Mid-April 2026
The start of March 2026 saw the war in Iran and the Middle East region start, and this now continues into April. The ongoing real cost from a human, environmental and economic perspective is mounting and only time will tell what will happen in the next few days and weeks.
Understandably, oil prices rose promptly at the start of the conflicts and after some volatility have continued to edge upwards to concerning levels, both in terms of price and availability. Many global equity markets have seen values fall, and some UK gilt yields have risen, as good, marginal and bad news filters through the various channels.
The new tax year 2026/2027 has now started and there is much to consider globally, not least with the very recent events in the Middle East. As observations, some global areas (America / Germany / Japan as examples) are deliberately ‘running hot’ on their economies which in turn is fuelling some equity markets and we do not expect these positions to change in the near term although, as noted above, there are no guarantees. Russia and Ukraine are still firmly in the news having reached well into the third year of hostilities, and with what appears to be the stalling of negotiations to bring the conflict to an end. Increased spending on (national and collective) defence has been agreed over the next years, and it almost has a feel of returning to the ‘cold war’ of decades ago.
Changing of debt parameters
The objective of the now not so new Chancellor is to effectively redefine the way the UK's debt rules work going forward. The planned effect is to allow the Chancellor to borrow more money for the next five years. We are talking about up to £50bn extra to help pay for the planned spending ahead, such as infrastructure spending. The risk is that interest rates remain higher than expected, costing us more over time. Subsequently, borrowing costs have elevated further and have not deviated downwards, putting more cost and pressure on the UK's already squeezed budgets.
More can be found on our late 2024 blog here: 30-october-2024-budget-the-headline-changes
Economic data from home and abroad
Late April 2026 saw the Office for National Statistics (ONS) confirm that the Consumer Prices Index (CPI) increased to 3.3% in the year to March 2026, which is not unsurprising with the increase in fuel costs. The ONS figures are beginning to show the effects of the conflicts in the Middle East, which is expected to have a significant effect on inflation going forward. The Bank of England target for UK inflation remains unchanged at 2.0%, and inflation is remaining above this level.
As a note, US inflation has remained stable in the most recent statistics - consumer prices (before seasonal adjustment) increased to 2.4% over the 12 months to February 2026. However, it is thought that this does not reflect the pressures associated with the recent conflict that will come though later, and inflation is expected to rise.
The Bank of England maintained the base interest rate at its March 2026 rate decision meeting, holding at 3.75% again. At the beginning of the year, it was thought that this decision point might have been a time to reduce rates (it was a close decision in February 2026). However the recent conflicts have seen oil and energy prices increase significantly and this may remain the position for a while. The night before 19 March, the US Federal Reserve continued to hold the base rate to a range of 3.50-3.75%.
It should be noted that higher interest rates are good news for savers, and some savings accounts are offering 4.0% - 4.35% pa gross plus. Look out for the AER rate pa (Annual Equivalent Rate) which show the real rate of interest being provided. Of course, higher interest rates are not so good for variable rate borrowers, and the days of cheap borrowing for individuals and nations are over, certainly in the shorter term.
As you might anticipate, many financial thoughts will be UK focused; however, the world is now a small place and many of these economic factors are occurring globally, as we enter a new era of higher costs (particularly energy), inflation, interest rates and the like. Increasing numbers of global conflicts remain constant at this time, along with new threats of US tariffs.
We have looked at some of these points below.
GBP / US dollar
Many readers will know that exchange rates can vary for many economic reasons. For some, it may only become apparent when purchasing foreign currency for a holiday or visit abroad. The current indicated exchange rate is $1.35 at the time of writing (23 April 2026), still an elevated rate in recent times.
UK Net Public Sector Gross Domestic Debt v GDP
It is noteworthy that net public sector debt has consistently run for some time at approximately 94%-100% of UK monthly GDP (gross domestic product) (source: Office for National Statistics / ONS). March 2026 saw an increase, with the statistics showing the provisional estimate as 93.8% and remains at levels last seen in the early 1960s. Some will not want to see this level (and its associated interest costs) rise.
The ONS notes that GDP growth in the UK to February 2026 for the prior three months was 0.5%. Many global trading areas are revisiting their growth forecasts due to the recent conflict in the Middle East and the inflationary rises expected to occur due to energy / oil price rises.
Markets factor in most things
Turning to the recent market position, many individuals may refer to the value of their pension or ISA arrangements as a reference point to how markets are moving. We all know that the value of funds can fall as well as rise, and we have seen some volatility this year, although alongside positive returns from some global equity markets in 2025. Volatility is not uncommon, and this can be triggered by global economic events, or their continued effects, as we have seen in recent weeks .
The key point here is that if we think something is happening (such as the ongoing cost-of-living issues and rising tax costs), the markets have usually factored in the effects. Looking at the markets on 15 April 2026, in comparison to a year ago, we find the following (approximate) for a range of market indices:
Market values can fall as well as rise and this is only a snapshot in time. As you can see, and as anticipated, some markets in this snapshot have performed better than others, although this is not a guarantee of future performance.
The tax year 2026/2027 is about to start
As noted above, we have now reached the new tax year (2026/2027), with renewals of annual allowances where applicable: a good time to take a look at your overall financial planning.
We look forward to helping you with your financial planning and hope you have a great start to the new tax year.
Keith Churchouse FPFS
Director
CFP Chartered FCSI
Chartered Financial Planner
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