively over that over that time period, but this one just keeps coming up and I think it's because it's so emotive with people, people know about it and people rely on it because they're making plans, they're basing their retirement strategy on having this lump of money. That they will be able to do something with, something that you know they've got a financial goal and it's going to help them achieve that, so I really understand why people are so concerned about the tax-free lump sum changing and I think, you know now in we've got social media and we've got clickbait and I think that, they latch onto that and I think they just, it just kind of, it just rolls really and it just it snowballs and I think with the, you know, even though the budget was announced in September so that's already 2 months ago, but we were talking about it before that too if you're looking, if you're excluding the big three taxes, where are you looking for other tax increases? Well, tax-free cash is always a good one to aim at. as for fixing the black hole. It, it absolutely not. It's, it's not going to, so yeah, there are going to have to be other tax takes if you like, if that's what the chancellor's going to do, and maybe that's, you know, what she was priming us for this morning.

Myron: And just finally on pensions and just to be explicit, how can pension savers use this period of uncertainty as an opportunity to review and perhaps strengthen their retirement strategy?

Rebecca: So retirement strategy is what I get out of bed for Myron. This is my day job. So this is not this is not a once a year budget type question. Financial resilience is about having a plan in place, a long-term plan. It's about thinking about what do you want your retirement to look like, when do you want to retire, how much do you want to. To have in retirement and you know what do you want to do because retirement is not a linear thing anymore, it's not you know we're going to be here in our office chairs one day and at home on the armchair watching daytime TV the next you know retirement is changing massively. And I think people will carry on working, they might work slightly differently, less hours, they might work in a different industry, they might do charity work. You know we're living longer, healthier lives so we might be involved more in sports or activities or traveling. So you know retirement is going to look very different. I think also when you're planning, the reason for a long-term plan and why that's important is because, and I think a lot of us would have seen this with aging parents or relatives because we're living longer, but there is a point at the end where we might need care. We might need that in our own home or in a residential care home, that is expensive. So if we want to plan for that, we need to be thinking about, you know, it could be 30+ years in retirement nowadays, So, it's about thinking about making that plan because when we plan with clients, what we're doing is making
a really robust plan so that things like this, budgets, changes in legislation don't actually knock clients off course from what they're trying to achieve, that's really important, so I would say never too early to start planning. We're talking to our financial planning clients about that all the time, but conversations with the financial planner is really, really important.

Myron: Can we talk wealth tax next, if that's OK. I mean, at Rathbones we've done some research into this, and I think one of the key findings that actually stuck with me is that a standalone wealth tax could, prompt up to 100 billion pounds, in assets to shift overseas or into less productive investments. Ed, first off, what exactly do we mean when we say wealth tax or wealth taxes or a wealth tax?

Ed: Yeah, so I mean they're kind of a novel concept for the UK but they have been used elsewhere. So a wealth tax is where you tax, say 1% on an individual's or sometimes an entity's stock of net wealth, so that's different to income tax, which is obviously a tax on income. It's different to inheritance tax, which is a tax on the transfer of net assets. It's different to capital gains tax, which is a tax on the appreciation of your wealth or the realised appreciation of your wealth usually. A wealth tax sounds conceptually simple, but it's, as many countries have found, it's devilishly difficult to implement.

Myron: Which countries?

Ed: So today there are only 3 countries that have one in our immediate peer group that's Norway, Spain, and Switzerland. In the past, quite a few other European countries have experimented with them, most notably France, that saw a big exodus of wealth. It has proved to be quite distortionary in the economist lingo. Interestingly, in 2017 to 2018, France abolished its wealth tax and replaced it with a property tax, progressive property tax that taxed wealthier people more. And it actually saw a lot of wealth repatriate into France, or at least that's what the evidence suggests at the moment. There hasn't been a really fantastic study where you're holding everything else equal to really isolate the effect of that tax change, but that's what the evidence looks like and that. Plays into some of the work that we have done recently looking at the residential property market which in the UK is often seen by many people as what you should be putting your money in, but there is a lot of structural things that have changed. Outlook for the property market, particularly over the last 10 years, and whilst we think a wealth tax is very unlikely because it's hugely costly to collect and it's very inconvenient for the taxpayer to administrate, property taxes are perhaps more likely, not necessarily at this budget, but at future. Budgets and that makes the relative attractiveness of a portfolio of financial assets compared to another house in the UK skewed to a bigger attraction to financial assets.

