Bank bonuses have reached their highest levels since the 2008 financial crisis, prompting calls for a hike in the windfall tax to help struggling households with their energy bills.

Analysis of bank bonus data by the Trades Union Congress (TUC) shows £25 billion was paid out in bonuses in the financial year ending in March 2026 - up 16% annually.

The TUC said bank bonuses have never been higher in cash terms and saw their highest real-terms quarter since 2008.

Ahead of the chancellor’s Mansion House speech this evening, the TUC claims these figures suggest there is room for a higher bank surcharge tax that could help fund a social tariff that would permanently cut energy bills for the majority of households.

The trade union says that “while sky-high bills are looming for ordinary working people, bank bonuses are booming”, adding that this is further evidence that banks could easily afford to pay more tax.

What is the bank surcharge tax?

The bank surcharge tax or windfall tax is an additional 3% corporation tax on the profits of banks above £100 million.

It was introduced 2016 as part of efforts to redistribute wealth back into the UK economy and was reduced from an initial 8% in April 2023 by the Conservative government.

Reforming the bank surcharge tax

Critics claim that the surcharge doesn’t go far enough, especially as banks have also benefited from charging higher interest rates on loans and mortgages in recent years.

Sara Hall, co-executive director at research group Positive Money, said: “Record bonuses to celebrate record profits - the cost of living crisis must be something of a fantasy to City bankers.

“Banks aren’t redirecting the windfall profits they’ve made from higher interest rates towards the households or businesses struggling to pay them, so it falls to the Government to do so in their stead.”

TUC analysis reveals an increase in the bank surcharge could raise between £9 billion and £60 billion over the next four years.

Even just reversing the Tory cuts and setting it at 8% would raise £9 billion over four years, the TUC said.

A 16% surcharge, doubling the surcharge's previous value before the Conservatives cut it, would deliver £24 billion over four years.

Meanwhile, a 35% surcharge, which would be the same level as the windfall tax the Conservatives imposed on energy companies, would deliver £60 billion over four years.

It comes after the big four banks made profits of £45.7 billion in 2025.

TUC analysis of the wider banking sector shows profits are 40% higher than in the lead up to the 2008 financial crisis.

The trade union suggests an increase in the bank surcharge tax could deliver a permanent social tariff - and further support when there is a spike in costs - to cut energy bills to all those on low and middle incomes by up to £559 a year.

Paul Nowak, general secretary of the TUC, said: “While sky-high bills are looming for working people, bank bonuses are booming.

“Every time there is talk of taxing banks, some of the richest people in the country start whining and try to claim they can’t afford to pay any more.

“But the big banks are making a killing off the back of higher interest rates and mortgage misery across the country. They can well afford to pay more tax.

“The case for an increase in the bank surcharge tax has never been greater. It’s a long overdue common-sense solution – and the government should use to money raised to cut people’s energy bills.”

Positive Money's Hall suggests prime ministerial frontrunner Andy Burnham is being handed a rare opportunity to rebalance the scales in the public’s favour.

She said: “He should seize the chance to implement this popular policy that won’t cost the Government a penny, but might just earn it some desperately-needed trust.”

Should banks help fund a social tariff?

A higher bank surcharge could ultimately mean reduced bonuses.

That may please the unions but not everyone is in agreement.

Samuel Mather-Holgate, managing director of Mather and Murray Financial, highlights that bank bonuses are not just City excess but are a performance tool.

He said: “If banks want to attract people who can grow lending, manage risk and deliver returns, pay has to reward results.

"Since the bonus cap era, UK bank profitability and competitiveness have hardly looked world-beating, so doubling down on restrictions would be a strange answer. There is a fair debate about whether banks should contribute more to public finances, but cutting bonuses to fund energy bills risks treating pay policy as a piggy bank.

“A social tariff may be worth considering, but it needs a stable funding model, not a raid on incentives that help banks perform.”

Anita Wright, financial planner at Ribble Wealth Management, added: “Energy bills didn't go up because bankers got paid too much. They went up because years of cheap money and a falling pound made everyone's cash worth less.

“The same forces that fattened those bank profits are the ones now squeezing families.”

If you really want to help people with their bills, said Wright, people should ask why the pound in their pocket buys less every year.

She added: "Blaming bankers is easier. It also fixes nothing. Someone always has to pay. Changing who picks up the tab isn't the same as shrinking it.”

The number of investigations into capital gains tax (CGT) rose by 26% last year, netting HMRC £266 million from Brits who had underpaid.

The taxman closed 9,800 investigations in 2024/25, up from 7,800 the previous financial year, according to new Freedom of Information (FOI) figures – the highest number of investigations in a tax year since the Covid pandemic.

Of those whose claims were probed, the average amount of underpaid tax rose from £23,333 to £27,142.

The total tax taken by HMRC following investigations increased by 46% year-on-year, from £182 million in 2023/24, the FOI figures obtained by tax and accountancy firm Lubbock Fine revealed.

Rachael Griffin, tax and financial planning expert at wealth manager Quilter, said the figures suggested “investors, landlords and business owners should not assume capital gains tax reporting slips under the radar”.

Griffin added: “At the same time, HMRC has significantly improved its ability to identify discrepancies through increased data sharing and digital reporting.

“Investment platforms, estate agents, conveyancers and other financial institutions provide information that can be cross-checked against tax returns, making it increasingly difficult for gains to go unreported.”

An HMRC spokesperson said: “We’re committed to helping people pay the right amount of tax, and the vast majority do. We take a variety of approaches to ensure all taxpayers are aware of their obligations and pay what they owe at the right time.”

Why people are being investigated over their capital gains

The uptick in CGT investigations comes after the annual exempt amount was reduced from £6,000 to £3,000 in April 2024. It was reduced from £12,300 to £6,000 in April 2023.

Griffin said: “Far more people now have a potential reporting obligation, including those who may never previously have had to think about CGT. As a result, some individuals may be finding themselves caught out simply because they are unaware of the rules.”

Lubbock Fine said HMRC was also cracking down on cryptocurrency investors, some of whom might not be aware crypto assets are taxable.

Graham Caddock, director at Lubbock Fine, said: “Cryptocurrencies were renowned for being the ‘wild west’ of investing. For many crypto investors this categorisation has stuck and many underestimate how seriously HMRC treats undeclared gains.

“Even worse, some crypto investors think that gains made through digital assets somehow sit outside the normal tax rules, which is exactly why HMRC is targeting the sector so aggressively.”

Lubbock said a lot of retail investors and young day traders were unaware selling shares could trigger a CGT bill as well.

How to avoid being investigated over your capital gains

First, it’s worth making sure you report any gains correctly.

Caddock, from Lubbock Fine, said: “Many CGT enquiries start because of basic errors such as failing to get an independent valuation (perhaps more than one) for such things as gifts of family company shares or even property.”

If you have had to input estimates in the value of assets when you report your capital gains, it’s worth explaining why too.

“This may avoid an enquiry altogether, and the disclosure will help limit HMRC’s ability to enquire into earlier tax periods,” Caddock explained.

Charlene Young, senior pensions and savings expert at investment platform AJ Bell, said lots of people come unstuck when it comes to reporting gains on property.

Young said: “While gains made on your main residence are usually exempt from CGT, profits on second homes must be declared and the estimated tax paid within 60 days of completion to avoid penalties and further investigation.

“HMRC can use data from the Land Registry, banks and estate agents to cross-reference what it has been told by taxpayers, or what it suspects hasn’t been declared.”

It’s also worth making full use of your annual £20,000 ISA allowance where possible. Gains made from investments held in a stocks and shares ISA are shielded from CGT.

The second quarter (Q2) of 2026 saw increased enthusiasm from British investors, and they appear to be positioning their assets strategically in order to capitalise on looming challenges for the artificial intelligence (AI) boom.

Data from investment platform eToro shows that their its investors predominantly bought semiconductor stocks, particularly the makers of memory chips, during Q2.

Memory is a key bottleneck for the AI and technology trade. Ownership of memory hardware producer Sandisk (NASDAQ:SNDK) on the platform rose 185% in Q2 compared to Q1, according to the analysis, while ownership of Marvell Technology (NASDAQ:MRVL) rose by 90%.

^{Source: eToro}

“We are entering a more mature phase of the AI trade,” said Lale Akoner, global market strategist at eToro. “Retail investors are no longer just buying the most obvious winners; they are starting to look for where supply bottlenecks, pricing power and capital spending are likely to create the next layer of beneficiaries.”

Despite the rise in ownership of these winners, none were significant enough to knock the AI infrastructure giant Nvidia (NASDAQ:NVDA) off pole position as the most-owned stock for eToro’s UK retail investors.

^{Source: eToro}

Investors became more confident during Q2

According to research from retirement firm Scottish Widows investors were more willing to put funds into their portfolios during Q2 than in the previous quarter.

Average portfolio contributions rose by 47%, reaching £3,554 between April and June, up from £2,413 from January to March, according to the firm’s latest investment pulse survey of 2,000 UK-based retail investors.

“Investors have shown real resilience this quarter, increasing their contributions even as global conflict has escalated and the UK political landscape has shifted expectations,” said Manuel Pardavila-Gonzalez, Scottish Widows’s managing director of investments. “Even as the cost of living continues to bite, most aren’t reacting to short-term noise or alarmist headlines – they’re staying the course rather than making knee-jerk decisions.”

He added that Q2 often sees a seasonal spike in investing as investors top up their portfolios and make use of their ISA allowance around the end of the tax year on 5 April.

The survey also identified a shift in allocations overseas. While UK-held investments remained the largest single allocation at 57% (down from 62% in Q1), allocations to North America increased from 16% to 21% – consistent with eToro’s findings that US tech stocks held high appeal for British investors last quarter.

Similarly, AI was the post popular investment theme – 35% of respondents highlighted this as their favourite theme – followed by renewable and clean energy infrastructure with 25% of respondents.

Where else did retail investors look last quarter?

Memory isn’t the only AI bottleneck that retail investors exploited last quarter.

Energy is another important part of the AI puzzle. With the power demands of AI data centres rising all the time, demands for energy are set to grow, and this was reflected in a dash for clean power and energy infrastructure stocks like GE Vernova (NYSE:GEV), Bloom Energy (NYSE:BE) and NuScale Power (NYSE:SMR).

“Energy remains on retail investors' radar, but the perspective is evolving,” said Akoner. “While traditional oil and gas names feature heavily among the fallers, investors appear to be turning their attention to clean power, nuclear-linked energy and low-carbon infrastructure.”

Akoner added that as well as AI’s increasing power demands, the energy transition away from fossil fuels in order to improve individual countries’ energy security is a further tailwind for clean energy stocks.

Unsurprisingly, given SpaceX’s blockbuster IPO taking place in the quarter, the space economy was another focal point for investors in Q2.

Space infrastructure manufacturer Intuitive Machines (NASDAQ:LUNR) was the fourth-biggest riser among UK users, with holders increasing 62%, while Rocket Lab (NASDAQ:RKLB), AST SpaceMobile (NASDAQ:ASTS) and Ondas (NASDAQ:ONDS) were also among the 20 stocks that saw their ownership on eToro increase most during the quarter.

It remains to be seen whether investors will sustain their current tech optimism going forward, but Scottish Widows’ Pardavila-Gonzalez believes investors should stay the course.

“While we’re expecting more of the same uncertainty in the next quarter, the principles of investing remain the same and it’s important not to let short-term volatility derail long-term plans,” he said.

Heatwave after heatwave have made for a brutal British summer so far.

In June, the record for the hottest June day ever recorded was beaten three days in a row, and 26 June marked the sixth-hottest day in the UK since records began.

Average temperatures in Britain are already around 1.2°C higher than pre-industrial levels, and heatwaves are set to become more frequent and longer because of climate change.

As the UK has been a cooler country for much of its existence, we have very little infrastructure to deal with such high temperatures. But there are reasons why Britain needs air conditioning now.

With higher temperatures seemingly here to stay, many will be considering whether they should invest in air conditioning (AC). It can be a life-saver in heatwaves, but can also be expensive to install.

However, a government grant may be able to bring down the costs for some.

Are there air conditioning grants in the UK?

Eligible households in the UK can get a grant to help with the cost of installing certain air conditioners that both heat and cool your home.

The grant is part of the government’s boiler upgrade scheme (BUS) which helps with the cost of replacing fossil fuel heating systems with environmentally-friendly ones.

A maximum £2,500 discount is currently available to households to help them install an air-to-air heat pump – commonly called an air conditioner.

Air-to-air heat pumps operate using the same principle as air or ground source heat pumps whereby they extract heat from outside to heat your home. However, unlike air or ground source heat pumps, they are able to cool your home as well as heat it.

These types of heat pump were previously exempt from the BUS, but the government announced in late 2025 they will be included in it, meaning you can now get help from the government when installing air conditioning.

It is important to note that the BUS is only available for households who are upgrading their fossil fuel heating system to something more environmentally friendly. That means that you will not be able to get the grant if you intend to use the air-to-air heat pump exclusively for cooling while keeping your current heating system in place.

What is an air-to-air heat pump?

When used as an air conditioner in the summer, an air-to-air heat pump works by drawing in warm air in your home, cooling it down, and then disposing of the heat outside.

The air is drawn in through fans, then refrigerant is used to cool the air down before it is returned to your room and the heat is disposed of. The whole process is powered by electricity.

Meanwhile, in cooler months the air-to-air heat pump can effectively do the same process in reverse to deliver heat to your home.

The reason the government is encouraging people to install these is because they are better for the environment than traditional heating methods. The fact they also work to cool the air down in summer is a bonus.

How can you get an air-to-air heat pump grant?

To get the grant, you will have to purchase an air-to-air heat pump through an MCS certified installer. They will apply for the grant on your behalf.

It is important to note the grant is only available when you get the heat pump installed by an MCS registered firm. If you go with a firm that does not have the certification you will not be eligible for the grant.

However, though the grant is now available, there is still work being done to get it offered by more MCS suppliers. That means that it may still be a little longer before you can get the discount.

If you want to use the BUS to get an air-to-air heat pump installed, you should contact an MCS certified installer and ask them about when the grant will become available to you.

How much does an air-to-air heat pump cost?

The cost of installing an air-to-air heat pump will vary depending on where you live, the state of your home, the specific model you want to install, and much more.

Supply and installation costs around £3,000 on average, with a typical lifespan of 15 to 20 years, according to checkatrade.

Once the £2,500 government grant is subtracted from these costs, the price looks more manageable, though you should note that you may not necessarily get the maximum amount.

When your air-to-air heat pump is installed, it will cost you money to run and the amount you pay will vary. It depends on many factors including how long you keep it running, the temperature you are trying to achieve, the size of your room and the current level of the price cap.

That makes it difficult to calculate an average cost, but you can work out how much it would cost you if you multiply the power of your model in kilowatts (kW) by how much you pay for a kilowatt hour (kWh) of energy.

Using the July price cap as an example, it would cost you £0.86 to run a 3.5 kW air-to-air heat pump for an hour, though this figure will vary by model and change when the price cap rises or falls.

Since the last time I covered Fuller's – Fuller, Smith & Turner (LSE: FSTA) – in November 2022, the shares have returned around 51% excluding dividends, outperforming the FTSE All-Share index's 41% over the same period. The pub group has not been immune to the headwinds facing the wider hospitality sector, but its robust balance sheet, cash generation and focus on higher-earning consumers in the wealthy areas of London and the southeast have helped it outperform in a tough market. In the past two years, the company has also reorientated its approach to shareholder returns.

