20th January 2025

Key Highlights:

???Gilts post best week since July after run of poor economic data

???FTSE 100 closes at record high on rate cut hopes

?? UK economy’s 0.1% growth fails to hit forecasts

?? UK inflation unexpectedly slows to 2.5% in December

?? Soderberg acquires stakes in three more advice firms

?? Goldman Sachs builds new unit in private credit push

?? Worcester-based commercial broker continues regional expansion with acquisition

?? Reinsurance broker expands into London and announces new office leader

?? Brown and Brown’s M&A strategy is ‘alive and kicking’ despite integration focus

?? Investment firm acquires business protection broker to enter new market

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UK Macroeconomics

19 January 2025: Donald Trump unlikely to impose trade tariffs on UK, says Treasury minister

-?????????? Chief Secretary to the Treasury Darren Jones believes Donald Trump is unlikely to impose trade tariffs on the UK and views the incoming administration as potentially "an enormously positive thing with lots of opportunities"

-?????????? Despite the optimistic outlook, the UK government is "prepared for all scenarios" and will wait to see what actually happens after Trump's inauguration

-?????????? The UK believes it has a "different relationship" with the US compared to other countries, with American trade figures suggesting a goods trade surplus that might deter imposing tariffs

-?????????? The government sees potential for deepening trade relationships, particularly in areas like technology, science, and research

-?????????? While Trump has threatened tariffs on imports from countries like Canada, Mexico, and China, the UK government remains cautiously optimistic about maintaining a positive economic relationship

17 January 2025: Gilts post best week since July after run of poor economic data

-?????????? UK government bonds (gilts) have experienced their best week since July, following a series of poor economic data releases

-?????????? This rally in gilts comes after a period of significant yield increases, with 30-year gilt yields reaching their highest levels since 1998 earlier in January 2025

-?????????? The recent positive performance for gilts is likely due to lower-than-expected inflation figures, with UK inflation slowing to 2.5% year-on-year in December, below market expectations

-?????????? The improved gilt performance has led to a decrease in yields, with 10-year gilt yields falling from 4.89% to 4.73% in a single day following the inflation data release

-?????????? This gilt rally provides some relief to the UK Treasury, which has been under pressure due to high long-term borrowing costs, and may influence the Bank of England's upcoming interest rate decision

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17 January 2025: FTSE 100 closes at record high on rate cut hopes

-?????????? The FTSE 100 hit an all-time high, closing at 8,505.22 points, driven by strong performances from energy, pharmaceutical, and financial sectors

- ????????? A weaker US dollar boosted multinational companies listed on the FTSE 100, as their overseas earnings became more valuable when converted back to pounds

-?????????? BP and Shell contributed significantly to the FTSE’s rise due to resilient oil prices, showcasing the sector's ongoing strength in the market

-?????????? AstraZeneca and other defensive stocks provided stability amidst global economic uncertainties, reflecting strong investor confidence in these sectors

-?????????? Analysts highlighted the appeal of the FTSE 100 for investors seeking dividends and exposure to global markets through its diversified range of companies

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17 January 2025: UK watchdog warns watering down swaths of regulation will cause more failures

-?????????? The Financial Conduct Authority (FCA) has warned that reducing regulations to boost economic growth will lead to more failures and harm to consumers and businesses

-?????????? FCA Chief Executive Nikhil Rathi committed to "deep reforms" in areas such as mortgage rules and anti-money laundering checks to support the government's growth agenda

-?????????? The FCA stated it would "take greater risks" to support the government's drive for economic growth, but emphasized the potential negative consequences of this approach

-?????????? This response comes amid ongoing discussions about balancing consumer protection with economic growth, with the FCA acknowledging the tension between these objectives

-?????????? The FCA's stance reflects a broader debate in the UK financial sector about the role of regulators in promoting economic growth while maintaining adequate consumer safeguards

17 January 2025: Bank of England delays new capital rules ahead of Trump presidency

-?????????? The Bank of England (BoE) has postponed the implementation of tougher global bank capital rules, known as Basel 3.1, by one year to January 2027, citing uncertainty about how these rules will be applied in the United States under Donald Trump's presidency

-?????????? The delay aims to provide more time for clarity on U.S. plans for implementing these standards, especially given Trump's history of deregulation during his first presidency and his pro-deregulation stance

-?????????? The BoE also factored in concerns about maintaining competitiveness and supporting economic growth while making this decision

-?????????? Basel 3.1 is part of international reforms designed to prevent financial crises, and member jurisdictions like the UK, U.S., and EU are adapting the standards for their national frameworks

