As 2025 unfolds, investors are closely watching the evolving global landscape. With Donald Trump’s return to the White House and Keir Starmer leading a Labour government in the UK, major policy shifts are set to influence markets. Our investment experts have analysed the key trends, risks, and opportunities that lie ahead, helping investors navigate the uncertainties and capitalise on potential gains.
The most significant development is Trump’s historic second term. This time, he enters office with experience and no re-election concerns, allowing him to pursue his agenda with greater confidence. Among his key policies are sweeping tariffs on imports, which could stoke inflation and disrupt global trade. If implemented, these tariffs may push supply chains inward, benefiting some US industries but potentially harming economies reliant on exports to the US. Additionally, Trump’s commitment to heavy fiscal spending will likely increase government debt issuance, influencing global bond markets.
In the UK, Starmer’s Labour government holds a strong majority, allowing it to govern decisively. However, economic challenges remain. Rising gilt yields are driving up borrowing costs, putting pressure on Chancellor Rachel Reeves’ fiscal rules. Investors are monitoring upcoming budgetary decisions, particularly whether further tax hikes or spending cuts could impact market confidence. Meanwhile, the Bank of England is expected to ease monetary policy, with potential rate cuts supporting businesses and markets.
Beyond the US and UK, Europe faces economic headwinds following political upheaval in Germany and France. The European Central Bank is likely to continue easing rates in response to sluggish growth and external risks, particularly the impact of Trump’s trade policies. China, meanwhile, has introduced stimulus measures to bolster its economy, but the effects have been muted. Further intervention may be required, especially if US tariffs trigger a renewed trade war.
Geopolitical tensions remain high. Trump has pledged to end the war in Ukraine swiftly, but the feasibility of such a deal remains uncertain. Elsewhere, contested elections and political unrest in emerging markets, such as Venezuela and Georgia, highlight the ongoing risks that could impact global stability.
At Arbuthnot Latham, active management is at the core of our investment strategy. We continuously assess the shifting economic and political landscape to identify both opportunities and risks for our clients. With a volatile year ahead, our clients can be assured that we are closely monitoring developments and positioning portfolios accordingly.
Arbuthnot Banking Group PLC (LON:ARBB), trading as Arbuthnot Latham, provides private and commercial banking products and services in the United Kingdom. Founded in 1833, Arbuthnot Banking is based in London, United Kingdom.