How Fuller’s is shifting focus on the customer

For its financial year ending March 2022, Fuller's reported total revenue of £254 million. The following year, the first full year of uninterrupted trading after the pandemic, top-line sales came in at £337 million. However, due to economic uncertainty, rampant cost inflation and disruption caused by Russia's war in Ukraine, operating profit was just £16.5 million and the company reported an operating margin of 3.2% for the year.

Most of this uncertainty-driven disruption is now in the rear-view mirror. For the company's 2026 financial year, it reported sales of £398 million, and analysts at Panmure Liberum have pencilled in sales of £416 million for 2027, rising to £450 million by fiscal 2028. Operating profit was £40 million for 2026 and could hit £51.3 million on current projections.

Fuller's clientele and its aggressive focus on costs are both helping it hit these targets. There is a whole section in the firm's annual report on the customer, which rightly insists that “understanding your customer is key to the success of any business”. To this end, management has invested heavily in a database of 6.9 million customers, 2.6 million of whom are fully contactable to help identify spending patterns and tailor marketing. Fuller's now knows that most of its customers have a household income above £75,000, a group that can be relied upon to spend its spare money on going out.

Management believes that it's this attention to detail that drove like-for-like food and drink sales up 3.5% and 5.8% respectively last year. Meanwhile, continued investment helped hotel sales rise 4.9%. Fuller's has 1,030 bedrooms, up from 1,009 two years ago, with an average room rate of £127.50, up from £120.

Fuller’s champions sustainability

Fuller's has also made progress with controlling costs. Since 2022 it has made a concerted effort to refurbish its pubs and switch from gas to electricity, helping push down energy costs. Its “Too Good to Waste” plan has also helped reduce food waste across its pubs and the group has offset rising costs through labour efficiency improvements and price increases.

One of the biggest problems in the hospitality industry is high staff turnover and inexperienced staff, which can slow service and dent customer satisfaction. To overcome these issues, Fuller's has built a reputation as a leader in training and retaining its staff. Last year, the group opened the new Fuller's Kitchen Academy in Reading, which has already delivered nearly 500 training sessions for chefs, while several thousand team members have also undertaken technical and career-building courses and management training.

New investments in procurement have also yielded significant efficiency savings across the supply chain. Thanks to such initiatives, the overall group operating profit margin hit 11.5% in full-year 2026, up from 7.5% in 2023. The Ebitda margin across the firm's managed pubs – those managed by the group directly rather than leased to individual landlords – hit 21.6%, up from 17.4% in 2023.

Fuller's is a cash machine – here's why you should buy in

With costs under control and margins growing, Fuller's has become something of a cash machine. Last year, it generated £80 million in cash from operations and reinvested £40 million into the business, resulting in free cash flow of around £40 million, suggesting the shares are trading at a free cash flow yield of around 10.5%.

Finance costs were £11.3 million including lease liabilities, or £8.4 million on bank debt and debenture stock (100% of net debt excluding leases). This borrowing looks sustainable given the value of cash flows and assets. The directors' valuation of the entire property estate is £991 million, £397 million higher than the net book value of £594 million, implying a net asset value per share of 1,512p.

Management has laid out plans to continue investing around £40 million a year in its estate, upgrading hotel rooms, adding new rooms to existing pubs (particularly in and around central London to capitalise on a booming tourism market) and pursuing select acquisitions.

The rest of the capital will either be returned to shareholders or used to pay down debt. Fuller's recently declared a full-year dividend per share of 21.2p, up 7.3% year on year. It has also commissioned a series of share buybacks over the past couple of years, in one-million-share lots. Last year, the group retired 2.3 million of its “A” shares and it has returned £54.7 million to shareholders through buybacks since fiscal 2023, retiring around 15% of outstanding shares. Including dividends, total shareholder yield was around 7.5% last year. The forward dividend yield is 3.2%.

As if shareholders didn't need more of a reason to buy, investors who own more than 1,000 A or C ordinary shares can apply to receive a “Shareholder Inndulgence Card”. Cardholders get a 15% discount on food and drinks in any of the group's managed pubs and hotels and special rates on some of its rooms – equivalent to a nice little tax-free dividend.

Rupert owns shares in Fuller's

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Insurance company Hiscox is benefiting from a volatile global backdrop that means firms want to make sure that their assets – from their factories to the goods and services they sell – are properly insured. Meanwhile, the rise of the digital economy has created new types of insurance, such as protection against cyberattacks.

It may not be glamorous, but some of the best investment opportunities are in industries that may seem dowdy, but are solid, profitable and crucial to the global economy.

Hiscox (LSE: HSX) focuses on three areas. It provides large-scale insurance through its membership of Lloyd's of London, the main insurance market in the world. It also offers reinsurance, whereby it takes on a portion (or all) of the risks in policies originally written by other insurance companies.

Both of those businesses have been successful, with Hiscox boasting a strong record of striking a balance between risk and return in its investments, which has allowed it to generate consistent profits. However, the most interesting part of Hiscox is its growing retail division, which offers insurance policies to small companies in the UK, US and Europe.

Hiscox's growth strategy is working

Thanks to advertising and a strong reputation for customer satisfaction, Hiscox has been able to burnish its brand and grow the retail part of the company faster than the other two segments: the retail side now accounts for around half of sales. The market is competitive, but Hiscox seems to have a sensible plan for maintaining this growth, including new products; striking deals and partnerships; and acquisitions to expand its presence outside the UK.

Hiscox's revenue grew by around 50% between 2020 and 2025, with earnings per share more than tripling between 2021 and 2025.

Both sales and profits are set to keep growing. Hiscox has also been able to increase its pricing power: operating margins more than doubled to 15%. This has enabled it to grow its dividend consistently since 2022. The stock nonetheless remains very reasonably valued, trading at only 12.8 times projected 2027 earnings, and offering a solid dividend yield.

This combination of strong profits and low valuations has started to attract interest from potential buyers. In May it was reported that Canada's Intact Financial had been exploring a potential bid for Hiscox. While nothing has been formally announced, Zurich Insurance Group agreed in March to purchase rival Beazley, demonstrating that the UK insurance sector is on global companies' radars.

In any case, Hiscox's share price seems to have plenty of momentum behind it. Hiscox has been the eighth best-performing share in the FTSE 100 over the past six months, gaining a third. It is also trading above its 50-day and 200-day moving averages. I would therefore go long at the current price of 1.861p at £1.50 per 1p. In that case I would put the stop loss at 1,261p, which gives you a downside of £900.

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In May 2025, Dario Amodei, the CEO of AI company Anthropic, said that the technology his company is helping push forward could drive unemployment up to 10%-20% in the next one to five years and wipe out half of all entry-level white-collar jobs, as Josh Tyrangiel points out in The Atlantic.

Jim Farley, the CEO of Ford, has estimated that AI will eliminate half of all white-collar jobs in a decade. Sam Altman of OpenAI has opined that it is just a matter of time before we see a billion-dollar company staffed by just one person.

That the advent of a new technology has given rise to predictions of disastrous consequences is hardly new. But that the prophets of doom come not from the ranks of the usual suspects, but from the makers of the new technology and those most in a rush to adopt it, is.

So, are they right? AI is clearly already transforming work, says Tyrangiel. Companies including Meta, Amazon, Walmart, and JPMorganChase have recently announced lay-offs due to “automation”.

Three academics from the Stanford Digital Economy Lab have found that entry-level jobs that are exposed to disruption from AI have already seen a 13% decline since late 2022. So the transformation may already be under way, even if it's too early to be sure (other factors could explain the decline and the evidence is sparse and mixed).

If that transformation unfolds slowly and the economy adjusts quickly, then we may, as economists reassure us, be fine, or even better off in aggregate. But if AI instead triggers a rapid reorganisation of work, compressing years of change into months, affecting roughly 40% of jobs worldwide – as the IMF projects – then the consequences could be huge.

Is AI actually any good for us?

Which will it be? Let's remember that humanity has been automating work for 250 years, as technology analyst Benedict Evans has pointed out. History shows that every wave of automation has destroyed whole classes of jobs and created new ones. The process may be painful for some, but over time and in the aggregate the result has been greater prosperity.

Two concepts from economics give us confidence that this time is unlikely to be different. The first is the “lump of labour fallacy” – the misconception that there is a fixed amount of work to be done and that if some work is taken by a machine then there will be less work for people. But if it becomes cheaper to use a machine to make a pair of shoes, say, then the shoes are cheaper, more people can buy shoes, and they then have more money to spend on other things, and we discover new things we need or want, and new jobs get created.

The second concept is Jevons Paradox. In the 19th century, the Royal Navy ran on coal and people worried about what would happen when the coal ran out. Don't worry, said the optimists: steam engines are getting more efficient, so they'll use less and less coal. Not at all, said economist William Stanley Jevons: if we make steam engines more efficient, then they will be cheaper to run, and we will use more of them and use them for new and different things, so more efficient steam engines means we will use more coal.

That paradox has been at work in relation to white-collar work for a long time, says Evans. In the 1880s, typewriters and carbon-copy paper meant that clerks could produce more than ten times the output of the days when they copied out documents one at a time by hand. The result for clerical employment? Far more clerks were hired. If one clerk can do the work of ten, then perhaps you might want to do more of the work that clerks do – more analysis, or manage more inventory, say. You might build a different and more efficient business that is only possible because of the new technology.

It was the same story when, much later, digital spreadsheets were introduced that could do at the click of a button what might previously have taken a whole team of accountants all week. Employment for accountants went up.

The most recent study into what AI is doing to jobs seems to confirm that this is indeed what is happening this time, as Noah Smith reports on Substack. A study by Ara Kharazian, Lisa Simon and Ryan Stevens, researchers at US technology start-ups Ramp and Revelio Labs, examined private data to determine what happens when companies start using generative AI. The answer is that they hire more humans. The number of entry-level jobs rose, too. So it seems that AI is “still mostly a complement to human labour rather than a substitute” for it, says Smith. For now at least, AI is “behaving pretty much like a normal technology”.

AI is just software

That's the usual pattern, and if AI did indeed start to progress at the rates feared and with the consequences predicted, it would be “unprecedented in human history”, says The Economist. New technologies have never spread fast enough to make large numbers of people unemployed for long periods of time because the diffusion of the technology always proceeds slowly.

To see why that is unlikely to be different this time, remember that AI is just software, as Tyrangiel points out. And the thing about software is that “people hate it almost as much as they hate change”. Before AI can transform a company, it has to access data and be woven into existing systems. A “trade secret of most Fortune-500 companies is that they still run critical functions on lumbering, industrial-strength mainframe computers that almost never break down and therefore can never be replaced”. Integrating such legacy tech with AI would mean big changes involving lots of people with strong opinions about the “right” way to proceed. Meanwhile, months pass, then years – and “the CEO still can't understand why the miracle of AI isn't solving all of their problems”.

Indeed, the idea that “one magic piece of software” will change everything instantly and override all the complexity of real people, real companies and the real economy “sounds like classic tech solutionism, but turned from utopia to dystopia”, says Evans. The reality looks rather different, as Zeynep Tufekci shows in The New York Times. Firms that have experimented with fully automating functions such as customer service have been burned. The result has been scammers talking chatbots into handing over control of key functions, promising refunds or incredible deals, such as a new car for $1. The bot taking orders at McDonald's proved “wildly dysfunctional”.

The key thing to understand is that these incidents are not the result of errors, but of the technology functioning as it is designed to do. Currently existing AI technologies are “not reasoning machines” – they simply produce answers that are probable based on the data they've been trained upon. They have no common sense or intelligence. AI can “do many things with astounding efficiency”, especially if those things are formal and structured and can be tested and checked in real time. Most jobs are simply not like that and still require “good old-fashioned human intelligence”.

This doesn't mean the “job apocalypse” definitely won't happen, says The Economist. Maybe this time will be different. Perhaps the technology will transform in ways we cannot yet predict. If so, you may know the apocalypse by these signs: sharply rising productivity combined with weak real-wage growth in the US, the world's frontier economy. This would show up as an increase in GDP per person above the 2.5% upper limit that is the historical norm in frontier economies and a simultaneous jump in corporate profits, reflecting that the gains from higher output were flowing to capital, not labour. Another sign would be big job losses in lots of industries, showing up in a recession. Which jobs vanish in the next recession will “give a hint about the shape of the AI world to come”.

Is there actually any sign of any of this happening? Not really. The labour market “certainly is not cracking yet”, says The Economist. “The share of the OECD's working-age population with a job keeps breaking records, unemployment across the club of mostly rich countries is just 5%, and America employs more people than ever in ‘AI-exposed' industries, such as law.” American graduates have been struggling to find jobs since before the launch of ChatGPT fired the starting gun on the AI revolution in late 2022. Many economists foresee relatively little disruption ahead. Those at America's Bureau of Labour Statistics think the country will add 5.2 million jobs between 2024 and 2034, increasing total employment by 3%.

Robots can't do your job

There are broader reasons for scepticism. The heaviest users of AI have recently been scrambling to curtail its use as the cost of using it outweighs the gains. Surprisingly few people use the technology on a regular basis and the share of companies in the OECD that have adopted AI remains small (about 20% for the latter, although figures for both individual use and company uptake vary widely across different studies, depending on what is deemed to count.) The basic problem here is that most people just don't know what AI is supposed to do for them, as Evans has argued. There's a box you can type stuff into, and you get text in response. Often the text is roughly right, but precisely wrong. For how many people will that be life-changing? As Pablo Picasso perceptively saw in 1968, “Computers are useless. They can only give you answers.”

The likelihood is that AI will not so much replace jobs, as make certain tasks easier and quicker for some people. Generally, says Evans, jobs are a complex mesh of things that we might not even be able to explain explicitly. You may have a good idea of just why a chatbot is never going to be able to do your job, for example, but will be impressed if someone says that it can of course already do the job of a lawyer or a doctor. The blunt truth is we do not know just what is involved in jobs we are confidently predicting will be gone tomorrow, nor do we know how AI will change them, if at all.

What we should most fear is fear itself. A recent poll found that 70% of Americans believe that AI will reduce their employment opportunities, says Robert Shiller, also in The New York Times. That fear could in itself have economic consequences. When millions and millions of people make economic decisions based upon negative expectations, there is a risk that the fear can actually “help birth the reality”. The leaders of Silicon Valley should learn to do better than peddle alarmist narratives in the hope that the resulting media attention will highlight how powerful their latest AI model is. They will find it harder to sell their wares in future if the result is an economy paralysed by fear and recession.

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Our philosophy at the Guinness Emerging Markets Equity Income fund is based on identifying quality firms, defined as those that have consistently generated returns on capital above their cost of capital.

Such companies tend to pay sustainable dividends because of the cash profits they generate. This sets our approach apart in emerging market stocks, which are often characterised by pronounced volatility.

We avoid rollercoaster cyclical sectors and focus on businesses with stable, consistent financial characteristics that can weather different market environments.

Three emerging market stocks to consider

Largan Precision (Taiwan: 3008) is a Taiwanese manufacturer specialising in the design and production of optical plastic lenses and is a key supplier for Apple. Largan's core business has been the smartphone market, but it has recently been expanding into co-packaged optics (CPO) technology.

CPO is essential for data transmission between AI chips and has proved to be more energy-efficient and less heat-producing than copper wires. Exploiting its existing expertise in precision optical lenses, Largan is developing in-house technical capabilities to manufacture fibre array units (FAUs), a central component of CPO, which may prove to be a crucial element for determining success.

Both the momentum behind FAU technology (currently in client testing) and the continued demand from smartphone manufacturers should help Largan to maintain its growth rate. This can be seen in its recent share-price performance, with the stock gaining 44.1% (in sterling terms) over the year to the end of May.

Arca Continental (Mexico City: AC) is one of the largest Coca-Cola bottlers in Latin America and has delivered consistent returns, gaining 22.4% (in sterling terms) in the year to the end of May. The brand itself provides a structural moat, with its pricing power derived from distributing one of the world's most recognised consumer brands.

Additionally, marketing investment from Coca-Cola itself is at a level that would be impossible for Arca to replicate. This is complemented by geographic diversification across the US and Central and South America. A fragmented bottling market in Latin America offers Arca opportunities for expansion through the consolidation of smaller bottlers.

Brasil Bolsa Balcão (São Paulo: B3SA3), also called B3, is Brazil's sole stock exchange. It integrates exchange, clearing-house and depository functions under one entity, making it structurally irreplaceable within the domestic market. Nearly all organised trading and over-the-counter registration of securities in Brazil flows through its systems. Diversification into data analytics and payments – via Trillia, B3's internally formed data-analytics division, and the acquisitions of Shipay and CRDC – provides a buffer against cyclicality in exchange-traded volumes.

Brasil Bolsa Balcão is also competitive on a global scale, having overtaken India's National Stock Exchange to become the world's largest derivatives exchange by volume in 2025. High Ebitda margins, sustained returns on capital and Brazil's growing retail-investor base underpin the long-term investment case. The shares have gained 33.2% in sterling terms in the year to the end of May.

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What is Manchesterism?

Manchesterism is the new political buzzword that Andy Burnham uses to describe his political philosophy – essentially meaning social democracy with an emphasis on close relations with business, regional devolution, strong municipal government and public control (though not ownership) of essential services. It is the word the soon-to-be PM himself prefers to sum up his outlook and record as metro-mayor of Greater Manchester since 2017.

In Burnham's words, the concept means “a modern and functional response to the high-inequality, low-growth trap that came from the 1980s drive to privatise economic power and overcentralise political power in the Treasury”.

To Burnham's critics, Manchesterism is nebulous flannel with no coherent set of policies attached; vibe-shift politics at its most virtue-signalling and vacuous. Meanwhile, to economic historians – free-market liberals in particular – his adoption of the concept is ironic and mildly annoying.

What's wrong with Manchesterism?

In the 19th century, “Manchesterism” was coined to describe the culture of laissez-faire capitalism that grew up in Manchester and its cotton-rich Lancashire hinterland. Burnham sees his new Manchesterism as the nemesis of “neoliberalism”.

By contrast, original Manchesterism meant the free-trade liberalism of Richard Cobden and John Bright, leaders of the Anti-Corn Law League, which campaigned successfully to scrap the protectionist tariffs that kept bread prices artificially high. The idea – as relevant today as ever – was that free markets and free trade will lead to a more equitable society by making goods available to all at reasonable prices.

What about modern Manchester?

Its recent history is also of expansion and getting richer: the city-region's economy has grown at more than 3% since 2015, double the overall UK rate, and the skyline is dotted with gleaming new towers. However, as Burnham acknowledges, the roots of that transformation long predate his tenure as city-region mayor.

In the late 1980s, the Labour mayor of Manchester City Council, Graham Stringer, began opening up the city to private-sector property investment. In the early 1990s, only a few hundred people lived in Manchester's city centre. Following the massive redevelopment and regeneration that followed the IRA bombing in 1996, that figure is now approaching 100,000.

In the 2010s, Labour council leader Richard Leese, together with the council's chief executive, the late Howard Bernstein, opened up the city to foreign investment in property and expanded the tram system. They also negotiated Greater Manchester's far-reaching devolution deal – creating the city-region and mayor position – with then-chancellor George Osborne in 2014.

What has Andy Burnham achieved as Greater Manchester mayor?

His signature achievement has been to bring Greater Manchester's buses, which were deregulated in the 1980s, back into one publicly controlled system known as the Bee Network. The municipal authority doesn't own the companies, rather it operates a franchise system under one (distinctive yellow) branding, with control over services, routes and fares (capped at £2 for a single trip).

It's been a success, with passenger numbers and customer satisfaction up. He's also attracted some £2 billion of public and private investment into the Greater Manchester Good Growth Fund, which aims to fund the building of 10,000 council and social homes by 2028, as well as a series of public-private industrial schemes.

Is Manchesterism socialism?

Burnham reckons Manchesterism is “business-friendly socialism”, says Tej Parikh in the Financial Times. But the long-term rise of Manchester was actually built on stable, pragmatic local government and its openness to private enterprise. “The emphasis on attracting investment, clustering and connectivity has supported creative destruction” – in particular the regeneration of old industrial zones into business spaces, drawing in higher value-added sectors including professional services, technology and media.

That's the real story of Manchesterism, not public control of colourful buses. Regional devolution has helped, but the city's rise is more “about the ‘neoliberal' forces the politically astute Burnham has recently criticised, and less the socialist principles he suggests”.

If the UK as a whole is to grow faster under its new PM, it will need to draw on the real “Manchesterism, not the version Burnham supporters think he represents”.

Can Manchesterism work at the national level?

“What Manchester does today, the rest of the world does tomorrow,” remarked prime minister Benjamin Disraeli on a visit to Britain's industrial powerhouse in the 1870s. Burnham, despite his eye-catching plans for a “Number 10 North”, will obviously not find it that simple.

If the UK does indeed follow Manchester's example, a new paper by two Burnham allies, Mathew Lawrence and Alex Williams (“The Productive State: A Framework for Manchesterism”), ought to be a promising guide to what we might expect. It calls for “public control of essentials” such as water and sewerage, energy networks and rail infrastructure, alongside social housing and social care.

But Greater Manchester doesn't actually have public control of these sectors. And in any event, the idea that what worked so well for Manchester will work for the UK is “the very definition of a fallacy of composition: the generalisation from a single example to the whole, from a city to a country”, says Wolfgang Munchau on UnHerd.

The crucial difference between a country and a large city is not size, it is macroeconomics and fiscal policy. Cities don't have currencies, don't have significant tax-raising powers and “they certainly don't have bond markets. Becoming acquainted with the latter will be a new experience” for the self-styled King of the North.

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Yeomans Drive, Aston, Stevenage, Hertfordshire

A Grade II-listed Georgian former coach house with a Flemish-brickwork façade, round-headed windows, and a wooden clock turret. The gardens include a swimming pool heated by an air-source heat pump. 2 bedrooms, 2 bathrooms, reception, garage with studio annexe above.

Price: £1.5m Hamptons 01992-874223

Redcastle Farmhouse, Great Barton, Suffolk

A Grade II-listed, 16th-century house set in landscaped gardens with a moat, swimming pool, tennis court and a Grade II-listed dovecote. It has beamed ceilings, an inglenook fireplace and a bespoke kitchen. 5 bedrooms, 5 bathrooms, 3 receptions, study, paddocks, 5.3 acres.

Price: £1.5m+ Bedfords 01284-769999

School Farm Barn, Maxstroke, Warwickshire

A converted grain store with landscaped gardens that include a natural swimming pool planted with water lilies. The house has a large open-plan area with a nine-metre high ceiling, a bespoke kitchen, oak floors and floor-to-ceiling sliding doors leading onto a terrace. 5 bedrooms, 5 bathrooms, office, garage, workshop, 0.5 acres.

Price: £2m The Modern House 020-3795 5920

Lower House, Redditch, Worcestershire

A Grade II-listed, 1560s house surrounded by gardens that include a range of traditional outbuildings and a heated swimming pool with a built-in Hydrastar jet function. The house has exposed wall and ceiling timbers, some of which originally came from 13th-century ships, leaded-light windows and a kitchen with an Aga and French doors leading onto a terrace. 5 bedrooms, bathroom, 2 kitchens, 2 receptions.

Price: £1.4m Finest Properties 0330-111 2266

Viola Hill, Petersfield, Hampshire

A contemporary house completed in 2025 in the South Downs National Park with a deck running the length of the house, a swimming pool with an electric cover, a tennis court and an outdoor kitchen. The house has open-plan living areas, floor-to-ceiling windows and a living area with a soaring, vaulted ceiling and a wood-fired stove. 6 bedrooms, 6 bathrooms, reception, cinema room, games room, 7.8 acres.

Price: £5.75m Strutt & Parker 01428-788670

Nant Isa, Rhyd-y-Foel, Conwy

A 17th-century rural property with a converted barn, formal gardens with a swimming pool and woodland and paddocks beyond. It has beamed ceilings, inglenook fireplaces with wood-burning stoves and a large kitchen with an Aga. 4 bedrooms, 4 bathrooms, 2 receptions, study, 2 kitchens, 3-bedroom barn, conservatory, garage, outbuildings, orchard, woods, 27.2 acres.

Price: £1.25m Fisher German 01244-409660

Foster House, Romney Marsh, Kent

A New England-style house on the Kent/East Sussex border close to Rye and Camber Sands. It has landscaped gardens with wildflower areas, an outdoor swimming pool with two cabins, a pool house and a studio. The main house has a covered veranda, beamed ceilings, open fireplaces and French doors leading onto a terrace. 6 bedrooms, 3 bathrooms, open-plan kitchen/living area, barn, 3 acres.

Price: £2.25m The Modern House 020-3795 5920

Howe House Farm, Beckwithshaw, Harrogate, North Yorkshire

A Grade II-listed house with terraces leading to a heated swimming pool and covered outdoor kitchen. It has beamed ceilings and a kitchen with an Aga. 6 bedrooms, 7 bathrooms, 2 receptions, leisure wing, equestrian buildings, floodlit manège, paddocks, 19 acres.

Price: £3.95m Knight Frank 01423-222077

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Segro's roots go back over 100 years. In 1920, Noel Mobbs led a consortium to buy 1.8 million square feet of workshops and 17,000 vehicles on a 600-acre site west of London. It had been a depot for the disposal of vehicles no longer needed by the army, but after disposing of the stock – which took five years – the new owners decided to turn the site into an industrial estate called the Slough Estate.

The venture attracted businesses including Mars, Gillette, Johnson & Johnson and Citroen, some of which are still there. The company diversified away from Slough but the Mobbs family remained involved into the 1980s.

The company's assets expanded across the UK and Europe and it rebranded as Segro (LSE: SGRO) in 2007. Yet industrial property was the Cinderella of the wider sector, less popular with investors than office and retail property. The advent of logistics warehouses and data centres changed that and Segro became the hottest stock in the sector. The shares rose above 1,400p in 2021 and traded at a significant premium to net asset value (NAV).

But over the next four years, the price halved amid rising interest rates. The shares fell to a discount to NAV, which had itself dropped by more than a quarter. In mid June, the shares stood at under 750p. Then Segro became the latest UK property company to receive an unsolicited bid. US logistics giant Prologis (NYSE: PLD) has proposed an all-share deal valuing Segro at a little above NAV. Segro's board says this is “opportunistic” given “the highly attractive underlying business and strong prospects”.

Segro is operating in a shunned sector

Marcus Phayre-Mudge, manager of the £1 billion TR Property Trust (LSE: TRY) had avoided the shares but rebuilt a holding in the last year. In his latest webinar, he listed 16 takeover bids by other listed companies and 16 by private equity across Europe to illustrate the attractiveness of the sector to corporate buyers at a time when investors have been shunning it.

“There is very little oversupply, rental growth is coming through and there is no speculative development,” he says, “the opposite of the early 1990s and before the financial crisis.” In addition, “a huge rise in costs means a low level of construction and an undersupply of prime space.” The weighted average discount to NAV in the sector is over 30%. This is below the peak discount of 45% in 2022, but still in the cheapest quartile since 1990.

To capitalise on this, TRY has geared up: borrowings equal 17.6% of net assets, close to its maximum of 20%.

The sector is still waiting for an upturn

A sector upturn is far from certain. Property faces many challenges. Population growth across Europe is, at best, static. Retailing continues to move online. Demand for office space is restricted to prime locations. The rush to build logistics hubs has abated. Student housing is a mature market. Leases have become shorter. Buildings become obsolete faster than ever, requiring expensive refurbishment or rebuilding.

TRY – which currently has 35% in the UK and 65% in Europe – has seen NAV fall 7% over five years, while the shares are down 8%. However, it has outperformed its benchmark in 14 of the last 15 years. A 32% gain over three years suggests an upturn, but performance has been flat over one year.

Still, a 9% discount to net NAV and a dividend yield over 5% means investors are paid to wait. Phayre-Mudge and his team continue to find niches of undervaluation, opportunity and growth. Consolidation will make the sector “more attractive to wealth managers who struggle to justify large positions in sub-£500 million companies”, he says.

That does not apply to Segro with a market value of £12 billion. This bid marks another milestone in the endless contraction of the London Stock Exchange. Its departure would be a short-term gain for investors, including TRY, but a dismal outcome for the UK.

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Is the shine coming off the Nasdaq 100?

The index – effectively a benchmark for US big tech, since it includes the largest 100 stocks listed on its namesake exchange but excludes finance companies – reached an all-time high of 30,730 on 3 June.

Over the next month, the index fell by 4.6%.

Increased fears over a potential artificial intelligence (AI) bubble bursting have played their part in this demise.

The AI boom over the last few year has been driven largely by a consensus that the enormous sums spent on AI infrastructure would inevitably pay for themselves.

“Now that is changing, and some [tech companies] are issuing debt to fund their AI operations,” said Annabel Brodie-Smith, communications director of the Association of Investment Companies (AIC) – an industry body that represents the UK’s investment trusts. “It’s understandable that some investors are looking to diversify their portfolios away from the AI boom and many investment trusts offer a great opportunity to do this.”

Any passive investments you hold will likely be heavily exposed to the big tech stocks that form the bulk of the Nasdaq 100 and the S&P 500.

“Correlation is the real risk in current markets,” said Saftar Sarwar, chief investment officer at model portfolio service manager Binary Capital. “A ‘diversified’ global portfolio is often not that diversified. Five companies account for around 30% of the S&P 500 – a very high level of concentration.”

But could these investment trusts offer some diversification and protect you in case the bubble bursts?

How to diversify away from AI

One of Sarwar’s first tips for diversifying away from AI is to avoid the “obvious emerging markets” of Korea and Taiwan.

These, he says, “are now significant technology-exposed equity markets”.

Instead, he recommends “so-called emerging frontier markets” like Poland, Egypt and Turkey, and picks out BlackRock Frontiers Investment Trust (LON:BRFI) as a route to gaining exposure given its 52% weighting towards financials.

Tomiko Evans, chief investment officer at portfolio manager Crossing Point Investment Management, recommends European stocks as another market that could offer diversification.

“Europe gives investors access to a broader mix of companies across sectors such as industrials, financials, healthcare, consumer goods and infrastructure-linked areas,” she said.

“Within this space, JPMorgan European Growth & Income (LON:JEGI) is one option we find interesting. The trust provides exposure to growth, but through a diversified European equity portfolio,” Evans continued. “Its approach combines quality, value and earnings momentum, allowing the managers to seek companies with attractive growth prospects while remaining disciplined on valuation.”

Buy British to avoid AI?

Both Evans and Sarwar believe undervalued UK stocks provide fertile ground for anyone looking to reduce their exposure to AI.

“UK equities have spent a decade unloved, and undervalued, for exactly the reason that now could look like an important advantage: minimal AI and technology exposure,” said Sarwar. “Trusts such as Merchants Trust (LON:MRCH), City of London (LON:CTY) and Law Debenture (LON:LWDB) own UK value or UK traditional equities with dividend yields of around 3% to 4%... These are good investment trusts if you want to move away from the whole AI theme and believe that the UK offers more compelling equity valuations relative to other markets.”