Myron: What about inheritance tax, Rebecca, I mean that's been another area that's been rife, of speculation more recent. I think it's pensions, income tax, and inheritance tax among, you know, our clients have been areas, that have been raised or areas of queries, I suppose, ahead of the budget. There's been taught that the government may introduce a cap to the tax-free gifts
made during one person's lifetime. There's also speculation that the seven-year rule could be extended, could be even be replaced. What are clients, Rebecca, asking you about when it comes to inheritance tax? Are gifting strategies being considered, reconsidered?

Rebecca: Yeah, absolutely. So I think inheritance tax is right up there with the tax-free cash conversations we've been having. With clients, it's actually been really part of conversations increasingly since COVID because there's been a huge focus on transferring wealth to the next generation and lots of family discussions about passing on wealth. So I think you're right, the two kind of things that are being suggested, well actually let's take a step back. So at the moment if you, if you transfer wealth during your lifetime, you can transfer unlimited amounts of wealth as long as you survive 7 years after making that gift. And if you survive for 7 years, then the gift that you've made is outside of your estate, and there's no inheritance tax to pay. So one of the things that is being suggested is a cap on the amount that you can give either each year or during your lifetime in that way. Now obviously there would be probably the onus on the gift giver to keep records of that, but also there would have to be some kind of administration from HMRC in tracking that and making sure that people were following that rule, which could be problematic. The other option, as you mentioned, is to extend this 7 year period so it could potentially go out to 10 years or 12 years. So it's really just extending the amount of time that you need to survive after you've made that gift in order for it to avoid inheritance tax. So potentially that maybe brings gift forward for clients if they're thinking about making gifts, I think what we've been talking to clients a lot about is that if you have, if you are planning to make gifts, so if you're imminently planning to, to gift money to loved ones, to children, to whoever, it's probably sensible to do that before the budget if you can do that. But I would caution that by saying that's not, you know, that's not me saying go and give all your money away. Because what's really, really important is that your financial security is protected, so I just mentioned you know previously we were talking about. What you want your retirement to look like, what you want to do, how much you want to spend, whether you want to provide for, for care, you need to really have that financial plan in place so that you can think about, How affordable is it for me to give this money away and the timing of that, so the plan is really important when we're talking about inheritance tax.

Myron: Last year, the Chancellor announced they're going to include pensions into inheritance tax calculation from April 2027. Is that all factoring into, you know, feeling of perhaps nervousness among people considering their estate planning?

Rebecca: It's got to because pension legislation does change fairly frequently. We had a bit of a quiet patch but it's always kind of on the horizon and I think it does a lot of damage because it's very unsettling for people, and it's very unhelpful for anyone that's trying to save with a long-term plan, and also selfishly, you know, for the people that are advising people to save for these long-term plans as well because you know we need to have certainty to build some trust. The state pension on its own isn't enough to provide a comfortable retirement, we should be encouraging people to save for retirement, whether that's in pensions or in other savings vehicles, you know, a combination, we should be encouraging people to save for retirement, so, you know we really need to need to be thinking about the impact of these kind of constant changes and speculation on people's attitudes towards saving and how they feel about pensions in particular.

Myron: And Ed actually, just from an economic markets point of view, all this speculation, how do you think people should, you know, approach their investments and, you know, some people are market watchers, but what would be your guidance to people who are market watchers and looking at all this speculation ahead of the budget?

