WeekWatch

Last week saw welcome news that the UK had experienced a strong growth spurt in the first quarter of this year. Yet just weeks ago there were warnings of a possible UK recession. With expectations seeming to change almost daily, is it still worth paying attention to the economic news?

Let’s start with the good news. The UK economy grew by 0.7% in the three months to March – up from 0.1% at the end of 2024. The figures mean the UK was the fastest growing G7 economy over this period. UK growth outpaced the US, Canda and Germany, among others.

Meanwhile last week in the UK, the blue-chip FTSE 100 rose 1.52%, while the mid-cap FTSE 250 climbed 2.28%.

On 19 May, it was reported that the UK had finally signed a trade deal with the EU. While the details have yet to be reported, the government has said it should boost economic growth further.

Yet the previous week the Office for National Statistics reported a fall in job vacancies to 761,000 in April. This was perhaps less surprising in the month in which the increase to employers’ National Insurance came in, along with a rise in the minimum wage.

This mixed picture based on good and bad news is not just happening in the UK. Earlier this month we wrote about fears that the US was on the verge of recession. The US economy had shrunk somewhat, due largely to the US-China tariff dispute. US government bonds (Treasuries) had fallen in price and the value of the US dollar was down.

Last week US credit rating agency Moody’s even downgraded the US from an AAA rating to Aa1. This was over concerns about rising government debt. However, it was also the last one of the few credit rating agencies that had the US on a triple-A credit rating (Fitch Ratings downgraded the US in 2023, while S&P Global Ratings did so in 2011). This means many viewed Moody’s rating as largely symbolic.

Highlighting again the swings back and forth, last week saw a notable de-escalation in the US-China trade war. Tariffs are now being reduced substantially for both American and Chinese companies for a 90-day period. The announcement gave a boost to global stock markets.

Hetal Mehta, SJP’s Head of Economic Research, says: “We have seen financial conditions unwind because of the de-escalation. As they have loosened, some forecasters have bought their recession probabilities back down and revised up their growth forecasts.”

But Mehta points out that there is no guarantee of things continuing in a positive direction – much will depend on what happens next.

“We believe that from here, there's still some two-sided risk. There might be further reductions in tariff rates, but it's also possible that a proper deal between the US and China takes more than the 90 days to thrash out. So, you could actually see tariffs go up. And there could still be some more tariff volatility ahead either at the end of the 90-day period, or if negotiations aren't going well.”

The volatility of recent times – the political uncertainty, tariff wars, substantial market swings – may feel as though it has become the new normal. If that is the case, what does that mean for our investment habits?

While it is worth paying attention to events that can affect an investor’s financial situation, recent market volatility underscores the view that choosing to do nothing can be a positive action. Attempting to time the markets is tricky even in relatively calm environments, so adhering to an investment strategy that encompasses diversification is even more important when times are uncertain. Ignoring the noise – rather than the markets themselves – can be a sensible approach, as SJP’s Investment Research Director Joe Wiggins has previously pointed out.

“Periods of heightened uncertainty and market noise are incredibly challenging for long-term investors often not because of the issue that is the focus of attention but rather our behavioural response to it. When under stress, investors tend to make decisions that relieve short-term anxiety often at the expense of their long-run objectives.”

At the risk of sounding like a broken record, taking a long-term approach when planning for the future has never been as valuable, he adds.

De-escalation is still the story

The 90-day pause on the implementation of sky-high tariffs on trade between the US and China continued to receive a warm reception from markets, which kept climbing from their April lows.

US

The S&P 500 rallied 5.3% on the week, to close above where it started the year. However, the weaker US dollar does mean the market is still in the red for sterling investors.

Asia

The Shanghai Stock Exchange Composite ended the week up 0.76% (1.66% in sterling terms), while Hong Kong’s Hang Seng rose 2.09% (2.15% in GBP).

Last week the Japanese market made marginal gains, with the Nikkei 225 rising 0.32% in sterling terms.

Europe

European markets continued to enjoy a positive week thanks to the ongoing effects of the de-escalation in tensions between the US and China. On continental Europe, the MSCI Europe ex UK gained 1.53% in sterling terms.

The link between money and mental health

Money and mental health walk hand in hand, as highlighted in SJP’s Financial Health Report 2025¹:

• One in four people said they felt anxious about the year ahead
• 28% said their concern relates to rising energy bills
• 20% are worried they’re not saving enough for future financial security

Money is woven into our daily lives, so it’s easy to see why it plays on our minds. We might spend more than we intended on a grocery shop, worry if an unexpected bill comes in, or edge into the red at the end of the month. It’s common to put things off – avoiding the bills or checking your bank balance – but that often only makes matters worse.

It’s best to tackle the situation head on, make a plan to get back on track, and stop things from spiralling. Talking it through with a family member or close friend can also help.

When it comes to bigger decisions – buying a house, changing jobs or preparing for retirement – it’s easy to feel overwhelmed. Most of us pick up our knowledge of money and our financial habits throughout life, learning as we go, without formal training or education.

This leaves many of us unprepared to manage investments or calculate our retirement fund without spending significant time and energy doing research. Sometimes, it's boring or hard to understand. That’s where a financial adviser can play a key role.

How financial advice can support mental health

It's estimated that one in four of us will experience a mental health disorder each year, says Catherine Ind, Head of the St. James's Place Charitable Foundation.

She says, “Providing timely support is essential to reduce crisis situations and enable people to move forward in a more positive and hopeful way.”

Nobody’s born knowing how to manage their money. But the more you know, the calmer and more in control you’ll feel.

Financial advisers are here to help you make sense of your situation and take practical steps towards your goals. They build lifelong relationships with clients and their families, offering support through life’s big decisions and tricky moments alike.

Anxious about money? Get in touch today.

¹SJP Financial Health Report 2025 conducted by Opinium who surveyed 6,000 UK adults nationwide in two polls between 23rd December 2024 and 17th February 2025. Quotas and post-weighting were applied to the sample to make the dataset representative of the UK adult population.
Previous years’ research was also conducted by Opinium - among 6,000 UK adults between 16th – 25th October 2023.

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested.