UK Investment Marketbeat Reports

For the data behind the commentary, download our latest UK Investment Report.

Tariff-ic News? 

The bond market volatility of January gave way to the geopolitical and economic tariff uncertainty of February, although as of mid-March, ten year bonds are still hovering at 4.6%. 

After significant talk about tariffs over the last few months – and indeed the advent of tariffs on aluminum and steel - the most recent discussions between the UK and the US suggests that a trade deal between the two countries could happen “very quickly”. However, to labour a well trodden trope,  the only one thing certain about the current political environment is uncertainty – and there may still be some movement on these conversations.  

Cut-Hold-Cut? 

Discourse around tariffs is having a knock-on impact on monetary policy. The MPC met on 20th March, with the base rate remaining at 4.5%, with only one vote for a 25 basis points cut. The decision was made off the basis of an increase in inflation - CPI has increased to 3%, with core inflation at 3.7% and services CPI as high as 5% and, as cited “intensification of global trade policies and increased geopolitical uncertainty”. However, with sluggish growth – the economy contracted by 0.1% in January month-on-month – the likelihood is of a further cut in the May meeting. 

Sheds and Shops 

One of the quirks on 2024’s annual total returns was the fact that the industrial and retail sectors, after a long period of diverging trajectories, both saw identical total returns of 8.3%. The logistics market, after a busy Q4, has seen a relatively muted start of the year, with the majority of deals carried over from the previous year and new stock coming in the form of recent launches in secondary locations. For retail, vacancies have been driven down across the majority of subsectors over the last 18 months; and there continues to strong demand for core product particularly across retail parks and supermarkets in particular.