Ed: I mean if you've got a globally diversified portfolio, which is what Rathbones tends to stand up for the vast majority of our clients, as long as Rachel Reeves does tackle the budget deficit hole in some way. And doesn't do something completely radical which doesn't seem to be, being mooted. I think the impact on markets is going to be relatively muted. and you, if you were somebody who's only looking at your portfolio once a year, for example, yeah, you probably wouldn't notice that anything had happened if you, if you check on January 1st 2026, and look back and hadn't checked for a year before that. So, it's really important that investors don't get too unnerved by what's going on in short term political developments. We've seen so many times over the last few years how markets tend to overreact to short term political events, particularly geopolitical events, but occasionally domestic political events as well. But they often underreact to events with very long-term consequences. So as we said when you asked me about what would income tax do, the hit to growth is relatively little. So if it's something along those lines, Short term impact is going to be relatively muted, so don't get too fearful about all these tax changes which I agree are not great for economic policy or financial planning, but in terms of what the market is going to do, it's probably not going to derail it. But you do want to, as an investor, you do want to be thinking about some of the long-term consequences of fiscal sustainability all around the world, of the fiscal impacts of ageing populations as I set out in one of my answers, and build that into the assumptions you are making about the long term prospects for financial markets.

Myron: And more broadly, like Rebecca, and this is going to lead me on to our Q&As because we have plenty of questions, thank you, viewers for sending these questions, but you know, it seems like speculation grows louder each year ahead of the budget. How can people really cut through the noise and take practical steps that, I suppose, bolsters their financial resilience. There are things like ISAs, making use of ISA and pension allowances, which is great practice regardless of what the budget might bring. But how should people broach this period?

Rebecca: So I think I have a lot of sympathy for people watching because the noise, the clickbait is really, I mean, it's fever pitch, isn't it, and, we've been talking about it for a long time already, as I said, we've still got another 3 weeks to go. You know, Rachel Reeves has come out this morning and, made another speech which has obviously caused a huge amount of reaction, so it's quite unsettling and it's really quite unhelpful, and I'm not surprised. It's very emotive. I'm not surprised that people are really concerned about what's going on. In practical terms, we've already been speaking to our clients about the budget, about financial plans for some time, I would suggest that if anyone watching or listening doesn't have a financial plan, first place to start would be, we've got loads of great content on our budget hub website which you can look at loads of great tips and commentary on there. We are here to help, so you know, conversations with financial planners, with investment managers, really important. Obviously, I caveat that by saying we're 3 weeks away from the budget now, so you know, we are kind of fairly limited in what we might be able to do before that point, and we still don't know what these necessary choices are going to be, so you know we, we don't have a crystal ball unfortunately. Regardless of the budget, what you mentioned Myron is really important. There's, you know, always some financial planning 10 ones, managing your debt levels, having rainy day, emergency, cash savings. So you don't need to touch investments if you know markets are going to have a little, a little wobble, using your ISA allowance, making pension contributions. I would also say just kind of a bit left field but also having a will as well, that's a real basic here, we're talking about inheritance tax a lot and passing on wealth. So if you want to direct your wealth on your death, make sure you've got a will, really important. and I think kind of for the next 3 weeks, I think we just have to accept that there is going to be a lot of speculation, a lot of rumour, there's going to be a lot of noise, so try and think about your long-term financial plan because that's the important thing here. What is it that you want from your finances over the long term, and that's what we're working with our clients on. And the plans that we're building are really robust, so when we're designing a plan, we're always thinking about what could blow us off course, more changes to pension legislation, budgets, all of this kind of thing. So we are already factoring those things in so that you know these unexpected things don't blow clients off course from what they really want to achieve.

Myron: Brilliant. Let's dive into some questions because I'm conscious that we don't have a lot of time and you know some of these questions are great and they're quite a good mix of you know, budget related, what shall we do, and markets related. I want to come to markets, so there's one, and it says, just have a couple of questions for me. Is today's pullback, you know, with markets looking less and roses, let's say today, at the beginning of a correction, and 2, where does gold go from here with gold, as you know reaching a long way.

