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Full podcast episode transcript
[0:08] Susannah Streeter: Hello and welcome to this Switch Your Money On podcast, with me, Susannah Streeter – Head of Money and Markets here at Hargreaves Lansdown.
[0:13] Sarah Coles: And me, Sarah Coles – Head of Personal Finance.
[0:15] Susannah Streeter: So, Sarah, this is our investment special, where we look at the factors moving markets around the world – and, next week, we have the personal finance update, don’t we?
[0:24] Sarah Coles: That’s something to look forward to – but that’s not the only special thing about this episode, right?
[0:27] Susannah Streeter: it is actually our 100th episode. We have been doing this for quite a long time now – haven’t we, Sarah? – getting together every fortnight – now every single week – to give you all the latest on what’s happening in the world of money, markets, and personal finance. And it’s been a pleasure to be with you all that time, Sarah – ...
[0:48] Sarah Coles: Ah – ...
[0:48] Susannah Streeter: ...chewing the fat.
[0:49] Sarah Coles: ...that’s very sweet. I feel like I’ve aged about 100 years in that time, so it’s about right that there’s been 100 episodes.
[0:53] Susannah Streeter: And you have been very hard at work... I would like to say, ‘Blowing up balloons,’ but nipping off to buy balloons.
[0:58] Sarah Coles: Yes.
[0:58] Susannah Streeter: To celebrate this, I think we should have some cake later. Certainly, the world of markets can be a turbulent one – and we’ve been attempting to help guide you through all the twists and turns – and we shall certainly be doing that in this episode as well. So, as usual, it’s all been happening at a really fast-moving pace.
[1:19] Sarah Coles: Yes – more of a gallop than a trot. One of the things that definitely changes, minute by minute, is that big, global geopolitical picture – which is... literally, every time you open up a newspaper, it’s something different.
[1:30] Susannah Streeter: Yes – and so, the latest... up until now – the day of recording – is that we are getting more scores on the doors when it comes to trade deals. So, President Trump has announced that he has, again, made a deal with China – and this is likely to be focused on China making it easier for American companies to buy rare-earth minerals, which are essential for production of so many different products – particularly in the tech sector.
And now, we’re also hearing that Canada appears to have stepped down somewhat in the negotiations and agreed to lift its planned Digital Services Tax on US tech giants – and that has brought Canada and the US back to the negotiating table. And we’re also getting hints that there could be a trade deal with India, imminent.
So, all of this has led to more positivity washing through financial markets. You had Wall Street stocks hitting fresh record highs – and we’ll just have to see whether this continues because, of course, there can always be something that can upset the apple cart.
Even though these deals appear to be being signed thick and fast now, they are likely to mean that there still will be higher tariffs...
[2:49] Sarah Coles: Oh.
[2:49] Susannah Streeter: ...on goods imported into the United States. If you look at how the US-UK trade deal was hammered out, it does still mean that there are extra tariffs on many imports of UK goods into the United States – and so that is basically being seen as a bit of a benchmark of how these other trade deals may play out. And so, because of that, there is still expected to be a hit to global growth this year.
[3:16] Sarah Coles: I suppose the one thing that we know is that we don’t know anything. That’s always going to be the case, but we do know that there is gonna be this global slowdown that we’re experiencing at the moment – and the Government in the UK has made an effort to work out how we can build growth out of this.
So, we heard a little bit last week about the industrial strategy, didn’t we? Can you tell us a little bit about that?
[3:36] Susannah Streeter: Yeah, we certainly did hear about the industrial strategy – and, obviously, it is a tricky time – they really want to kickstart growth.
We did have a revision that came through in terms of the UK growth numbers – and the UK economy grew a little bit more in March than previously estimated by the Office for National Statistics. Although it didn’t really move the dial that much, it still grew the economy by 0.7% for the first quarter of the year – and, of course, we did have that downturn and that shrinking of activity in April. So, still, overall, it is pretty sluggish.