Sarwar also highlighted Temple Bar Investment Trust (LON:TMPL) for its value discipline and its heavy weighting towards the UK in comparison to the US.

Evans, meanwhile, picked out Murray Income Trust (LON:MUT). “Rather than simply owning the traditional large cap UK income names, the managers can look across a broader range of companies that can generate cash, pay sustainable dividends and offer scope for capital growth,” she said, adding that the trust offers “UK equity exposure, income discipline and relatively limited direct technology exposure” for investors that want to reduce their tech exposure without moving fully into defensive assets.

Good news for shareholders in the International Biotechnology Trust: their fund has a significant holding in US cancer research business Nuvalent, for which GSK has just agreed to pay $10.6 billion– 40% more than its share price prior to the deal being announced. Even better: Nuvalent is the sixth company in the portfolio to have been acquired at a premium this year.

The deals are part of a spree of merger and acquisition (M&A) activity taking place in the global biotechnology sector – to the benefit of many investment trusts and open-ended funds specialising in this area – as part of a marked reversal in fortunes. For much of the past few years, sentiment in the sector has been downbeat – preoccupations about risk, volatility and rising interest rates have overshadowed optimism about the undoubtedly huge long-term potential of the products. More recently, however, the tide has turned. “The outlook is looking increasingly constructive,” says Jo Groves, an analyst at Kepler Trust Intelligence.

The fundamentals of investing in biotech are compelling. You're backing companies that are developing new treatments for health problems ranging from life-threatening cancers to lifestyle-related illnesses. The demand for such treatments is huge, particularly in the context of rising and ageing populations as life expectancies increase. The United Nations estimates that the number of people in the world aged 65 or over will rise from 800 million in 2024 to two billion by 2067. No wonder biotechnology is such a high-growth industry. Precedence Research forecasts average annual growth of 4% over the next decade, which would see the market grow from $1.8 trillion today to $6.3 trillion by 2035. At the same time, biotechnology companies are finding new ways to respond to demand, developing ever more sophisticated treatments, even for the most complex diseases and conditions. For example, they're harnessing technologies such as AI to accelerate drug discovery and to move into areas that scientists previously considered too ambitious.

Another positive factor is the so-called “patent cliff”. Pharmaceutical companies are only entitled to exclusive rights to the drugs they own for a limited period; once this period ends, rivals can make their own versions of the drug. This adds to the demand for biotechnology companies that develop new treatments while individual companies continue to benefit from the enhanced revenues that the patents generate.

Biotech M&A generates positive returns early

All of this can add up to exciting returns for investors in biotechnology companies working on new drugs in high-value areas. And often, those returns materialise early, because a biotechnology company with a promising pipeline of treatments is an attractive takeover target for the global pharmaceutical industry. The biggest companies do blockbuster deals – Novartis alone spent $29 billion on M&A last year.

Investing in biotechnology also carries risks and potential downsides. In particular, most biotech companies are relatively small and focused on a handful of specialist projects – perhaps even a single drug candidate. Trials that start out looking highly promising can – and often do – fail later on, leaving the business without a product to sell. When investors are feeling broadly optimistic, they're more willing to take such risks, but during less confident times their appetite for danger may be diminished. Global trade tensions and international conflict have therefore been challenging headwinds for biotech investment in recent times.

Another factor is the cost of finance – partly as biotechs often borrow to fund their early-stage work, but also because investors are effectively being offered returns that will come in the future rather than today; such returns needed to be discounted by what investors could earn elsewhere on their cash in the meantime. In this context, rises in global interest rates during 2024 and 2025 were unhelpful to biotech businesses; more recent reductions have been a positive.

Policymakers can also have an impact on the industry in other ways. Most countries attempt to regulate drug prices in some way or to restrict intellectual property rights. The US, the world's biggest spender on pharmaceuticals, is especially important; the industry was certainly anxious about the approach Donald Trump would take in his second term of office.

Ebbs and flows in all these positive and negative factors feed the cycle of biotech businesses' share-price performance. The sector performed poorly through most of 2024 and early 2025, but has been much stronger over the past 12 months. The Nasdaq Biotechnology index has risen by more than 51% over the last year; the MSCI World Biotechnology index is up by more than 15%.

Still, sometimes it's also important to look past the numbers. One fascinating part of the biotechnology story is the incredible science that businesses are pursuing – and the advances they're making for humanity. “The development I find most compelling is RAS-targeted therapy,” says Oliver Kenyon, a senior director at RTW Investments, pointing to cancerous tumours caused by mutations in the RAS family of genes. “RAS mutations drive roughly 90% of pancreatic cancers, 40% of colorectal cancers and 30% of non-small-cell lung cancers. It's one of the most common drivers in all of oncology, and for decades it was considered ‘undruggable' – that's now changing fast.” We are seeing the “combination of genomics, gene editing and AI accelerate both the discovery and development of new medicines”, adds Chris Hollowood, CEO of Syncona Investment Management.

AI is helping biotech companies deliver

AI is also helping, says Hollowood. Researchers are analysing complex biological and clinical datasets and identifying promising targets in a “more efficient and robust” way. “The last decade saw the development of a huge number of new ways to make drugs; gene therapy, cell therapy, RNA, gene editing and many others. So as these new targets emerge in the next decade, developers and patients have many more ways to address them, meaning medicines will be more precise and have greater impact.”

So much is possible. “A real hope would be if something works for Alzheimer's disease,” says Marek Poszepczynski, portfolio manager of International Biotechnology Trust. It has been especially tough to find efficacious drugs in this area, but “the industry continues with its efforts and perhaps we will see something in the next decade or so”.

And breakthroughs in mental health are possible, too. “Around a third of the 300 million people living with depression globally don't respond adequately to existing antidepressants,” says Kenyon. “Conventional psychiatry has largely run out of answers for that population, but psychedelic-derived medicines are starting to change that.”

It's not just about developing cures to diseases and conditions previously thought untreatable. Geoffrey Hsu, general partner of OrbiMed, points to the huge and ongoing impacts of weight-loss drugs. “Their effects are not purely cosmetic,” he says. “These medications in clinical trials have reduced the incidence of strokes, heart attacks and diabetes, and have helped alleviate symptoms of patients suffering from sleep apnoea and osteoarthritis.”

Biotechnology firms are at the heart of innovation in all these areas, says Groves, who points to data from industry analyst IQVIA showing that the number of clinical trials currently stands close to all-time highs. “The rapid development of biologic treatments and therapies is constantly expanding the [range] of products, particularly in chronic and complex diseases,” she says. “There has also been a healthy pipeline for novel drug approvals, with recent approvals for treatments for lung cancer, leukaemia, haemophilia, schizophrenia and Alzheimer's, amongst others.”

All of this points to a potentially exciting period for the biotechnology sector – and the prospect of further gains to come. Further M&A would help – while the pace of deals has accelerated in recent months, many analysts think there is more to come. Partly, that reflects the patent-cliff issue, with pharmaceutical companies now approaching a particularly precipitous drop-off. Between now and 2030, the industry will lose exclusivity rights to drugs currently generating $230 billion of revenues a year; they won't forfeit such money overnight, but as patents run out, rivals will be able to produce much cheaper alternatives. Other drivers of M&A include the increasing desire of many pharmaceutical businesses to diversify their holdings, acquiring biotechs with drugs that take them into new areas, and the accumulation of deal finance during a period of fewer deals. It also helps that the US government appears to be taking a more laissez-faire approach to regulation.

In this case, there is still some time to join the biotech party. At an aggregate level, valuations remain reasonable by historical standards – and while there have been good gains from many stocks, the sector's performance has been eclipsed by, for example, the surge in the technology arena. Still, the vast majority of investors will prefer to get exposure through a collective investment fund rather than by buying individual stocks themselves. The science is just too advanced for non-specialists to make realistic assessments of the prospects of individual businesses and their key drugs.

A fund offering diversified exposure to a pool of companies chosen by a professional manager therefore provides relative comfort. Indeed, managers in the sector are often more qualified and experienced than peers investing in other industries, with relevant clinical experience of their own as well as professional investment experience. We look at some of the best options in the box below.

The best biotech stocks to buy now

A broad range of collective funds invest in the sector, but there's a strong argument for considering a closed-ended trust over other types of fund. Biotech can be an illiquid area and prone to exaggerated shifts in sentiment that drive significant inflows and outflows of cash. A trust, where you're buying exposure to the underlying portfolio of assets, provides some insulation from that.

The Association of Investment Companies' healthcare and biotechnology sector offers seven investment trusts to choose from. Its top performers over the past 12 months are the Biotech Growth Trust (LSE: BIOG), with a total share price return of 103%, the RTW Biotech Opportunities Trust (LSE: RTW), up 93%, and the International Biotechnology Trust (LSE: IBT), which has returned 83%.

Alex Trett, a research analyst at Winterflood, points to the potential of two in particular to continue benefitting from M&A activity. “RTW Biotech Opportunities has seen ten M&A-related transactions in the last 12 months, all resulting in an immediate uplift to net asset value,” he says. Worldwide Healthcare Trust (LSE: WWH) is another beneficiary. “In addition to its portfolio holdings, the trust maintains a basket of M&A swaps that provide exposure to potential takeover activity across the sector.” Should the current pace of M&A activity persist, “we believe these trusts remain well-positioned to benefit. They combine extensive sector resources with teams possessing deep scientific and medical expertise, enabling them to identify innovative firms and emerging technologies, which in some cases become attractive acquisition targets.”

That's not to say open-ended funds should automatically be excluded. If you prefer this type of vehicle, Dzmitry Lipski, head of funds research at investment platform interactive investor, picks out the Candriam Equities L Biotechnology Fund, run by Linden Thomson. The Luxembourg-domiciled fund has holdings in around 75 companies.

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The MoneyWeek ETF portfolio saw its annual rebalancing at the beginning of April, as the Middle East crisis raged. We cut a bond position that was stale and superfluous, and held the cash to reinvest once the outlook was clearer. This week, I set out to write that promised update – only to see the conflict ramp up to its worst for at least a month.

Nonetheless, this is still a good time for a decision. The point of the ETF portfolio is certainly about sharing our top-down views on markets, but it is also about having a process for investing. Holding lots of cash for too long because of fears of what might happen is a good way to earn worse returns over the long term.

The most protective part of our portfolio lies in very short-dated government bonds (essentially a cash proxy with a near-4% low-risk yield) and short-dated inflation-linked bonds (we think there is a growing risk of inflation picking up on a one-year view). These invest in US bonds, but are hedged back to sterling. We would hold UK bonds instead for simplicity, but the equivalent ETFs don't exist.

Oil stocks have benefited us in this crisis and remain reasonably attractive, but we would consider trimming them if peace sets in.

Gold has not done as well lately as many investors expected and with hindsight we can be grateful that rebalancing in April automatically took some profits from a strong run-up. My view is that gold often doesn't shine in the immediate phase of a crisis and the key factor is whether fears about inflation and the dollar's role as global reserve currency continue to increase gold's appeal over the longer term.

Balancing tech exposure in our ETF portfolio

Meanwhile, our equity positions viewed together mean we are far less concentrated in the US than the global index. Our decision to switch into the equal-weighted version of the S&P 500 last year – to reduce our concentration in the tech mega-caps – was early, but has not hurt us too much: the market has shown signs of rotating away from them lately. We have done well in Japan and in emerging markets. However, we need to be very aware of the extent to which non-US markets are geared to the AI trade.

I have discussed this several times with regard to emerging markets recently, and this leads us to an obvious decision. Last week (issue 1319), I suggested using the new WisdomTree True Emerging Markets (LSE: WEMP), which does not hold China, Korea and Taiwan, as a way to balance some of the tech and East Asia bias that is dominating the emerging-market index. Using some of the cash to add 5% in this should give us more diversification, although note that since this is not a well-established core index, it is a bit harder to be sure what performance we can expect in different scenarios. That leaves 5% still in excess cash, which I will look at next time in conjunction with the one position I have not yet discussed – real estate.

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Rumours are already swirling about what changes Andy Burnham could make if he were to win the Labour leadership contest – including a shake-up of the capital gains tax regime.

The MP for Makerfield looks more-than-likely to gain the keys to Number 10 later this month and is said to be considering Wes Streeting as his chancellor.

Should Streeting take on the role, he could look at reforming capital gains tax (CGT) in attempts to drum up much-needed cash for the Treasury.

In an interview with the BBC’s Nick Robinson in May, the former health secretary suggested raising the three CGT rates to mirror income tax rates – 20%, 40% and 45%.

Currently, you pay a rate of 18% if you’re a basic-rate taxpayer and 24% if you are a higher or additional-rate taxpayer.

A number of experts have called for the equalisation of CGT rates with income tax rates, including the Centre for the Analysis of Taxation and Dan Neidle, founder of tax think tank Tax Policy Associates, arguing it would reduce tax avoidance and boost UK economic growth.

Neidle posted on X that Streeting’s proposal was “good”, suggesting the extra money it brought in could be used to cut the basic rate of income tax.

“That would be a brave thing for a Labour politician to do, but in my opinion the right thing at this moment. Spend the rest on e.g. defence. I think most people would agree,” Neidle said.

However, Jeremy Hunt, former chancellor for the Conservative Party, said a CGT rate rise would be “terrible” for the economy.

He said: “It doesn't matter if you're left or right, don't do it. If you increase your CGT above 24%, you will get less revenue, not more, because investors will change their behaviour.”

MoneyWeek asked Andy Burnham’s office for comment.

How would a rise in capital gains tax rates affect you?

Calculations by wealth manager Rathbones suggest aligning CGT rates with income tax rates could increase the tax bill on a £50,000 gain by almost £10,000 for an additional-rate taxpayer.

A higher-rate taxpayer’s bill would rise by over £7,500, according to Rathbones. The tax bill on a £10,000 gain would be more than £1,000 higher.

Basic-rate taxpayers would be stung less – Rathbone’s calculations suggest the tax bill on a £10,000 gain would be over £100 more compared to the current rates.

These figures were calculated based on gains being made outside tax wrappers such as ISAs and pensions and including the £3,000 CGT annual exempt amount.

How to protect against capital gains tax

Everyone gets a CGT annual allowance of £3,000. Any gains made within each tax year less than this amount aren’t taxed, and there are other methods you can use to lower your CGT bill too.

Maximise the use of ISAs

Gains made inside tax wrappers like ISAs are free from CGT so it’s worth utilising your full ISA allowance each year. The current annual ISA allowance is £20,000 per tax year.

Assets like shares or funds held outside an ISA can be transferred into a tax-wrapped ISA through a ‘Bed and ISA’.

Jason Hollands, managing director at wealth manager Evelyn Partners, said: “This involves selling investments, ideally not exceeding the annual £3,000 CGT exemption, and then repurchasing them within an ISA so that future gains – and income – are sheltered from tax.”

Use interspousal transfers

Assets can typically be transferred between married couples and civil partners without triggering a tax bill.

Transfers can be a useful way of moving your assets around and using up each person’s CGT and ISA allowances to full effect.

It can also be worth transferring assets to a partner who pays a lower rate of CGT, thereby reducing your combined tax bill.

Use your annual allowance rather than letting gains build

By selling assets each year within your annual £3,000 allowance, you can pull out profits tax-free and save yourself a larger bill on a big chunk of gains down the line.