Ed: OK, so the markets are off a percent or so this morning. It is really important not to try and post rationalise every day's move like we see that in the financial press, but you know, the veracity of those rationalisations are usually pretty, pretty poor, and sometimes, you know, markets go down simply because there are just more sellers than buyers that or more desired sellers than buyers that day. As I said in the opening question, we think there are lots of fundamental factors supporting markets to new highs. We think that will continue to power markets over the next year, but there is always the risk of a 10% correction that happens in 1 in every 2 years. That is just part of equity market investing. That potential for that drawdown is the reason why equity investors tend to get rewarded over the long term for putting their money at work. There is a risk, as I said, of a bigger correction than that if some of the sentiment turns around the AI story. So you do want to be diversified, don't have all your money in the Magnificent7. But we don't think that there is a risk of a profound multi-year or a high risk of a profound multi-year bear market because of some banking crisis or because of a financial asset bubble.

Myron: And gold?

Ed: So gold, yes, sorry, so look, gold has gone an awful long way. It had a bit of a correction last month. But it still delivered fantastic returns. The way we view gold is something that you should have as a strategic asset. It helps smooth the returns of your portfolio over time if you're mixing it with some equities and some bonds. It used to be something that you could trade tactically in and out of because you could explain the movements in the price of gold by pretty well with things like the inflation adjusted interest rates in the US or geopolitical uncertainty, but those models since 2022 have just gone out the window and now it is very difficult to explain and even harder to predict the price of gold. There is some what we call in economics emitted variable in our model that that is driving the gold price higher. It's likely. The purchasing of gold from official and financial institutions in countries that are outside of America's sphere of influence where America might weaponise the dollar against them if they fall foul of them geopolitically, but that is very hard to measure very accurately and even harder to predict. So we think there is a structural driver causing the gold price to move higher permanently. It has gone a long way though, there are some signs that people are using it speculatively, which increases the risk of a correction, so a small strategic weight in our portfolios is worthwhile, but don't try and time it.

Myron: Many questions related to pensions actually. I think this one captures it all. if tax-free pension was to change,
so, you know, the tax-free pension lump sum was changed,
it wouldn't be immediate, would it?

Rebecca: Sensibly I would say probably not because if you change the rule on you know midnight on budget day. You're going to miss out on that bit where everybody probably rushes to take tax-free cash out of their pensions and so the chancellor's not making any money when people take tax-free cash out of their pensions obviously because there's no tax to pay, but where the benefit comes is what they do with that money, whether you know it's coming back into the economy or investments or you know whatever they're choosing to use it for, so I think it would be incredibly unlikely also because if you think about all of the admin and the systems in the background from all of those huge pension providers, they've got to change their systems overnight to account for a reduction in tax-free cash or in the abolition of tax-free cash and they, you know, they do a lot of record keeping, so you're talking about huge companies that have got to change systems and admin processes and that would have to happen overnight incredibly difficult. So my kind of my rational judgement says unlikely I think that it that it would change overnight. I think there would have to be a period of grace and that's certainly what we've seen with previous pension changes. So if you think about, I mean if you if you look at the change in the budget last year which is not coming in until April 2027, so there's usually a period of time here where the industry has to react and you know and make those changes, so I would say unlikely, but I don't think anything's definite. And regardless, avoid a knee jerk reaction. Absolutely, definitely, so you need to think about your own personal circumstances and you need to think about why, if you're thinking about taking tax-free cash out, you need to think about why you're doing that and what you're going to do with that money.

Myron: Another market slash economy one for you, Ed, so very interesting debate, so some live feedback for you guys there. Ed, you're apparently much more positive on the UK than informed journalists and politicians I'm guessing are making out. Is this just a case of the government not explaining themselves clearly and rationally?

Ed: I think governments do a terrible job at explaining economic policy. Yeah, you've seen that so many times over the last few years. Over the last couple of decades off topic, but the benefits of globalisation, for example, has been explained absolutely terribly and therefore you have these populist swells of anti-globalisation, and you can't blame people who are anti-globalisation for that because the forces at which it benefits the economy as a whole are pretty complex, and someone has got to explain it. Governments are appalling at that, and I don't think either side. At the moment when it comes to explaining the government's financial fiscal position or the stock of government debt or the fact that, as I said, the UK government is pretty much the only indebted country trying to shrink the deficit is explained at all and it gets lost in the point scoring that both the incumbent government and the opposition governments lobbied each other or try to score for each other across the aisle. So yes, that's what we try and do at Rathbones, lay political predilections at the front door and just analyse this stuff in a really cold-hearted way. And when you do that, look, the UK economic outlook and its fiscal position is not rosy. There's plenty of stuff that needs to be done. But it's not this uniquely precarious position that so many journalists and politicians paint it out to be.