So, what the Government have done is set out this 10-year plan to try and boost investment and create jobs. So, it’s got this package of investment that, for the first four years, aims to cut energy prices by up to a quarter – more than 7,000 UK businesses – through ‘The British Industrial Competitiveness Scheme.’
There are other measures included in this industrial strategy - £1.2bn has been dedicated to improve skills training by 2028-2029. There are efforts being made to try and attract elite, global talent via reforms to the Visa and Migration Schemes. And also – we’ve heard this as well quite a lot in the past – hiring more planners and streamlining planning applications.
This is all aimed at trying to get the construction industry moving again. Of course, there’ll be plans to build many more homes, but quite a lot of planning applications get held up through log jams in planning departments – and the Government really wants to try and change that. And then, of course, there’s this money as well allocated to R&D research and development spending. £22.6bn is gonna be spent by year 2029-2030 – and there’s big commitment to AI as well.
[5:26] Sarah Coles: Big commitments – you know, robots running podcasts!
[5:29] Susannah Streeter: Let’s hope not! – ...
[5:30] Sarah Coles: [Laughs]
[5:31] Susannah Streeter: ...although you shouldn’t be surprised by anything, Sarah. I have actually had my own avatar created at a tech show that I went to – and it is incredible. She’s a little bit more serious than how I speak – I think – ...
[5:43] Sarah Coles: [Laughs]
[5:43] Susannah Streeter: ...a little bit more muted. But it takes quite a long time to answer a question – but, you never know, she could change in the future.
[5:51] Sarah Coles: She’s like tired you, ...
[5:52] Susannah Streeter: [Laughs]
[5:53] Sarah Coles: ...by the sounds of it!
[5:53] Susannah Streeter: Yeah!
[5:54] Sarah Coles: [Laughs] So, I guess, putting this big strategy in place, there’s a lot that the Government’s hoping for. Why is it so keen to kickstart these things? You’ve talked a little bit about the backdrop – but, presumably, there are other signs of things in trouble as well?
[6:07] Susannah Streeter: Yeah – so we’ve got that overall growth picture, showing the economy is largely stagnating. There will, of course, be hopes that, with the UK-US trade deal now signed – and, certainly, a better situation for many exporting companies to the United States – that that could lead to a bit more optimism hanging around. But other data shows that it’s been a pretty dismal month for supermarkets. Retail sales fell in May by 2.7% – that was the fastest pace for more than a year. So, clearly, lots of consumers are being that bit more wary – they’re not spending big, particularly, on things like alcohol and tobacco – but also, clothing and household-goods stores reported really slow trading.
This has been a bit of a picture, though – we’re spending more on experiences and wanting to enjoy ourselves rather than, necessarily, buying more stuff. So, that’s not changed that much – but, certainly, retail sales have declined more rapidly.
[7:04] Sarah Coles: So, I guess, if we’re all going out and shopping less – and spending less – we’re paying less VAT – we’ve got less cigarette and alcohol duty... I guess that’s not good news for the Government in terms of borrowing either, is it?
[7:13] Susannah Streeter: No – government borrowing actually hit the second-highest level for May since monthly records began back in 1993. So, borrowing, of course, is the difference between spending and tax. It came in at £17.7bn – up £0.7bn from May last year.
So, still, it is a tricky situation for the Chancellor, Rachel Reeves. Of course, the Budget is looming – and, at the same time, the Government also has had to contend with a mini-rebellion about its welfare bill – and there are tweaks being made to that – and it will mean that it might not be ablet to make so many savings as it was hoping. And, at the same time, of course, we’ve had this big NATO Summit, where the UK – along with other NATO nations – has pledged to spend much bigger on defence. We’re talking 3.5% of GDP – plus an extra 1.5% GDP by 2035.
