16/08/2025 by Tony Redondo
The latest UBS Wealth Report shows that global wealth amounts to USD 471 trillion, with the USA contributing 35%, China 19%, Japan 4.5%, just ahead of the UK, Germany, and France. Europe, comprising the EU, UK, Switzerland, Norway, and Turkey, accounts for 22% with 80% of the world’s wealth divided between the USA, China, Europe, and Japan. These figures include financial assets, real assets, and liabilities. Financial assets alone stood at USD 305 trillion, marking an all-time high. Net wealth grew by 4.4% in 2024, below the five-year average of 5.1%, influenced by equity markets, inflation, and geopolitical factors. High-net-worth individual (HNWI) wealth increased by 4.2% in 2024, with the HNWI population growing by 2.6%. A “great wealth transfer” of approximately USD 83 trillion is projected over the next 20-25 years, with much of it passing horizontally (e.g., to spouses) and to younger generations by 2048.
https://www.ubs.com/global/en/wealthmanagement/insights/global-wealth-report.html
Currency Exchange Rates Update
The Pound climbed to a six-week high on Thursday against the Euro before finishing last week up nearly 0.5% for the last month. Recent UK economic data has led to a hawkish repricing of BoE (Bank of England) policy expectations, whilst global risk appetite remains upbeat, helping the Pound via its positive yield differential against the single currency.
Against the US Dollar, the Pound climbed to a five-week high on Thursday and is up over 1.1% over the last month.
This week, the key economic data releases include:
Tuesday Canada CPI Inflation
Wednesday New Zealand RBNZ Interest Rate Decision
UK CPI Inflation
Sweden Riksbank Interest Rate Decision
EU CPI Inflation
Thursday UK PMI
EU – PMI
Germany – PMI
Friday UK Nationwide House Prices & Retail Sales
Germany – GDP
What’s in the news?
Over 40% of fund managers believe the global economy is set to weaken whilst inflation continues to rise over the next 12 months, with US economic policy and weaker consumer demand seen as the largest forces at play. A trade war triggering a global recession remains the biggest risk for causing significant losses in the market for investors.
UK
Huw Pill, BoE chief economist, warned that an increased risk of persistent inflation could affect the chances of further cuts.
Opinium’s latest poll finds Starmer’s approval rating shows no sign of improvement with Parliament in recess. The PM remains on a low rating of -41%, down 5 since Parliament went into recess. The other leaders’ ratings have remained fairly consistent, with Kemi Badenoch on -19% (+3), Ed Davey on -1% (+1) and Nigel Farage on -9% (-2).
Good news
The ONS (Office for National Statistics) reported that the UK economy grew by 0.4% in June in an unexpected turnaround following months of tariff and tax uncertainty. In the second quarter, GDP rose by 0.3% after declining in both April and May. The UK services sector, which makes up over 80% of the UK’s output, expanded by 0.4% in the second quarter, while construction enjoyed 1.2% growth.
Liz McKeown, director of economic statistics at the ONS, said, “Growth slowed in the second quarter after a strong start to the year. The economy was weak across April and May, with some activity having been brought forward to February and March ahead of stamp duty and tariff changes but then recovered strongly in June.”
The BoE will also look at the new GDP data with hesitation, hoping that five interest rate cuts over the last year could have a positive effect on boosting investment and output. But attention is quickly turning to possible tax rises in the budget in October, with the NIESR (National Institute of Economic and Social Research) claiming Reeves faces a £50bn black hole. The introduction of a wealth tax, which several Labour backbenchers support, was dismissed as “daft” by the business secretary Jonathan Reynolds, whilst industry groups are urging the Chancellor to avoid adding costs to businesses.
Ben Jones, lead economist at the CBI (Confederation of British Industry), said, “Policy uncertainty in the run-up to the Autumn Budget risks tipping the balance. With the business tax burden already at a 25-year high, the government must chart a steadier course by ruling out further tax rises and prioritising policies that can quickly lift investment and productivity.”
https://www.birminghammail.co.uk/news/money/five-ways-rachel-reeves-could-32216977
BDO, the business advisory and accountancy firm, in its latest monthly Business Trends Report, reveals optimism in the manufacturing sector is at its highest level in nine months after the recent trade agreements. However, headwinds including weak GDP growth, high labour and energy costs and ongoing uncertainty surrounding future global trade policy continue to weigh on confidence. In contrast to manufacturing, sentiment in the services sector remained flat.
Scott Knight, Head of Growth at BDO, said, “There are signs of recovery, but they are fragile. Manufacturers may be breathing a little easier in the wake of trade deals, but their output is yet to catch up. Business leaders are stuck in limbo, waiting for clearer signals from the government that further investment will be worth the gamble.”