-?????????? The delay aligns with previous BoE signals to reduce additional capital requirements for British banks, reflecting ongoing efforts to balance regulatory rigor with economic challenges

16 January 2025: UK economy’s 0.1% growth fails to hit forecasts

-?????????? The UK economy grew by just 0.1% in November 2025, falling short of economists' expectations, with the growth primarily driven by services, pubs, restaurants, and the construction industry

-?????????? Despite the slight growth, the economy showed no expansion in the three months leading up to November, with experts describing the economic situation as "broadly flat" and showing signs of stagnation

-?????????? Services output grew by 0.1%, with notable increases in human health, social work, professional services, and food service activities. However, production output declined by 0.4%, particularly in manufacturing

-?????????? Despite the current sluggish performance, the International Monetary Fund (IMF) remains optimistic, forecasting UK GDP growth of 1.6% in 2025 and predicting the UK will outperform other European economies like Germany, France, and Italy

15 January 2025: UK inflation unexpectedly slows to 2.5% in December

-?????????? UK inflation unexpectedly dropped to 2.5% in December 2024, down from 2.6% in November, marking the first fall in three months and coming in below market expectations

-?????????? The inflation rate was influenced by easing price rises in areas such as restaurant food, clothing, footwear, and hotel room prices, while transport costs showed an upward contribution

-?????????? The lower inflation rate boosts hopes for an interest rate cut at the Bank of England's February meeting, with current expectations pointing to a potential reduction from 4.75% to 4.5%

-?????????? Core inflation, which excludes volatile food, energy, and alcohol inputs, also slowed to 3.2% from 3.5% in November, providing further optimism about economic stabilization

-?????????? Despite the positive inflation data, economists remain cautious, noting that underlying price pressures persist and the economic path ahead is likely to remain slow and uncertain

15 January 2025: BoE may need to speed up rate cuts in the coming year, policymaker says

-?????????? Alan Taylor, an MPC member, suggests the Bank of England may need to cut interest rates by as much as 1.25 to 1.5 percentage points in 2025, with up to six cuts, to address a weakening economy and ensure a “soft landing” for inflation

-?????????? Taylor highlighted a deteriorating outlook for 2025, citing stalling GDP growth, falling business sentiment, and a rapidly loosening labour market as indicators of economic strain

-?????????? While inflation has eased to 2.5%, mixed signals persist, with labour costs and other pressures creating uncertainty about whether gradual or accelerated rate cuts will be needed to sustain the 2% target

-?????????? Taylor and other MPC members advocate for immediate rate cuts, contrasting with the majority, including Governor Andrew Bailey, who favour a gradual approach to lowering rates from the current 4.75%.

-?????????? Potential triggers for a sharper downturn include trade wars, rising taxes, debt servicing costs, and employer national insurance contributions, all of which could further strain household and business cash flows.

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UK Wealth Management

20 January 2025: Aberforth unveils ￡14m Brooks stake ahead of AIM exit

-?????????? Aberforth Partners LLP acquired a significant stake in Brooks Macdonald Group plc on January 15, 2025, crossing the 5% voting rights threshold

-?????????? The stake is valued at approximately ￡14 million, representing a substantial investment in the wealth management firm

-?????????? This acquisition comes as Brooks Macdonald plans to transition from the Alternative Investment Market (AIM) to the London Stock Exchange's Main Market, expected between March 4 and March 31, 2025

-?????????? The move to the Main Market is anticipated to enhance Brooks Macdonald's corporate profile and attract a wider investor base

-?????????? Brooks Macdonald has reported strong performance, with its strongest quarter of gross inflows in 18 months, despite elevated outflows

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16 January 2025: Advice firm leaders to discuss ongoing advice review at FCA meeting

-? ???????? Leaders from the UK's largest wealth management firms are scheduled to meet with the Financial Conduct Authority (FCA) at the end of January to discuss the ongoing review of advisory services

-?????????? Organised by the Investment Association, this roundtable aims to foster a closer relationship between the FCA, advice firms, and wealth managers, addressing key regulatory issues

-?????????? Lucy Castledine, the FCA’s director of consumer investments, will participate in discussions covering topics such as the distinction between advice and guidance, as well as services for vulnerable clients

-?????????? This meeting follows the FCA's earlier request for data from major advice firms regarding their annual review processes, highlighting the regulator's focus on ensuring clients receive the services they pay for

16 January 2025: Rathbones: Impact from Investec exits falls to ‘lowest level for the year’

-?????????? Rathbones reported that the impact from Investec Wealth & Investment (IW&I) exits has decreased to its lowest level for the year, indicating improved stability following the merger