So, you can’t trim so much from welfare benefits just spending much bigger on defence – and, of course, we also have these commitments for the Winter Fuel Allowance – and, handily, Helen Morrissey is here – our Head of Retirement Analysis. And, Helen, this is gonna cause more trouble for the Government when it comes to trying to balance the public finances, isn’t it?
[8:31] Helen Morrissey: Yeah, I think it will – and, as you say, it was very heavily trailed that there was gonna be some kind of government U-turn on the Witner Fuel Allowance. You remember, when it got announced, it was a real shocker for people – the cost-of-living crisis is still a very real deal for a lot of pensioners up and down the country – and a lot of them really struggled over the winter. So, it was quite understandable that the Government did decide that they were gonna row back on that a little bit.
From this winter, there will be more pensioners getting that Winter Fuel Payment, which will be very good for them – but it still leaves a bit of a gap in the government’s finances, there. And, by doing this, they’ve given themselves one less avenue to go down – because, you’ll be very aware that there’s a lot of ongoing debate around the State Pension – and the cost of the State Pension – and there have been discussions around whether the triple lock might be tinkered with in a bid to save money – but the Government has also recently pledged that they’re gonna keep the triple lock for a little while longer yet. So, the government headaches around making those savings – and where they come from – are gonna continue.
[9:41] Susannah Streeter: Yeah – and I think this speculation over whether or not we might see tax rises in the Budget is going to continue for many months leading up to that big event that we all cover very closely. And, Sarah, what kind of speculation has there already been?
[9:57] Sarah Coles: Well, as Helen will tell you, there’s been an awful lot of chat about pensions tax – and all the questions around that. So, there was some debate about whether the Lifetime Allowance might come back in. There’s questions about whether income tax is gonna be frozen. There have been discussions about even more that could be done to dividend tax – although all these things are, at this stage, really being thrown out and debated – and we could see none of these things happen – all of these things happen. We will get a lot more debate before we get any certainty.
What I would say, though, is that we’re trying not to be too depressing here – so there’s got to be some positives in all of this – surely, Susannah?
[10:30] Susannah Streeter: Yeah – and, obviously, there are positives because the markets have reacted pretty positively to the fact that these trade deals are coming through more quickly – and we’re not in the scenario that we were back in April, which led to the absolute rollercoaster of a ride that we had on financial markets. There is a bit more predictability creeping in – and also, the UK is retaining its reputation for stability.
There is still a bit of uncertainty around – for sure. For example, Central Bank has flagged this uncertainty because of trade turmoil as one of the reasons that they’re not going to – or they haven’t wanted to move very fast on cutting interest rates again. However, because, here in the UK, the economy is sluggish – and also we’ve had a little bit more evidence that some of the warning lights about the tight labour market aren’t blinking quite so furiously... that is leading to expectations that there will be interest rate cuts ahead.
The chances of interest rate cuts in August have edged up a bit – we are expecting a couple of interest rate cuts this year. So, certainly, that will buoy some optimism – because higher borrowing costs are still weighing on consumers and companies alike – and, if they are cut, it should help stimulate a bit more optimism.
[11:51] Sarah Coles: So, it’s nice to end on a high – and a bit of an upbeat moment.
[11:54] Susannah Streeter: Yes – and, actually, I was at the Investment Association Annual Conference, which brought together some really key players in the world of investment – from the Chief Executives in the London Stock Exchange to the Chief Executive of Aberdeen – and so many other big players, including the Investment Minister, Poppy Gustafsson – as well as the Pensions Regulator and the Financial Conduct Authority.
And, although we’ve had quite a lot of doom and gloom about London losing its shine as a hub of finance – with the bright lights of New York luring firms abroad – it was really great to hear all of the plans laid out to try and kickstart more optimism in the London markets – and quite a lot of the players and key figures there who have a real global view of what’s happening in the world... they did point out that the UK certainly has regained its reputation for stability, which should help secure more investment down the line.