Holland said: “The annual CGT exemption has become much smaller at £3,000 than it used to be, but it is still valuable. Many investors overlook it, allowing unrealised gains to build up over many years.”

EasyJet has put up a good fight. Over the past two months, its board has turned down a series of higher and higher offers from Castlelake, a US investment firm with more than $25 billion in assets. On Monday, it finally blinked. The board said it was minded to accept the latest £5.2 billion offer, and serious negotiations will now start to tie up the sale.

There are still obstacles. Castlelake needs to find a way of complying with EU rules that state that airlines based on the continent have to be majority-owned by European shareholders. It will need to be cleared by the British competition regulators. And it will still have to be put to a vote of shareholders. But if those can be overcome, easyJet will disappear into an American firm specialising in asset-based investments, including aircraft leasing.

That is good news for anyone with easyJet shares. The share price has risen by more than 80% since the lows touched in May before the takeover talks were revealed. And Castlelake may well prove a decent long-term owner. But it is a bad deal for the British economy more widely.

EasyJet is one of the most successful British companies of the past 30 years. It has built one of the best route networks in Europe, with a strong brand, and is well positioned in one of the continent's fastest-growing industries. With 90 million passengers a year, it is already the fifth largest airline in Europe, just behind Air France-KLM and slightly ahead of Turkish Airlines, and has an unblemished safety record.

Perhaps most importantly, it has carefully positioned itself in the middle of the market. It is a lot cheaper than the traditional national carriers, but it also offers a slightly more civilised experience than the hyper-aggressive approach of Ryanair. It has occupied the middle market, with lowish fairs and acceptable service. For most industries, the middle market is where, over the long run, the most money is made, and there is no reason to think that aviation will turn out to be any different. As European air travel steadily grows, and if its mid-market, low-cost model can be replicated in US or Asian markets, then it also has the potential to grow.

Over the last few years, investors have been far too quick to sell out British companies. In the past few months alone, sugar manufacturer Tate & Lyle has been sold to US rival Ingredion; Intertek has been sold to private-equity firm EQT; and Evoke, the owner of the William Hill betting chain, has been sold to Greek casino operator Bally's Intralot. This week Sky's American parent Comcast agreed to buy ITV, Britain's largest commercial broadcaster. The list keeps getting longer.

EasyJet shareholders should reject the deal

We can all understand why. Britain has become a very hard place to make money. The economy has stagnated, real wages are barely growing and the government is determined to squeeze more tax out of companies wherever possible.

It is surely worth reflecting that if easyJet did not have to pay higher national insurance charges, if rates at airports (a £40 million rise last year at Gatwick, one of its main hubs) had not been increased so much that they were passed on to airlines in landing fees, and if air passenger duty has not gone up by so much (rising another £2 a ticket on short-haul flights in the last Budget) then its profits would have been significantly higher, and it would not have been a target for a takeover in the first place.

Likewise, a moribund, over-regulated stock market means many basically good businesses are undervalued by global standards. One by one they get taken over by foreign rivals and there are no new companies coming along to replace them. Britain's economic base is steadily getting hollowed out.

Britain can't afford to lose easyJet. It may not exactly be a national treasure, but it is a decent business with a solid future. If we had lower taxes on businesses, if the stock market was deregulated, and if demand started to grow, British firms would not be quite so vulnerable to foreign predators.

Just for once, perhaps the airline's shareholders should reject the advice of the board and demand that it remains an independent company listed on the London stock exchange.

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Flexjet, the private aviation operator, has teamed up with Formula 1 as an official supplier. To find out what that means in practice, Flexjet invited MoneyWeek to watch the sprint qualifying at Silverstone last Friday, before the British Grand Prix held on Sunday. Naturally, this being Flexjet, half the fun was in getting there – by helicopter.

Ensconced in the leather-trim cabin of Flexjet's own Sikorsky S-76 helicopter – whirring over the fields of Northamptonshire on the way to the famous racing circuit (55 miles from London as the chopper flies) – it set me to wondering while gazing out of the window… which is faster, a modern F1 car of the type driven by Lewis Hamilton or a Sikorsky S-76?

Inside Flexjet's Sikorsky S-76

An hour or so before vertical takeoff, I had arrived at London Heliport in Battersea to find the lounge busy with genuine fans of sport and those just out for the summer season, mixed in with odd clusters of business types. One of the first things you will notice about London Heliport is that it isn't very big. From the lounge, I watched a small helicopter with skids hover a few feet off the ground, then squeeze past a much larger helicopter to inch its way out over the Thames, whence it ascended to the heavens.

Nobody around me seemed to notice. I figured they were probably used to it. Passengers waited with cups of coffee and glasses of English fizz to be buzzed into Wimbledon and, as I would soon be, the British Grand Prix. It was a busy day in the British sporting calendar. But as much as I would have wanted it otherwise, the thing that struck me was how normal everyone looked. No audacious tiaras, top hats or high heels. No footballers, billionaires or Logan Roys barking orders to their cowed subordinates.

The choppers arrived like bees. One helicopter would descend over the River Thames, then creep into the hive, to be followed shortly by another. I was to be “hot-loaded”, I was told – that is, I would be boarding the helicopter while the rotor blades were still spinning. There is, I was told, no danger – it's just a bit loud. The heliport was simply too busy for the chopper to power down. I clambered in, conscious of the blades spinning a few feet above my head. But once inside, it was lovely.

This particular Sikorsky had been decked out in Flexjet's Phantom trim – dark-hued seats and a creamy white ceiling, all in leather. It had the look and feel of an executive car, which is very much the point. Thanks to the cabin's noise-cancelling design, there is no need for headphones and you can chat easily enough with your neighbour. It is only the whirr of the engine and the tips of the spinning blades visible out of the window – along with the tree tops and tiny houses – that remind you of where you are. In fact, this workhorse, the S-76, which first flew in 1977, has two engines and its safety record is excellent. But the hot weather that has “blessed” Britain this summer doesn't help – the engines have less oxygen and there are fewer air molecules for the rotor blades to “grip”. So, our party was slimmed down to six people. Usually a helicopter such as this can carry eight passengers, plus the two pilots.

The private aviation sector has taken off

The private aviation sector has soared since the pandemic began, with the number of flights taken anywhere in the world rising 4.6% in 2025 from a year earlier, according to data firm WingX. Flyers are also getting younger. “Our average age has dropped ten years. I can see right now a significant impact from… AI wealth,” Andrew Collins, Flexjet's global CEO, tells the Financial Times.

Another trend is the recent spate of collaboration between companies working in the luxury sector. In addition to F1, Flexjet has partnered with Ferretti Yachts and France's LVMH.

Luxurious, yes, but, to be sure, flying private isn't the most environmentally friendly way to travel. So, all of the helicopter flights Flexjet will undertake as part of its partnership with F1 will use sustainable aviation fuel (SAF), which is made from vegetable oils and other materials. It is less polluting than conventional aviation fuel. This mirrors the way in which F1 has sought to reduce its own carbon footprint, aiming to achieve net zero by 2040. Flexjet also offsets the carbon emissions generated by its European fleet by 300%. New technology, such as electric vertical takeoff and landing (eVTOL) aircraft, which are just now taking to the skies, promises to minimise the effect on the environment even further.

A day at the British Grand Prix in Silverstone

Like a coiled snake in the grass, the circuit of Silverstone hoved into view 25 minutes after leaving Battersea. I could already make out the fans, dressed in all the colours of the teams, packed into the stands as the helicopter descended. The Sikorsky's undercarriage met the grass without so much as a bump. The door was flung open and we were out in the sunshine, being ushered into the terminal where more fizz awaited, along with a London black cab to take us to the track-side House 44 – the premium hospitality suite backed by Lewis Hamilton – that sits upstairs in the F1 Paddock Club at the end of the pit lane.

The sprint qualifying for the sprint race that would be held the next day was Friday's main event. The sprint race is a 100km dash and a truncated version of the full-fat British Grand Prix on Sunday. Drivers have a limited time to set the fastest lap and the fastest drivers of the sprint race earn themselves a few points towards their championship ambitions.

But Silverstone is almost as much about the festive atmosphere as it is about the cars. There was a DJ in the Paddock Club, racing simulators, places to buy “merch” as well as bars and snacks. I spent much of the day working my way through the cocktail menu and glimpsing the cars screaming past the observation deck.

British former racing driver David Coulthard popped in for a chat and we were lucky enough to be shown round the paddock (where the teams pitch up for the weekend) by Jamaican racing-car driver Sara Misir. There was also an opportunity to tour the pit lane – some of the activities that are available to “Owners” on Flexjet's Red Label programme.

Lewis Hamilton set the fastest lap in the sprint qualifying. He covered the 3.66 miles of a single lap in just one minute, 28 seconds and 593 milliseconds. To go back to my original question of which is faster – Hamilton's Ferrari SF-26 or my Sikorsky S-76, I'm afraid the Ferrari wins. If the track were stretched out in a straight line, it would take Hamilton, driving at the car's top speed of 217mph, one minute to cover the distance, outpacing the 178mph Sikorsky by almost 14 seconds (or so AI tells me). So, there you have it. Hitching a ride with Hamilton may be the fastest way to get around Silverstone. But for getting to the British Grand Prix, you can't beat a Flexjet helicopter for comfort and speed.

About Flexjet

Flexjet operates on the basis of fractional ownership. You buy a share of an aircraft – a Gulfstream G650 or a Praetor 600, say – and that translates into flying hours. (Other fees apply, such as to cover indirect expenses.) That also means the price per hour varies. For those who would like to try Flexjet's services before jumping in, there is the Jet Card, which acts as a prepaid card, with flights charged at an hourly rate. Red Label is Flexjet's top-tier offering and comes with perks such as behind-the-scenes “experiences” at Silverstone. And there is the Helicopter Access Programme, which begins at 25 hours of flying time a year, and the Helicopter Card – perfect for those who want to take the hassle out of commuting.

Visit Flexjet.com to find out more.

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This week, Donald Trump has been leading the celebrations of the 250th anniversary of American independence. And it is hard to escape the irony that the current head of state is every bit as autocratic as a Hanoverian king – and then some.

Seldom have Thomas Jefferson's words sounded so hollow than on the lips of an unashamed strongman, who has purposefully sought “to upend the very freedoms Americans are celebrating” while brazenly “treating the presidency as a personal ATM”, says Rolling Stone. “Let's say it plainly: there has never been a president as corrupt as Donald Trump.”

Trump's second term as US president has been punctuated by a steady stream of stories relating to his and his family's business interests – from the cynically marketed Trump Bibles, gilded merchandise and social-media ventures marking his inauguration to the Qatari Boeing 747, booming stock portfolio and multiple crypto ventures that have followed.

When the president talks about “liberty”, says The Wall Street Journal, the entity closest to his heart is World Liberty Financial, the self-described “next-generation financial platform” that accounted for a large chunk of the $2.2 billion gains that he has made since returning to the White House, according to a financial disclosure report released last week.

Americans have become so used to the drip, drip of financial “coincidences” and family deals that closely track state policy – a federal contract for a Trump son here; an investment in drone technology or Kazakhstani mineral rights there that they have almost become part of the wallpaper.

Nonetheless, his recent financial disclosure seems to have touched a nerve, says The Free Press. “It's not just the moneymaking that's unrivalled. It's also the flagrant appearance of corruption that those billions represent” – at a time when many Americans are struggling. “You do not need to think Trump is the end of American democracy, or that everything he does is evil, to see this for what it is”: a blatant “transfer of wealth from them – and perhaps foreigners – to the president”.

The way Trump sees it, these moneymaking ventures are payback time for his period in the financial and legal wilderness after the 6 January riots. The family's Wall Street debanking in particular was a source of humiliation. There's another factor at play here too, says The Guardian: the entanglement in Trump's mind between what is good for him and what is good for America. His defence of his crypto windfall, for instance, is that it's the dibs of a wider boom he has personally conferred on America. Trump has taken Louis XIV's dictum, “L'État, c'est moi”, to heart, with an extra twist. In his view, he is the stock market, too.

Trump compares himself to Hitler and Napoleon

In the general scheme of constitutional abuse and the weaponisation of government departments, Trump's hijacking of the Independence celebrations might seem small beer. Yet they are a case study in how things work under the 47th president, says The Telegraph: from the Colosseum-style cage fight on the White House lawn to the underhand tactics, not to say fraud, underpinning the funding switch from the politically neutral America250 organising committee to Trump's pet Freedom250 body.

In Regime Change: Inside the Imperial Presidency of Donald Trump – a hair-raisingly detailed survey of his second term so far – New York Times reporters Maggie Haberman and Jonathan Swan reveal how Trump proudly showed them a document “arguing he was more powerful than some of the most feared and treacherous leaders in history – including Attila the Hun, Genghis Khan, Napoleon, Stalin, Mao, and Hitler”, says CNN. That is now coming back to bite. To Trump's chagrin, the book topped the sales charts on Independence Day. There was symbolism in that.

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The UK’s Defence Investment Plan (DIP) will boost UK defence spending to £80 billion by 2029 – but that figure is still set to fall short of the NATO target of 5% of GDP.

It sits nonetheless in the context of rising defence spending across the world.

“Global military expenditure hit a record $2.9 trillion in 2025, the 11th consecutive year of growth,” Tom Bailey, head of research at ETF issuer HANetf, told MoneyWeek (citing figures from the Stockholm International Peace Research Institute).

Much of that increase was driven by Europe; military spending rose 25% across the continent in 2025. But the UK’s defence spend fell 2% in the year.

“Even over the longer term, the UK’s increase looks relatively modest. UK defence spending is up 32% over the past decade, but that compares with much sharper increases in countries such as Germany, Poland, Spain, Japan and Italy,” said Bailey. “If Britain wants to remain a serious global military power it has to increase defence spending.”

This imperative has prompted criticism of the DIP. Former defence secretary John Healey and armed forces minister Al Carns both resigned their posts on 11 June, with Carns saying afterwards the bill was not sufficiently funded and the government was planning to spend money on outdated systems and Healey saying the bill “falls well short of what is required for defence and the country at this dangerous time”.

Fixing the defence spending deficit won’t be a case of waving a magic wand for Andy Burnham, who is widely expected to become the UK's next prime minister.

“Fiscal constraints and sluggish economic growth means it’s not just a simple question of increasing spending,” said Neil Wilson, UK investor strategist at investment bank Saxo. “Debt markets will punish extra borrowing – Starmer pointedly [ruled] out ‘war bonds’ as just extra debt. Germany’s decision to scrap a new warship programme underlined the problem facing governments without the same level of fiscal constraint.”

What does the Defence Investment Plan contain?

Having initially been expected at the end of last year, the DIP was delayed as the Ministry of Defence (MoD) had been pushing for an additional £28 billion of defence spending over the next four years but the Treasury would only permit £10 billion.

In its current form, the DIP allows £298 billion of investment into defence over the next four years – £15 billion in additional spending.

The bill includes provision to spend £20 billion more on the country’s nuclear deterrent over the next four years compared to the previous four, including the purchase of F-35A stealth fighter jets – capable of carrying nuclear warheads.

It also contains £5 billion of investment in drones and autonomous systems over the next four years.

“That may look modest beside the roughly $55 billion for the US’s multi-year Drone Dominance programme,” said Bailey. “But measured against each country’s previous annual defence spending, the UK number does not look small, being roughly 7.5% of 2025 UK defence spending, compared with around 5.8% for the US figure. As a share of GDP, both are also very similar.”

There is also £3.2 billion allocated for space capabilities and £2.5 billion for cyber and electromagnetic defences.