Myron: We have time for one last question, and I think this actually speaks to both your worlds. So please tell us about the long-term issues that were alluded to. So, I mentioned longevity, so ageing populations were mentioned also low birth rates, and which are the long term issues, I suppose that factors into fiscal decisions, things like the budget, and you know and also how it will impact markets. But first, Rebecca, I'd like to come to you with that question.

Rebecca: I think in my world, it's all about living longer, healthier lives, it's all about what retirement looks like. You know, retirement used to be, I don't know, 10 years maybe you'd finish work, and you'd have, you know, maybe 10 years in retirement, you'd have your state pension, you'd be pretty well catered for. You know, now you could have 30+ years of retirement. You could do so much in retirement, we're much healthier, you know, we can go off and pursue other interests, we might work differently. So a lot of what I do is understanding what clients want to get from their retirement, what it looks like for them, and then I think this kind of what I mentioned about an ageing population, we are living longer, we are healthier, but there does come a point where more of us are going to need care, going to need assistance. And that's really difficult because we don't live in our close-knit family communities anymore, but we are seeing a lot of, particularly the Gen X sandwich generation where they've got teenage children and ageing parents, that kind of pressure of having to look after relatives and the cost that goes along with care homes and care fees and just having that quality of life in later life. So I think for financial planners that's a big piece that is really changing and evolving at the moment, thinking about the very long term and what life looks like. And that will affect your decisions around giving wealth away, around inheritance tax planning, you know, even around investing because your pension has got to last you for so much longer now, there's so much more life to fund that you know that will bring us together in financial planning in these kind of robust plans that we're looking at, where we're looking at you know modelling income and modelling wealth to really make sure that. You know, just bringing it back to the budget, like things like today, like whatever happens in 3 weeks' time, doesn't knock you off course so that you know you can't achieve what you want to, you work hard enough in the run up to retirement, right, you want to be able to enjoy it.

Myron: And Ed, if I may, maybe like a 30 second response in terms of how those factors impact the economy, markets, and this decision making by, you know, governments more broadly.

Ed: So they have profound effects in many ways. It's difficult to cover in 30 seconds, but the ageing populations mean that there are more people out of work compared to people in it. That's quite expensive for the government, so the tax basis has to shift somewhat from relying on taxing working income to taxing. Other things, it puts some upward pressure on inflation if there are more people consuming goods but fewer people producing them as the because the population is still growing but working aged people are getting a smaller part of it that has inflationary consequences and then of course the fiscal choice of if you're not careful, it starts to get unsustainably expensive.

Myron: Brilliant, thank you very much both, for your views. And well, that's all we have time for unfortunately today, but thank you so much for joining us and for all your brilliant questions actually and comments throughout the session. But before we sign off, just a few quick things to keep on your radar, so first up our post budget webinar. So that's coming up on the 27th of November, so mark that on your calendar. We'll be walking through the Chancellor's announcements and what they could mean for you, your finances, and also the wider UK economy. You can register now using the link in the webinar platform. So we're also looking ahead to our next investment insights webinar, which will be on the 24th of March 2026, so next year, which is around the corner. So if you found today useful, we'd love to see you there. Registration is open via the link provided. And if you're keen to dive deeper into budget related topics, head over to the Rathbones website and search for the Budget hub. It's packed with insights before, during, and of course after budget day. So it's a great place to stay informed. And finally, we'd really appreciate your feedback, so please take a moment to fill out the form provided. It helps us make these sessions even more relevant and engaging for you. We hope you're leaving with a clearer view of the markets and perhaps a few ideas to take away. So until next time, take care and happy investing.

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