-?????????? The company's funds under management and administration (FuMA) rose 3.6% to ￡109.2 billion as of December 31, 2024, compared to ￡105.3 billion a year prior, showing overall growth despite the exits

-?????????? Rathbones remains confident in achieving its synergy targets, including the 2025 goal of realizing at least 70% of total synergies on a cumulative run-rate basis

-?????????? The client consent process for migrating Investec clients to Rathbones services is progressing well, with the company anticipating completion of client migration onto a single operating platform during the first half of 2025

-?????????? Despite earlier challenges, including net outflows following the merger, Rathbones' integration of Investec Wealth & Investment continues to perform well, with very low investment manager turnover post-combination

16 January 2025: Soderberg acquires stakes in three more advice firms

-?????????? Swedish wealth manager S?derberg & Partners has acquired stakes in three UK independent financial advisory firms as part of its expansion strategy in the UK

-?????????? Based in the Southwest, the first firm manages over ￡900 million in client assets and has a 65-member team focused on comprehensive financial planning

-?????????? Located in Croydon, the second firm Qi Financial oversees ￡165 million in client assets and employs seven staff, including three chartered financial planners

-?????????? Operating from Southampton, the third firm manages ￡1.5 billion in assets, serving 3,500 personal clients and 150 corporate employer schemes

-?????????? S?derberg & Partners aims to partner with entrepreneurial firms that prioritise customer service and innovative financial planning to strengthen its UK presence

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15 January 2025: Brooks Macdonald plans to quit AIM

-?????????? Brooks Macdonald has announced its intention to transition from the Alternative Investment Market (AIM) to the Main Market of the London Stock Exchange, aiming to enhance its corporate profile and attract a broader investor base

-?????????? The move is expected to occur between March 4 and March 31, 2025, at which time the company's listing on AIM will be cancelled

-?????????? Brooks Macdonald does not intend to raise additional funds or offer new shares in connection with the admission to the Main Market

-?????????? The company has been listed on AIM since 2005 and views this transition as a natural progression, reflecting its growth and strong track record over the years

-?????????? The move to the Main Market is subject to approval by the Financial Conduct Authority (FCA) and does not require shareholder approval

13 January 2025: Goldman builds new unit in private credit push

-?????????? Goldman Sachs has established the Capital Solutions Group to enhance its focus on private credit and private equity markets

-?????????? This new division will integrate resources from the Global Banking & Markets and Asset & Wealth Management divisions, leveraging staff experienced in structuring alternative transactions

-?????????? The group will be co-led by Pete Lyon, formerly global head of the Financial Institutions Group and the Financial and Strategic Investors Group, and Mahesh Saireddy, previously global head of Mortgages and Structured Products. Both will join Goldman's management committee

?-?????????? CEO David Solomon emphasized the significant demand from clients for private credit and private equity, stating that the growth of private assets is "one of the most important structural trends taking place in finance."

-?????????? This initiative reflects Goldman's strategy to strengthen its position in the private credit sector, aligning with similar efforts by other major banks to tap into the expanding private credit industry

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13 January 2025: Redmayne Bentley profit jumps 60% ahead of deal for failed DFM

-?????????? Redmayne Bentley, a private client manager and broker, reported a 59% increase in profit, reaching ￡7.1 million for the fiscal year ending March 2024. Revenue also rose by 11.7% to ￡36.2 million

-?????????? The profit surge was attributed to higher interest rates, improved trading volumes, and increased income from fees and charges. The firm held ￡22.3 million in cash at the end of the review period

-?????????? Operating expenses increased from ￡28 million to ￡29.1 million, reflecting investments in staff and systems. The number of employees grew from 270 to 275, including 150 client-facing investment professionals across more than 25 UK offices

-?????????? In July 2024, Redmayne Bentley integrated 1,700 clients from the collapsed wealth firm Blankstone Sington, following its administration in October 2023. This expansion included opening a new office in Liverpool

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UK Insurance Broking

20 January 2025: Worcester-based commercial broker Hazelton Mountford continues regional expansion with acquisition

-?????????? Worcester-based commercial broker Hazelton Mountford has acquired the customer book of business from White Knight Group, a firm located in Lydney

-?????????? White Knight Group specializes in providing advice on pensions, investments, and mortgage propositions

-?????????? This acquisition aligns with Hazelton Mountford's strategy to expand its regional presence and enhance its service offerings in the financial advisory sector

-?????????? Clients of White Knight Group can expect continued service under Hazelton Mountford, benefiting from the combined expertise and resources of both firms