Which companies could benefit from higher UK defence spending?

UK defence spending tends to be quite internationalised with an understandable slant towards domestic companies.

“Since 2019, around 45% of MoD procurement spending has gone to UK-headquartered firms,” said HANetf’s Bailey. “Higher UK spending can benefit UK-listed names but also foreign-listed companies with meaningful UK defence exposure.”

There is a notable attempt to shift from over-reliance on US firms – understandable given the US’s unpredictable foreign policy so far this year.

In terms of the companies that could be expected to benefit, BAE Systems (LON:BA.) is notable due to its central role in the design of the Tempest jet being made jointly by the UK, Italy and Japan. Its shares rose nearly 10% between 29 June and 2 July.

Besides BAE Systems, Wilson also highlights Chemring (LON:CHG) as a potential beneficiary of the MoD’s more technological shift.

“We see Chemring, a specialist in sensors, electronic warfare and counter-drone technology, coming out of this rather well,” he said.

“Rolls-Royce (LON:RR.) gets a lift from nuclear power/Tempest engine considerations, while QinetiQ (LON:QQ.) is one to watch in the field of artificial intelligence, robotics and autonomous warfare,” he continued.

He also highlights some interesting prospects further down the market capitalisation ladder, including SpaceX supplier Filtronic (LON:FTC), Concurrent (LON:CNC) – an embedded computing specialist with significant defence contracts – and MS International (LON:MSI) which, among other things, manufactures navy guns.

Why hasn’t the defence bill boosted UK defence stocks?

These stocks, on the whole, haven’t risen off the back of the DIP.

If anything, the opposite is true. Despite its initial surge after the DIP’s announcement, BAE Systems is up just 2.4% in the 12 months to 8 July. Rolls-Royce is up a healthy 45% over the same period but most of these gains predate the DIP’s publication; between the DIP’s publication and 8 July, the stock fell 1.1%.

Chemring’s share price fell 2.1% over the year to 8 July, while Qinetiq is down 5.3%.

The main reason the DIP hasn’t lifted these stocks substantially is that it was fairly underwhelming. Markets had expected a much more substantial uplift in UK defence spend, and this became priced in.

“Shares in various defence contractors rose last year on expectations for more spending, but lately investors have been left disappointed,” said Saxo’s Wilson.

How to invest in UK defence stocks

Besides buying the shares directly there are few pure-play routes to investing in UK defence.

You could pick an exchange-traded fund (ETF) that offers some exposure.

Two obvious examples are the HANetf Future of European Defence Screened UCITS ETF (LON:NAVY) and the WisdomTree Europe Defence UCITS ETF (LON:WDEP). Both these are specialised in European defence companies; whereas a global defence ETF like iShares Global Aerospace & Defence UCITS ETF has less than 12% of assets invested in the UK (as of 7 July), NAVY and WDEP have approximately 25% of assets (both as of 8 July).

Open-ended funds and investment trusts focusing on defence are thinner on the ground.

JPMorgan Claverhouse (LON:JCH) also offers some UK defence exposure through holdings like Rolls-Royce, Serco (LON:SRP) and BAE Systems – though as of 31 May these three stocks make up just 7.7% of the portfolio.

Whilst only tangentially related to defence, Seraphim Space (LON:SSIT) holds private companies that relate to the space technology theme. Some of these overlap heavily with defence; All.Space, for example, has contracts with the MoD as well as the US Department of Defence.

It's become a cliché to describe a collectable that's hard to find as a “holy grail”. You don't often read about something being an “unholy grail”. But if there was ever such a collectable up for sale – at least in the eyes of England fans – it's the captain's armband Diego Maradona was wearing when he punched the ball into the England net during the World Cup on 22 June 1986. That infamous “Hand of God” goal put Argentina 1-0 up early in the second half, and England went home at the end of the match – while Argentina went on to win the tournament. “A little with the head of Maradona, and a little with the hand of God,” was how Maradona cheekily put it after the whistle. The armband appears as part of “The Beautiful Game” sale, held by Sotheby's in New York, which runs until 16 July. The highest bid as of late last week was $100,000, with days to go.

A less controversial lot in the sale is the remarkably small number-ten shirt that a 17-year-old Pelé wore while scoring two goals against Sweden in the World Cup final in 1958, which Brazil won 5-2. Almost 70 years after that match, Pelé remains the youngest-ever player to appear in a World Cup final, and Sotheby's expects that shirt to sell for at least $6 million, according to The Guardian. That would make it the most expensive single item of football memorabilia sold at auction.

The current record holder? The Argentina shirt that Maradona was wearing while scoring with “divine assistance”. It sold for an eye-watering $9.3 million in 2022. And recently, Dallas-based Heritage Auctions revealed it will be selling the actual ball in August. That one defies valuation. As Heritage says, the sports collectables market has been booming.

Japan's World Cup jersey sales soar

Football fever is apparent in other sales rooms, too. Sotheby's archrival Christie's is taking a decidedly left-field approach to celebrating the World Cup by selling five giant metallic football art installations, on 17 July, in New York. The works are currently on display across New York and New Jersey and a portion of the proceeds will go towards good causes.

Northamptonshire-based Budds (formerly Graham Budd Auctions) sold dozens of match-worn shirts from past tournaments this week, while more vintage tops can be found online with Dutch online auctioneer MatchWornShirt.

It might be worth keeping an eye out for one from Japan, as Eru Ishikawa notes on Bloomberg. Sales of this year's Japan away shirt have risen 29-fold compared with sales from the 2022 Qatar World Cup – and they have doubled for the home shirt – according to the manufacturer, Adidas. But good luck finding one. The adult replica shirts on the Adidas website in Japan, priced at ¥13,200 (£60) each, have sold out. Japan may already have been knocked out of this year's World Cup, but at least its fans will be left holding on to something longer lasting.

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Three luxury summer destinations

Sail on Lake St. Moritz

St. Moritz in the Swiss Alps was originally known as a summer destination before the skiers arrived, thanks to its fresh air, cooler altitude and outdoor activities. In a bid to reclaim that heritage, Badrutt's Palace Hotel in the resort town is giving guests the chance to sail on Lake St. Moritz in July and August in the hotel's own private sailboat.

Explore the crystalline waters of the beautiful Upper Engadin Valley with a skipper or on your own and gain an alternative perspective on the Swiss Alps that is not defined by winter sports. Thanks to the Maloja wind that sweeps through the valley every afternoon, Engadin has long been considered ideal for sailing.

Badrutt's Palace Hotel also offers paddleboarding and windsurfing on the lake, along with guided hikes on the glacier, helicopter trips over the valley and scenic railway journeys.

Rates from £730 a night, visit badruttspalace.com/en/summer/ for more information.

Design a superyacht in Arev St. Tropez

This summer, Arev St. Tropez has teamed up with Feadship, one of the world’s most prestigious builders of superyachts. The luxury hotel on the French Riviera is hosting a pop-up exhibition and film showing exploring superyacht design at its chic Place des Oliviers courtyard.

Lucky guests receiving a “Carte Blanche” invitation from the Feadship team will be invited to enjoy “The Ultimate Bespoke Design Experience,” where a Feadship designer will map out their own dream superyacht. Following a consultation to decide the purpose and aesthetics of the vessel, the designer will then create a custom handprinted design sketch to be presented in a leather roll and delivered to the guest’s suite along with a Feadship gift.

Until 15 August 2026. Rates from €1,500 in summer. Visit arevcollection.com.

Sail through the Indonesian islands

If you can't bear the thought of summer ending, head to the southern hemisphere. From 29 September to 5 October, Silolana Sojourns will be sailing a traditional Indonesian yacht through the Komodo Archipelago, where guests are invited to combine world-class snorkelling and diving with treks across wild island terrain – travellers may even encounter the famous Komodo dragons while on a guided walk through Rinca Island.

Alternatively, from 23-30 November, Silolana Sojourns will be exploring Raja Ampat, which is celebrated as being one of the most biodiverse marine regions in the world. Guests can go on a diving expedition to explore the vibrant coral gardens, possibly meeting dugongs and turtles along the way.

From £2,300 per person for each seven-day journey, based on two people sharing a cabin. Visit silolona.com for the full list of what's included.

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Whether you’re decades into your investing journey or just starting out, time can be a double-edged sword.

Investing is a long-term game and while many fear the ups and downs of the market could ravage their returns, that’s only true if you’re trying to ‘time the market’.

Most people who invest and stay invested for the long term end up significantly better off.

Much of that is due to the power of compounding, which is more powerful the more time you have for it to take effect. Yet for younger investors – those at the start of their journey – the effects of inflation will have a huge impact on how they approach financial matters.

Younger generations aren’t apathetic when it comes to investing. A recent Vanguard study reveals that 68% of savers without investments say they plan to start investing in the next two years, rising to over 90% among Generation Z (Gen Z) and more than 80% among Millennials.

What motivates Gen Z investors?

Vanguard found that Gen Z accounted for nearly 780,000 new investors in the past two years, contributing £25 billion. These younger investors have a larger appetite for new, esoteric investments like cryptocurrency (crypto) compared with older demographics.

The survey of 2,000 UK adults shows Gen Z favoured crypto as their first investment, a move made by 33% of the cohort.

The report, The British Money Mindset 2026, says the danger of having a higher risk appetite early in your investment journey is that it could disproportionately expose younger investors to the volatility of crypto assets.

“Negative early experiences can discourage participation and reinforce misconceptions about investing,” it says.

Discretionary fund manager Albemarle Street Partners (ASP) suggests the main driver for this higher risk appetite is the need for their money to work harder, which stems from an early experience of inflation.

ASP managing director Charlie Parker says Gen Z is at a critical moment in life: coming of age, starting to take financial responsibility and pay their own bills, while at the same time they’ve been confronted with two enormous external disruption events.

“First, they had the pandemic and then they had the inflationary surge that followed.”

How inflation shapes your financial decisions

Behavioural economists suggest that experiencing a significant bout of inflation in a formative period of life can change everything about the way they think about saving, investing and risk-taking for the rest of their life.

Parker recalls the common shortage of hot water when he was growing up.

“If you wanted more hot water you had to approach your mum and ask to put on the immersion heater, which was like you were asking to burn liquid gold. Because my parents had come of age during the oil shock of the 1970s, lodged in mum’s psychology was this idea that energy ‘is the thing which is going to get me.’”

Today’s younger investors are facing their own challenges. According to Finder.com, in 2007, the average age of a UK first-time buyer was 30.3. Now, it’s 33.9. Home ownership is moving out of reach faster than this generation can save.

This leaves young people in a scenario where gradual savings into a “boring” multi-asset fund won’t cut it.

“They don’t think the world is working in their favour in order to do that,” says Parker. “So if they’re going to do any investing at all, it’s going to be a financial ‘prayer for redemption’. They’ll think, ‘I’m going to buy some cryptocurrency; something which gives me some hope that it might make me enough money to make a real difference’.”

Gen Z is investing at a younger age than any generation that came before them – more of them started in adolescence and early adulthood than other cohorts. They take more risks without necessarily knowing the consequences. Parker cites World Economic Forum data showing that 64% of Gen Z investors adjust and review their portfolio at least once a month.

As well as cryptocurrency, they are also the most active user group of alternatives, derivatives and non-fungible tokens.

What are the financial milestones at different ages?

As time works both for and against you as an investor, it’s a crucial factor in setting your priorities, whatever your age.

If you’re a Baby Boomer, some of the biggest moments are not financial but psychological. Navigating the transition to retirement is one of the biggest challenges for people in this lifestage, according to Parker.

Another shift that many Boomers have to contend with is acknowledging that they can spend their money. Many financial advisers say they’ve got clients who just can’t get their heads around drawing down from their pension pot while they’re not earning.

By age 65, half of people stop going abroad on holiday; it’s either too hard physically or emotionally. Healthy life expectancy in the UK is just 61.

“That’s not to say you’re bedbound. But there’s something going on with your health that makes things a little more difficult,” said Parker.

The average age of needing care is 84 and life expectancy is 83 for a woman and 79 for a man.

For Gen X, the pressure is on. If you’re in your 40s or early 50s, you’ll likely be earning the most money you’ll ever earn, perhaps have recognised that you can’t take your health for granted and that the workplace presents more challenges.

Parker explains: “If you’re in a physical job, you might be less able to do certain things. There are always fewer jobs at a more senior level than you. It’s quite easy to get to middle management but it’s harder to get beyond. The workplace can be an increasingly difficult and challenging place for people in their 40s and 50s and 60s, given technology and the pace of change.

“This is a generation that’s nearly running out of time to get the benefits of compounding, that’s in need of urgent intervention if pensions haven't been established, and good habits haven't been established in early life,” Parker continued. “They might still have just enough time to benefit from the power of regular contributions, but they need to act very, very quickly.”

Going self-employed can bring plenty of freedom and flexibility but it also means giving up attractive workplace perks.

More than 4.5 million people run their own business. While they may benefit from managing their own schedule and more tax-efficient ways to withdraw cash, such has from a limited company, there are downsides.

Research by business insurance provider Protectivity warns the self-employed community are giving up an average of £6,428 worth of workplace benefits per year such as sick pay and holiday pay. In pension contributions alone, the lifetime shortfall could exceed £119,000.

Based on typical self-employed earning, the analysis suggests a freelancer would need to work an additional 16.5 days, more than three full working weeks, on top of their normal workload every year to break even with an employed worker to get the same benefits.

Chris Trotman, head of sales and underwriting at Protectivity, said: “Self-employed workers are an essential part of the UK economy, and it’s clear that the vast majority wouldn’t trade the flexibility or autonomy that working for themselves allows.

“It does, however, come with financial risks that employment automatically absorbs and a lot of people don’t fully grasp the scale of that gap until they’re up against it.”

Here are the workplace perks you give up when going self-employed.

Paid annual leave

Full time employees in the UK are entitled to 28 days of paid annual leave per year including bank holidays

For employee on the average median salary of £39,039, that equates to £4,704 of paid time off.

Sick pay

The average UK employee takes 4.4 sick days per year, according to the research, worth an estimated £740 at median earnings, which would usually be covered by their employer at full salary.

In contrast, 79% of self-employed people who took a period of sickness absence in the last year said they received no income whatsoever during that time, according to Protectivity.

The research found that self-employed workers take 35% fewer sick days than employees, not because they’re healthier, but because they ‘can’t afford’ to take time off.

Pension contributions

Under auto-enrolment rules, employers must contribute a minimum of 3% of qualifying earnings into an employee’s pension, which is worth approximately £984 a year at the median salary.

You don’t get this if you are self-employed; instead you need to set up your own pension.

Compounded over a full working career at a standard 5% annual growth rate, those missed employer contributions could amount to more than £119,000 in lost retirement savings, according to the research.

Mortgages

It can also be harder to get a mortgage if you are self-employed as your income may fluctuate and be hard to prove.

Stephen Perkins, managing director of Yellow Brick Mortgages, said: “Those early years can also involve lower profits as businesses invest and grow, which may reduce how much you can borrow.

“It shouldn't put anyone off starting a business, but if you're also planning to buy your first home or move within the next couple of years, it's well worth factoring into your decision.”

How to prepare for lost perks

Replicating an employed package including a pension, insurance cover and paid time off quietly swallows between a fifth and a third of gross income on top of tax, says Anita Wright, chartered financial planner at Ribble Wealth Management.

She adds: “Nobody prices it in, because benefits are invisible right up until you need them.”

However, she suggests that autonomy and tax flexibility are real compensation as long as you can reflect the other costs in the rate you charge clients.