Not so good news
The Government’s latest insolvency data shows a 6.8% rise in corporate failures during the first half of 2025. While overall volumes remain broadly in line with late 2024, the picture is far from steady. Administration levels are fluctuating, rising costs are mounting, and April’s tax changes are beginning to bite, putting increasing pressure on UK businesses. Sectors like construction, financial services and education are under particular strain. Construction alone saw nearly 500 failures in February, while the £22m bailout of Dundee University in June points to deep issues in higher education.
The CIPD (Chartered Institute of Personnel and Development) reported that hiring intentions among UK companies have fallen to a record low, with only 57% of private sector firms planning to recruit in the next three months. This marks its lowest since the survey began in 2016, excluding the pandemic.
KPMG and the Recruitment and Employment Confederation report that the rise in starting salaries fell to its slowest pace in four years due to the lack of demand among recruiters and the larger number of job seekers has led to starting salary inflation slowing down to its lowest level since March 2021.
The CSJ (Centre for Social Justice) report that the economy faces a “midlife crisis” with the number of jobless benefit claimants aged 50 or older having reached nearly two million for the first time, a 21% increase since 2015 in older individuals exiting the workforce due to health conditions.
The ONS reported a dramatic 4% fall in business investment compared to the first quarter of the year, with gross fixed capital formation, which considers investment in transport or other machinery and equipment, falling by 1.1% in the second quarter, with alarm bells ringing on low productivity levels across the UK economy.
UK Finance reported that home repossessions jumped 47% between April and June this year compared to the same period last year. This is also up 10% on the first quarter. Additionally, landlord repossessions rose by 11% year-on-year.
The British Chambers of Commerce reported that UK exports to the US in June fell by 15% to hit a three-year low.
Scotland’s Finance Secretary Shona Robison defended the country’s finances as “sustainable” despite new figures showing a £26.2bn deficit in 2024-25, equal to 11.6% of GDP, more than double the UK’s 5.1% rate.
USA
The S&P 500 is up 10% year-to-date largely thanks to a handful of powerhouse companies driven by the global nature of the S&P 500, where a substantial portion of its total revenue, estimated to be between 30% and 40%, is generated from international markets. This week, the “Magnificent Seven” tech giants surpassed their February peak. Their success is rooted in impressive earnings reports, with dividends and share buybacks. This makes the market incredibly concentrated, with the top 10 stocks now making up 25% of the total U.S. market cap, a concentration not seen since the 1960s.
The US–China trade truce has been extended for another 90 days, keeping US tariffs on Chinese imports at 30% and China’s tariffs on US products at 10% until November.
The NFIB small business optimism index in July rose to its highest level since February.
The CPI (Consumer Price Index) figures strengthened expectations for a Federal Reserve interest rate cut in September. Annual CPI came in at 2.7%, under the 2.8% forecast, showing little sign of tariff impact. Combined with a softening labour market, the data gives strong backing for a rate cut next month. US Treasury Secretary Scott Bessent has called for a 0.5% reduction, double the likely 0.25% cut.
Bessent also said he hopes Stephen Miran will be confirmed as Fed Governor in time for the next interest rate decision, due on 17 September.
The EU
Eurozone sentiment data is flashing warning signs. Germany’s ZEW survey for August showed a sharp deterioration in both the current situation and the expectations gauge.
The ZEW economic sentiment in Germany hit its highest level for 3 years in June. The expectation was for a fall in August following the reality of Trump tariffs, as well as the poor Q2 German economic performance, but it was not expected to fall a full 18 points.
Others
The RBA (Reserve Bank of Australia) cut rates by 0.25% in a unanimous decision. The central bank flagged rising uncertainty, warning that households and businesses may hold off on spending despite rising wage levels in a job market that remains tight. Total employment rose by 24.5k, on target with estimates, with a surprise surge in full-time work. Part-time roles fell, suggesting a shift toward more stable employment. The jobless rate dipped to 4.2%, while the participation rate eased to 67%. With numbers this strong, a September RBA rate cut looks unlikely, with November a stronger possibility.
Gold is up $600 or 21% from the end of 2024, driven by Central bank buying demand and investors placing safe-haven bets.
Stranger than fiction
www. No, not the ‘world wide web’ but what scientists have dubbed the ‘wood wide web’ after creating the first global map of mycorrhizal fungi, the vast underground mushroom networks that connect plant roots and let plants trade nutrients and store carbon. These ‘wood wide webs’ underpin ecosystems.
In the first half of 2025, about 2,200 people died in weather-related disasters, down from a historical six-month average of over 37,000. Compare this to the 20th century, when annual death tolls were sometimes in the hundreds of thousands. News cycles often give the impression that disasters are deadlier than ever, but better warnings, stronger infrastructure and improved emergency response mean we’re safer from extreme weather than at any point in history.
Quote
Epictetus, the Greek Stoic philosopher, said “Wealth consists not in having great possessions, but in having few wants.”