20 January 2025: FCA unveils plans to remove ‘unnecessary regulation’ in letter to prime minister

-?????????? The Financial Conduct Authority (FCA) plans to remove unnecessary regulations to reduce costs and improve the competitiveness of the UK’s financial sector

-?????????? The FCA aims to review retail conduct rules and simplify commercial insurance regulations for businesses to enhance efficiency and clarity

-?????????? These changes align with the FCA’s new post-Brexit objective to bolster the international competitiveness of the UK’s financial services industry

-?????????? FCA Chief Executive Nikhil Rathi highlighted the authority's focus on lowering business costs while promoting economic growth and reducing red tape

-?????????? The FCA is engaging with the financial industry to gather input and identify regulations that can be streamlined, with a deadline for feedback in October 2024

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17 January 2025: Reinsurance broker BMS Re expands into London and announces new office leader

-?????????? Reinsurance broker BMS Re has expanded its operations by opening a new office in London, aiming to strengthen its presence in the global reinsurance market

-?????????? The London office will be led by John Smith, who brings over 20 years of experience in the reinsurance industry and has previously held senior positions at major firms

-?????????? This expansion aligns with BMS Re's strategy to enhance client services and leverage London's status as a key hub for the reinsurance business

-?????????? The new office aims to provide tailored solutions to clients, utilising local market expertise and global resources to meet diverse reinsurance needs

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17 January 2025: Brown and Brown’s M&A strategy is ‘alive and kicking’ despite integration focus for 2025

-?????????? Brown and Brown Europe plans to focus on "a smaller number of larger" M&A deals in 2025, aligning with its One Retail integration strategy launched in April 2024

-?????????? The company's acquisition strategy remains active, with a "really healthy pipeline" of potential deals, despite the emphasis on integration. They're particularly interested in expanding into geographical areas with little coverage and strengthening their specialisms

-?????????? Brown and Brown is prioritizing cultural fit in potential acquisitions, considering whether both parties would want to socialize together before exploring financial details

-?????????? The broker's underwriting arm is actively seeking acquisition opportunities, especially in the SME space, to bolster their retail broking proposition

-?????????? Brown and Brown's US parent company is heavily involved in the UK M&A process, particularly for sizeable acquisitions, providing both financial support and assistance in closing deals

17 January 2025: Investment firm Pivotal Growth acquires business protection broker to enter new market

-?????????? Pivotal Growth has acquired Business Protection Solutions UK (BPS), a Northern Ireland-based protection insurance broker, marking its entry into the business protection market

-?????????? BPS specializes in various protection products, including shareholder protection insurance, key person insurance, relevant life plans, and group private medical insurance

-?????????? This acquisition allows Pivotal Growth to expand its service offerings in Northern Ireland and enter a new specialist market, enhancing its overall portfolio

-?????????? John McComiskey, the managing director and founder of BPS, expressed enthusiasm about joining Pivotal Growth and anticipates that the partnership will enable BPS to better serve clients and expand its reach

-?????????? Simon Embley, CEO of Pivotal Growth, highlighted that the acquisition strengthens the company's proposition by adding specialized capabilities in business protection, presenting a unique opportunity for diversification and growth

16 January 2025: New Insurance minister response to regulation demands in first speech to brokers

-?????????? In his inaugural address to insurance brokers, the newly appointed Insurance Minister, John Glen, emphasised the government's commitment to reducing regulatory burdens within the insurance sector

-?????????? Glen acknowledged industry concerns regarding the complexity and volume of existing regulations, stating that a more streamlined approach is essential for fostering innovation and competitiveness

-?????????? He outlined plans to collaborate closely with the Financial Conduct Authority (FCA) and other regulatory bodies to identify and eliminate redundant or outdated rules that may hinder business operations

-?????????? The minister also highlighted the importance of maintaining robust consumer protections, ensuring that any regulatory adjustments do not compromise policyholder interests

-?????????? Industry leaders have responded positively to Glen's remarks, expressing optimism that this initiative will lead to a more efficient regulatory environment conducive to growth and adaptability in the evolving insurance landscape

15 January 2025: Insurtech and broker team to launch travel product

-?????????? Partnership Formation: London-based insurtech Urban Jungle has collaborated with insurance broker Canopius to introduce a new travel insurance product

-?????????? The offering includes comprehensive coverage for policyholders, encompassing various travel-related risks and emergencies

?-?????????? Aimed at tech-savvy consumers, the product leverages digital platforms for easy access and management of travel insurance policies?

-?????????? This collaboration signifies a growing trend of insurtech companies partnering with traditional brokers to innovate and expand insurance product offerings

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Sources: Financial Times, Citywire, Insurance Times