Another way of looking at it is that you could design your own benefits package, although you need to pay for it.

Samuel Mather-Holgate, managing director at advisory firm Mather and Murray Finance, said: “Income protection, life cover, private medical insurance, pension contributions, training, holidays and parental leave all have to be priced into your fees and paid for deliberately.

“That can feel painful, because the cost is visible in a way employer benefits rarely are. But visibility is not the same as waste.

“Many of these costs may be tax-deductible where they are genuine business expenses, and pension contributions can be tax-efficient too. The real mistake is treating self-employment income as take-home pay. A self-employed person needs to build the employer into their own pricing, otherwise freedom can quickly become fragility.”

Losing the title deeds for an inherited home is a headache – and while tracking them down can be easy, it's not always so straightforward.

Title deeds are documents confirming who the legal owner of a property or piece of land is and trace the history of ownership over time.

Deeds also usually include whether the property has a mortgage on it, how much it was last sold for and details of any ‘restrictive covenants’ – promises not to do certain things with the land, like not building on a certain area.

But around 10% of properties in England and Wales aren’t registered with Land Registry, making tracking down title deeds a lot trickier.

Historically, title deeds, also known as a title register, were a collection of physical papers, but Land Registry started phasing in digitally-formatted ones from the early 1990s.

Because title deeds say who the legal owner of a property is, they are essential if you inherit one, particularly if you want to sell it – no buyer’s solicitor is likely to let their client buy a home if it can’t be proved who owns it by law.

Paula Higgins, chief executive officer of property advice website HomeOwners Alliance, said: “Title deeds can be particularly important when inheriting a property that you intend to sell, as the executors or administrators will need to establish that the deceased was the legal owner before the property can be transferred or sold.”

How to locate title deeds on an inherited property

Before doing anything, you need to find out if the inherited property is registered with HM Land Registry. This is the process that applies to properties in England and Wales.

More than 90% of land in these two countries is registered, according to the Land Registry, so it is more than likely an inherited property will be on its database.

You can find out whether a property is registered via gov.uk.

If the property is registered

If the inherited property is on the Land Registry’s database, you can typically source a digital copy of the title deeds for a small fee.

David Fenwick, lead probate solicitor at Co-op Legal Services, said: “Where a property is registered, the original paper deeds are no longer needed to prove ownership. Official copies of the title register…can be obtained from HM Land Registry and are accepted in place of the historic deeds.”

If the property isn't registered

If the property isn’t registered with Land Registry, this is where the process can get trickier. As a first port of call, contact the solicitor involved in the initial sale of the deceased’s house or the mortgage company – either of these might have the original paper deeds.

The deeds may also be in a safe deposit facility with the deceased person’s bank or with other family members who have helped with their affairs.

If, after this, you still can’t find your title deeds, you’ll need to get legal help from a conveyancing solicitor.

They will be able to apply to HM Land Registry for what’s called a “first registration” which will ensure the property is registered and on its database.

They’ll gather a host of documents that can prove to the Land Registry that the property you’ve inherited belonged to the deceased.

Fenwick said: “This might include historic conveyancing documents, mortgage records, council tax bills, copies of documents held by previous solicitors, or statutory declarations from individuals with knowledge of the property's ownership history.”

Do note, HM Land Registry says it can take up to 12 months to process a first registration application.

You can apply for a first registration yourself, but it can be legally complicated, so it’s worth getting a conveyancing solicitor in to help, although they will charge you for their services.

In any case, Land Registry will charge you up to £1,105 to apply for first registration and fill in the relevant form, which could be a TR1, TP1, AS1 or other form.

How to sell an inherited property

If the property is registered with the Land Registry and the deceased person was the only person who owned the home, you will need a Grant of Probate or Letters of Administration to sell it.

You will need a Grant of Probate if the deceased person left a valid will naming you as an executor and Letters of Administration if there is no will or it is invalid.

Grants of Probate or Letters of Administration are usually issued within 12 weeks of applying but can take slightly longer depending on the complexity of the application, according to the Courts and Tribunal Service.

If the title deeds have been lost, you’ll need to first go through the first application process to ensure the property is registered with HM Land Registry.

Once probate or administration has been granted, you need to arrange a valuation of the property with an estate agent to gauge its market value before putting it up for sale.

The process of selling an inherited property is similar to selling a regular one, except there are tax implications to consider.

If the value of the property has increased since the person who owned it died, you may owe capital gains tax, if the gain is over your annual exempt amount of £3,000. You can deduct estate agent or legal fees to reduce how much any profit is taxed at.

You may also owe inheritance tax of 40% if the value of the deceased person’s home combined with the rest of their estate breaches the nil-rate bands.

Crypto investors are being urged to ensure they have reported any capital gains to HMRC or face fines worth hundreds of pounds amid new transparency rules being introduced next year.

Financial Conduct Authority (FCA) data suggests around 8% of UK adults, roughly 4.5 million people, now hold cryptocurrency such as Bitcoin.

But commentators warn that those who have got into it as a side-hustle or to make quick profits amid Bitcoin price rises may not realise that they need to pay capital gains tax (CGT).

HMRC has previously clamped down on those failing to pay owed CGT.

As many as 101,024 CGT warning or ‘nudge’ letters were sent to investors in crypto assets between 2020 and 2025, according to Freedom of Information (FOI) data obtained from HMRC by comparison platform BrokerChooser.

Crypto investors will have no excuses from 2027 when platforms have to start reporting user data to HMRC.

Here is what you need to know.

Crypto tax changes explained

Owning crypto has never been tax-free and any profits from sales of the asset could result in a CGT bill if above the £3,000 threshold.

Currently investors have to report this to HMRC themselves but under the UK’s incoming Cryptoasset Reporting Framework, UK cryptoasset service providers began collecting user data in January 2026, with their first reports to HMRC due between January and May 2027.

Providers must record each user's name, address, date of birth, tax residence and, for UK residents, their National Insurance number or Unique Taxpayer Reference.

If you give inaccurate information or do not provide details, you could get a penalty of up to £300

HMRC expects the measure to raise an extra £315 million over four years.

If you have not paid owed tax and HMRC finds out, you may get a penalty of up to 100% of the tax due plus interest.

Harvey Dhillon, chief executive of at accountancy firm Zmartly said the person caught out is not the sophisticated trader but the everyday holder or side-hustler who bought a little, sold or swapped some, and never thought to put it on a tax return.

He added: "Crypto was never untaxed. It was just unseen, and that is the only thing changing. Selling a coin, swapping one for another or being paid in crypto can trigger Capital Gains Tax or Income Tax, and always could.

"Reported to HMRC is not the same as declared by you, and the gap between the two is where the penalties live. The person caught is not the full-time trader but the everyday holder who bought a little, sold some, and assumed a small pot could never be taxable.”

How to prepare for crypto tax

Crypto prices have soared in recent years, especially if you have bought and sold Bitcoin or Ehtereum in your investment portfolio.

With the capital gains allowance frozen at £3,000, even modest disposals can be chargeable.

Dhillon added: "If you have ever sold or swapped crypto, check your history now, work out the gains for each year, and correct anything missing before the reports land. The anonymity was the only thing protecting an unpaid bill. In 2027 it goes."

Graham Nicoll, financial planner at NCL Wealth Partners, urged people to review their transaction history.

He added: "This isn't a new tax, but it is a significant shift in transparency. I’ve seen investors who made substantial gains during previous crypto rallies wrongly assume those profits didn't need to be declared. As HMRC receives more data directly from crypto providers, those historic gains are likely to come under greater scrutiny.

"At the same time, investors shouldn't overlook losses. Properly reporting capital losses now can allow them to be offset against future gains, potentially reducing tax when markets recover or from gains on other assets.

“Anyone who has bought or sold crypto should review their transaction history, calculate any gains or losses and, if necessary, correct previous tax returns before HMRC comes knocking. Good records are now just as valuable as good investment returns."

Keir Starmer vowed not to touch the triple lock, a system that promises to increase the state pension each April by either the rate of inflation, average earnings growth or 2.5% – whichever is highest.

The triple lock guarantee saw over 12 million pensions receive a state pension boost in April, as it increased by a very generous 4.8%. This added £575 to state pensioner income this year.

Most pensioners saw their income increase more than non-pensioners, who are effectively funding the state pension.

The Office for Budget Responsibility estimates the triple lock will cost around £15.5 billion by 2030, up from the £5.2 billion originally estimated when it came into play.

The triple lock was introduced by the Conservative-Liberal Democrat coalition in 2012. The Conservatives left it untouched and Labour, under the leadership of Keir Starmer, also promised to leave it alone.

The policy is hugely popular among state pensioners, making it a difficult policy for politicians to tinker with. But is a costly policy set up in 2012 still sustainable or fair today?

Will Andy Burnham, who looks likely to take the top spot in government later this month, finally axe the triple lock?

While Burnham’s focus is on devolution, he cannot escape the need to cut government debt. Pressure will inevitably mount for him to be the leader to finally stop placating pensioners.

What’s the problem with the triple lock?

Depending on who you ask, you may get a different answer. Steve Webb, who was the pensions minister when the triple lock was introduced, told me on the MoneyWeek Talks podcast that the triple lock was there to do a job to keep pensioners afloat.

“I became pensions minister in 2010. But in the previous 30 years, the state pension had been falling in value relative to what people earn, so it just went up with inflation most of the time.

“But the problem with that is if you earn and earn and then stop earning, then the thing you fall onto when you stop earning needs to be connected to some proportion of what you were earning. Otherwise, you just fall off a cliff and your standard of living crashes. So, the state pension needs to be pegged to a proportion of what people are earning and for 30 years, [prior to the triple lock] that had not happened.”

“So, the point of more generous indexation post 2010 was to undo 30 years of damage. I’m not embarrassed or ashamed; I am proud of the fact that the state pension has been over-indexed.”

But the working generation would argue the system is an unfair burden on taxpayers, especially as young workers doubt the state pension will even exist for them.

Pensioners will say they worked for it and the increase merely protects them from rising living costs.

Though, according to the think tank Resolution Foundation, the triple lock has done little to reduce pensioner poverty. In the 12 years following the introduction of the Triple Lock pensioner poverty rose by 2.3 percentage points.

Difficult choices for Burnham?

Former Labour leader Tony Blair and former Conservative chancellor Jeremy Hunt have both called for the ‘outdated’ and ‘unaffordable’ policy to go.

A report from the Tony Blair Institute earlier this year called for the triple lock to be cut by 2030 and to overhaul the UK state pensions system.

Though it is unlikely the new Labour leader will make any change during this parliament, he will need to make some difficult choices, eventually. Will Burnham be the man who finally takes the triple lock out?

Tens of thousands more households could be dragged into paying the ‘mansion tax’ under rumoured plans, if Burnham becomes the new Labour leader.

The prime minister-in-waiting could potentially lower the threshold at which people start to pay the High Value Council Tax Surcharge from £2 million to £1.5 million, according to reports in The Mail on Sunday.

An estimated 150,000 additional households could be pulled into paying the surcharge if the levy was brought down to the reduced amount, based on calculations done by think tank Tax Policy Associates.

The so-called mansion tax was first announced by chancellor Rachel Reeves during her 2025 Autumn Budget and is set to come into force in April 2028.

As it stands, the measure will see those with properties worth over £2 million pay between £2,500 and £7,500 per year depending on the value of their home. It is expected to bring in £430 million in 2029/30.

But should Burnham win a Labour leadership contest, he will need to find ways to fund an ever-growing welfare budget and multi-billion pound hole in the Defence Investment Plan (DIP).

Lowering the entry level at which households pay the mansion tax could be one way of doing this alongside potentially scrapping the triple lock pension system.

MoneyWeek approached Andy Burnham’s office to comment.

What is the mansion tax and how will it work?

The High Value Council Tax Surcharge will take effect from April 2028 and apply to homes in England worth £2 million or more.

The Valuation Office (VO), which is part of HMRC, is set to carry out a valuing exercise to assess which homes the surcharge will apply to.

Homes valued at £2 million or more but less than £2.5 million will be charged £2,500.

Properties worth £2.5 million or more, but less than £3.5 million will need to pay £3,500. Homes worth between £3.5 million and £5 million will need to pay £5,000. Properties worth £5 million or more face a £7,500 surcharge.

These charges are set to be increased each year in line with the Consumer Price Index (CPI) measure of inflation. Revaluations will be conducted by the VO every five years.

How a reduced threshold of £1.5 million on the levy would be applied exactly is unclear, but would almost double the amount of households paying it, according to calculations done by Tax Policy Associates.

The think tank predicts around 243,000 households would have to pay at least something, up from 127,000 under a £2 million entry-level threshold.

What else is Andy Burnham considering?

In a major speech on 29 June, Burnham said he intended to reform business rates to support high streets and pubs which have taken a battering in recent years.

According to the British Beer and Pub Association, a trade body for the sector, 161 pubs closed across Britain in just the first three months of 2026. UK Hospitality, a trade body for the hospitality sector, has forecast six hospitality venues will close each day in 2026.

Rumours have been swirling about what else Burnham could introduce if he were to become the next prime minister of the UK.

The MP for Makerfield could reportedly look at reforming Capital Gains Tax (CGT) by bringing the rate paid in line with income tax. Basic-rate taxpayers currently pay a CGT rate of 18% while higher and additional-rate taxpayers pay 24%.

Burnham could also replace stamp duty with a ‘land value tax’ – an annual tax based solely on the value of the land itself.

One of the best ways to gauge how your fellow investors feel about the market is to follow the money.

The flows of cash in and out of European exchange-traded funds (ETFs) during June suggests a pivot back towards US stocks and funds and away from their European counterparts, according to analysis of etfbook.com data from investment manager Fidelity International.

June was a strong month for European ETF flows overall, attracting just under $45 billion in total funds – 29% above the three-month average monthly flow and 19% above the 12-month average.

“Strong corporate earnings, combined with new record highs in equity markets, have boosted investor confidence,” said Stefan Kuhn, European head of ETF and index distribution at Fidelity International.

If you’re considering where to invest for the coming months, it can help to have an idea of which way the money has been going recently.

Fund flows shift from Europe to America

Funds investing in North American equities saw $14.7 billion of inflows during the month, more than three times the monthly average for the region over the past year.

Much of the strength in American stocks will have been driven by demand for artificial intelligence ETFs, with the US still the major player in the theme. The sector also received a sentiment boost in June from SpaceX’s record-breaking initial public offering.

At the same time, though, European investors appear to have abandoned their domestic markets, with Europe-listed ETFs targeting European stocks registering $2.2 billion in outflows in June.

^{Source: etfbook.com via Fidelity International. Data as of 30 June 2026.}

“The story of the second quarter was the return of the United States,” said Kuhn. “While investors were allocating more heavily to Europe and other regions at the start of the year, we are now seeing a clear preference for the US market again,” he added.

June marks the third consecutive month of outflows for Europe-focused funds according to Fidelity.

Commodity ETFs slide as investors snap up active ETFs

Demand for commodity ETFs waned during June, coinciding with a decline in gold prices as expectations for higher interest rates (particularly in the US) rose and the war in Iran appeared to be simmering down.

“With the immediate escalation phase now behind us, some of the geopolitical risk premium has faded from commodity markets,” said Kuhn. “At the same time, many investors expect central banks to keep interest rates higher for longer, making non-yielding asset classes such as gold less attractive.”

Actively-managed ETFs, though, continue to soar in popularity. June was a record month for flows into this category of funds, according to Fidelity’s analysis.