And, of course, there are lots of big plans afoot about kickstarting investment in the UK – and part of that, Helen, was that focus on the pooling of pension funds – and, by doing that, that could hopefully channel more investment into the UK market.
[13:07] Helen Morrissey: Yeah, absolutely – the Government has got this ongoing pension review at the moment. They’ve just completed the first phase – or they’ve done the report for the first phase – and part of that is exactly what you say. So, there’s this move towards increased scale – so, rather than having a very fragmented industry – as the UK pensions industry is at the moment – they’re talking about having several superfunds – and the idea being that ‘Bigger is better.’ If they can pool those assets, they can drive down costs and they can invest in areas that maybe they were unable to do in the past – and that may well also include increased investment into the UK economy.
[13:45] Susannah Streeter: Yeah – and it’s really interesting to see those developments and how they will play out. There’s also a renewed focus on the retail investor – and ensuring that they have the confidence to invest more – and, here, we’ve got changes to the so-called ‘Advice Guidance Boundary’ – and the hope is that will nudge people into creating better outcomes for their investments.
So, lots of developments going on – with the hope that there will be better outcomes, not just for London, as a financial hub, but also for individual investors as well.
[14:18] Sarah Coles: So, talking about better outcomes... I’m hoping for a better outcome than all the quizzes that I’ve ever set before!
[14:23] Susannah Streeter: [Laughs]
[14:23] Sarah Coles: You’ve got a quiz for us, Susannah!
[14:25] Susannah Streeter: I have got a quiz, this time around – my news quiz of the week. And did you know that a price has been put on Brexit – how much of a hit it’s been to UK productivity – just to put a dampener on all that optimism we had just now.
So, this has come from the Constitution Society and Federal Trust – and it’s analysed how much it cost the public finances in lost tax revenue.
Is it £10bn, £20bn, or £40bn?
[14:55] Sarah Coles: This is gonna be a total guess – I have literally no idea. I’m gonna go down the middle – whatever the middle was... £20bn.
[15:01] Susannah Streeter: Helen?
[15:02] Helen Morrissey: Okay – I’m going to be a little bit more depressing than that, I think – and I’m gonna go with £40bn.
[15:08] Susannah Streeter: It was £40bn. And, actually, it shouldn’t really come as that much of a surprise because I know you follow the forecast made by the Office for Budget Responsibility super-closely – and that, actually, was the forecast that they put of the hit to the public finances of Brexit.
[15:25] Sarah Coles: Well, it’s always nice to hear forecast of one kind or another! [Laughs]
[15:28] Susannah Streeter: I think the forecast is for the temperatures to cool down slightly – which is good because I’m feeling rather hot in the studio today – but thank you very much for joining us, this time around. Next week, the podcast is gonna focus on personal finance – and, in particular, what you have to do to make sure you’re prepared to live to 100.
We’re off to celebrate this podcast’s 100th anniversary.
[15:52] Sarah Coles: But, before we go, we should say this was recorded on 30th June 2025 and all information was correct at the time of recording.
[15:58] Susannah Streeter: Nothing in this podcast is personal advice – you should seek advice if you’re not sure what’s right for you. Investments and any income they produce can rise and fall in value, so you could get back less than you invest – and past performance is not a guide to the future. Tax rules can change and benefits depend on individual circumstances.
[16:12] Sarah Coles: Yes – this is not advice or a recommendation to buy, sell, or hold any investment. No view is given on the present or future value of any investment – and investors should form their own view on any proposed investment.
[16:21] Susannah Streeter: And this hasn’t been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.
[16:28] Sarah Coles: Non-independent research is not subject to FCA rules prohibiting dealing ahead of research. However, HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing.
[16:39] Susannah Streeter: You can see our full non-independent research disclosure on our website for more information.
So, all that’s left is to thank our guests: Helen Morrissey and our Producer, Elizabeth Hotson.
Thank you so much for listening – we will be back next week. Goodbye!
[16:53] Sarah Coles: Goodbye!