“Strong demand for active ETFs shows that investors increasingly want to differentiate between regions, sectors and individual companies,” said Kuhn. “In a market where the gap between winners and losers is widening, active security selection can provide real added value.”

The UK is obsessed with cash. Out of the 15 million adult ISA accounts that were in use in the 2023/24 tax year, almost 10 million were cash ISAs, making up around 66% of the total.

We love cash because it is simple and we know that when we need to access it, we won’t find that the value of our savings has fallen to zero. Put simply, cash is risk-free.

But that is not the whole truth, according to Andy Reed, head of behavioural economics research at Vanguard.

Speaking to Kalpana Fitzpatrick, digital editor-in-chief , on the MoneyWeek Talks podcast, Reed said there is a significant opportunity cost in hoarding more of your savings in cash than you might need.

In the UK, there is over £200 billion of excess cash languishing around, research by Vanguard found.

This does not include savings that it may make sense to hold in cash, like what is needed for an emergency fund or short-term spending..

Reed said: “When you dig a bit deeper and start to ask ‘why are you sitting on the sidelines? Why are you not invested?’, they realise that there is a risk-return trade-off that they’re making and they tend to say they prefer a more conservative approach. They feel like cash is safer.”

Reed says this is partially a result of inertia.

“[Savers] are going with the flow. They’re maintaining the status quo. The status quo feels safe. It doesn’t feel risky. But what they don’t realise is that investing is risky, yes. But not investing is also risky.”

That is because every moment that your money is not growing, it is being eaten away by inflation.

This has been particularly true in recent years as the UK, and many other western countries, have had to deal with price growth above the 2% target.

In Britain, inflation reached a recent peak of 11% in 2022, while the latest data shows it reached 2.8% in May 2026.

As cash ‘stuffed under the mattress’ earns 0% interest, it will be worth less in real terms after years of inflation. But cash in savings accounts are not entirely safe either.

“The risk is that your cash is not going to keep up with inflation because the interest on cash can be very low while inflation might be higher and so your purchasing power is going down over time.

“But inflation is out of sight, out of mind for many people, so they don’t realise the hidden cost of cash.”

That is not to say that cash is inherently evil and all your savings should be diverted to investments.

Reed says: “Cash is a story of too much of a good thing. You need enough for emergencies, say your dishwasher breaks, or your car breaks down, you also arguably need cash in case of job loss.

“That’s where highly liquid assets like cash are super valuable because they give you that flexibility to withstand bumps in the road.

“But having cash above and beyond those short-term emergency needs means you’re incurring opportunity costs. What you’re giving up by not investing is quite a bit larger than what you might realise.”

Listen to MoneyWeek Talks for our full interview with Andy Reed, where he discussed how emotions can affect investor behaviour, the barriers to investment in the UK, how different generations invest, and much more.

You can watch the podcast on YouTube, or listen to it wherever you get your podcasts.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence.

Artificial intelligence (AI) could be embedded into every aspect of a financial services business by 2030 as millions of savers and investors are already making use of the tools, research by the Financial Conduct Authority (FCA) has found.

The City watchdog asked executive director Sheldon Mills to review how advances in AI could transform retail financial services.

The Mills Review, published this week, found one in five UK adults - equivalent to 11 million UK adults - are already open to AI making decisions for them in areas such as pensions and investments but there are concerns about trust and control.

The review found that while AI has the potential to improve access, personalisation and efficiency, it could also amplify risks associated with fraud, cybersecurity, consumer harm and market concentration.

Mills said: “Artificial intelligence will transform financial services by 2030. It creates significant opportunities for consumers, firms and the wider economy. This report sets out a roadmap for how industry regulators and government can prepare for the next phase of AI-driven change in our world-leading financial services sector.”

Here is how the FCA expects AI to reshape financial services.

Changing roles in financial services

The regulator suggests human roles in financial services will change.

It highlights that many firms are already piloting and rolling out AI tools and by 2030 they could be more independent and cover every function from customer support and underwriting to compliance, claims and product design.

AI may become the main method by which they process information, serve customers, and evidence outcomes, the FCA suggests.

This could mean the role of people within firms changes from operators close to each decision towards collaborators, approvers and, eventually observers who monitor outcomes and step in when systems move outside agreed parameters.

The FCA said: “This is a substantial organisational shift, requiring new skills and a clearer account of what human oversight actually involves.

“Firm governance will extend existing model risk management to cover more complex systems and deeper reliance on third-party providers. Successful AI deployment should lift productivity and support economic growth, though the benefits will reach consumers only where firms remain accountable and markets stay competitive enough to pass them on.”

The review suggests the human role becomes one of challenge, judgement and review rather than direct production of every output.

The rise of agentic AI

Consumers are increasing using AI applications to act on their behalf and automatically follow preset instructions, known as agentic AI, and the FCA predicts this could grow in financial services.

This may involve easier bank switching, embedding insurance into other platforms, auto-rebalancing in savings and investments and pension pot consolidation.

The FCA said: “Overtime, AI systems will move beyond offering information and recommendations towards trusted AI agents that can act continuously for consumers within agreed limits, providing ongoing financial management and optimising people’s financial lives.

"If done well, this could help consumers achieve more while doing less, addressing long-standing problems such as low switching, advice and protection gaps, and improving outcomes for people with lower financial capability.”

The FCA warns that consumers will still need to be able to oversee, understand and challenge AI-driven decisions, especially when things go wrong, the report adds: “Unequal access to high-quality applications risks widening inclusion gaps - but well-designed AI systems also present an opportunity to radically improve outcomes for those who need more support.”

Changes in market power

The rise of AI could reshape who holds the power in financial services.

Investors and savers may flock to well-known investment platforms or providers now but the FCA says AI has the potential to drive greater beneficial competition in financial services and to support new entrants.

This could make the suppliers more powerful and there are risks of dependance on a few technology firms.

The FCA said: “Control of the AI-mediated customer interface may become a major source of market power.

"As consumers rely on agents to search, compare and transact, the owner of that AI layer may influence which products are visible, how choices are ranked and where value is captured, shifting the customer relationship away from financial services providers.”

AI risks

While AI could help consumers manage their finance more effectively, the FCA review wants that there will also be more fraud risks.

The report said: “Deepfakes, synthetic identities and personalised social engineering are taking fraud and cyber risks into a new era and changing how fraud and cyber-attacks are conducted. Existing weaknesses can be exploited far more quickly than before, and defenders will need to keep pace.

“Defensive, supervisory and enforcement capability must evolve at least as quickly as the threat. To remain effective, firms, regulators and their partners will need access to many of the same AI capabilities as those used by attackers.

"They will also need to share the right information with those best placed to act, when it matters and before harm escalates.”

Is AI regulated?

Artificial intelligence isn’t regulated but Mills suggests that existing rules such as the Consumer Duty and Senior Managers Regime should cover some of the risks associated with how savers and investors may use AI.

The review does add that regulation may have to evolve though to focus on shared models between firms though rather than focusing on individual conduct.

It also suggests that the FCA review AI tools such as ChatGPT and Claude to assess if there are regulatory overlaps and risks in the results generated.

Commenting on the report, Amal Jolly, chief executive of the AI company Saturn, which specialises in financial advice, said: "AI brings new opportunities to close the advice gap, improving the financial lives of millions of adults, but as this report shows it also brings huge risks.

“In financial services, AI is the new Wild West: consumers are left with no protection. Only 9% of people have access to regulated human financial advisers, but 100% of people have access to ChatGPT and other AI platforms. This is not just a theoretical problem, but can cause real harm to people who are entrusting major life-changing financial decisions to unregulated AI.”

SpaceX has joined the Nasdaq 100, meaning passive funds that track the index will now automatically hold positions in the company, which listed on 12 June.

SpaceX (NASDAQ:SPCX) joined the index today (7 July), a week after it was added to the Russell 1000 Index (29 June).

Bloomberg reported SpaceX could look forward to an estimated $5.4 billion of inflows as a result of ‘forced’ buying by index funds that track these two indices.

Elon Musk’s space exploration company was fast-tracked for inclusion following rule changes by the index providers, put in place to reflect the unprecedented size of some initial public offerings (IPOs) coming to market.

Nasdaq’s new rules now allow freshly listed companies to be included in as few as 15 trading days, rather than its previous minimum period of three months after an IPO.

What will SpaceX index inclusion mean for flows?

Nasdaq says globally, there is around $1.4 trillion in assets tracking its component companies’ combined market capitalisation (market cap) of $31.5 trillion, around half of which do so through exchange-traded funds (ETFs). The other half is in derivative products, such as futures and options.

The Nasdaq 100 index represents the largest 100 companies, excluding financials, listed on the Nasdaq Stock Market. Often described as a tech-focused index, it contains all ‘Magnificent 7’ names – Alphabet, Amazon, Apple, Tesla, Meta, Microsoft and Nvidia. But it also contains many other companies with a value of $100 billion or more from healthcare, industrials and materials, for example, with representation across 10 of the 11 standard industry classification sectors.

When a stock joins an index like the Nasdaq 100, funds tracking that index are effectively forced to buy its shares so that they still reflect the index. This creates additional demand for a stock and could push up its share price.

The UCITS version of Invesco’s Nasdaq-100 ETF (LON:EQQQ) is the largest Nasdaq-tracking ETF available to UK investors. Barclays Smart Investor platform lists it as the seventh most popular purchase during the week of 26 June to 2 July.

Alongside the uplift from index fund inclusion, several investment banks have issued positive analyst statements on SpaceX, marking the end of the ‘quiet period’ that typically follows an IPO. Morgan Stanley, Goldman Sachs, UBS and Bernstein Research are among the names backing the stock with ‘buy’ recommendations or equivalent, based on asset strength and long-term growth prospects.

Average house prices have increased for the first time since the outbreak of the Iran war in a boost for homeowners.

The newly-named Lloyds House Price Index, rebranded since the bank retired the Halifax name, showed average property values rose 0.2% in June.

The slight rise in house prices is an improvement on the previous month's 0.2% fall, while annual growth was at 0.6% compared with 0.5% a month before.

This put average UK house prices at £299,330.

It is the first monthly rise in average prices since February as confidence has been dented by the Iran conflict.

But hopes of a peace agreement and lower swap rates may now be filtering into the housing market and mortgage pricing, helping to boost demand.

Amanda Bryden, head of mortgages at Lloyds, said: "Recent price trends continue to reflect wider economic uncertainty, including the impact of global events on inflation and interest rate expectations."

Affordability remains stretched for many buyers, said Bryden, but this has been mitigated by mortgage rates easing from their recent highs.

"While latest industry data shows the number of new mortgage approvals dropped in May, this wasn’t unexpected given the spike in rates seen earlier this year, and we ’d expect to see activity recover assuming borrowing costs continue to fall," Bryden added.

Where are house prices rising?

The housing market has been quieter in recent months as the volatility caused by geopolitical tensions has pushed up swap rates, making mortgages more expensive and hitting buyer demand.

More stock is also on the market, which some attribute to a landlord exodus linked to the Renters’ Rights Act.

Higher supply and reduced demand has pushed price growth down.

But there have been signs of life in the housing market more recently as tensions have eased in the Middle East.

Northern Ireland continues to record the strongest annual house price growth in the UK, with average prices up 7.4% over the past year to £229,000, Lloyds said.

Scotland has the next highest annual growth at +3.9%, with an average price of £223,277.

In Wales , property price growth has strengthened by 0. 9% on annual basis to £ 231,142.

Meanwhile in England, stronger price growth remains concentrated in northern regions. The North East saw prices rise 2.8% over the year to £181,133, while the North West recorded annual growth of +2.4%, with the average property now costing £248,218.

In contrast, southern markets continue to see prices fall. The South East led declines, with prices down 2% year-on-year to £381,654, while London saw average values fall by 1.1% to £534,831 .

Will house prices rise in 2026?

The housing market has struggled to get going in 2026 and while the latest price rise may look good if you are hoping to sell your property, analysts remain cautious.

Amy Reynolds, head of sales at Richmond-based estate agency Antony Roberts, said "On the ground, the picture is more nuanced than national headlines suggest."

While the rate-dependent end of the market is exhibiting caution, well-priced family homes in the right roads are still seeing sustained interest from cash- or equity-rich buyers.

Reynolds suggests there is the familiar pre-summer push from families wanting to be settled before the new school year, but warns that the mood is steady and selective rather than booming or stalling, adding: "We expect a quieter, price-sensitive summer, with activity firming again in the autumn once buyers have more clarity on rates and the geopolitical noise has died down."

Sarah Coles, head of personal finance at AJ Bell, said the small rise in prices in June will owe something to the Iran peace agreement, which lowered inflation expectations and brought mortgage rates down, but warns that one swallow doesn’t make a summer.

"One small bump doesn’t mean the end of tougher times for the property market," said Coles. "There’s still a huge amount of global uncertainty as the peace deal remains fragile. Closer to home, the picture has started to look marginally more positive, with unemployment falling a little and economic growth edging up. But this is unlikely to move the dial just yet."

Coles highlights that unemployment has been trending up for the past four years and while economic growth might be positive right now, real household disposable income still fell in the first three months of this year, so prospective buyers may be feeling overstretched already.

Bryden is a bit more optimistic, saying: "We expect the housing market to continue moving at a measured pace. Lower borrowing costs should provide some support for demand, though affordability constraints remain an important factor. The outlook for house prices will depend largely on inflation continuing to ease and household confidence gradually improving."

Cohabiting couples who are not married or in a civil partnership are set to receive new rights to finances under new rules proposed by the government.

The proposals could see unmarried partners allowed a portion of the proceeds from a house sale, a percentage of a pension, automatic inheritance rights, and more when a relationship ends.

The measures are part of a new framework by the government that aims to bring family law “into the modern age” as more couples cohabit without getting married.

Cohabiting couples who are unmarried have far fewer financial protections than married couples under current laws. This can lead to complications if a relationship ends.

The government says these difficulties disproportionately affect more vulnerable groups such as women, children, and victims of domestic abuse.

The framework for new financial rights is set to establish more concrete rules for how assets should be split when a separation takes place.

The consultation proposes that courts should have access to similar actions that are available in the case of a divorce, though options are set to be narrower to maintain the unique status of marriage in law.

David Lammy, deputy prime minister and justice secretary, said: “We’re launching this consultation to make sure our new family law builds a fair system that offers the most vulnerable protection in the event of a breakup, and at a time where the country is facing cost of living pressures.

“Whether you’ve been left bereaved by the sudden and unexpected death of a partner, or escaped horrific domestic abuse, our laws should work to protect you.”

The consultation launched on 5 June and will run for 10 weeks, closing on 14 August. The government will then use the findings to help inform future reforms, which will be made law “when parliamentary time allows”.

Separating couples could be entitled to a portion of a partner’s pension

The new framework will provide family courts with a number of new remedies they can use when an unmarried couple separates. These mirror the ones available in divorce cases.

Possible remedies include property adjustment orders which can transfer interest or ownership in a property from one party to another, potentially entitling a partner to partial ownership of a house.

Separating couples may be entitled to a percentage of their partner’s pension too under the new rules as courts will have the power to enforce pension sharing orders.

Courts could be granted the power to order one partner to pay a lump sum of money to the other partner.

The government also says in exceptional circumstances time-limited maintenance orders that require one party to provide regular payments to the other may be granted by a court.

Couples would need to cohabit for at least three years or have a child together for the rules to apply to them. Courts must also be satisfied the couple are in an “enduring family relationship”.

The consultation adds that while cohabitants may have access to the same measures as divorcing couples, this does not mean there would be equivalent financial outcomes to divorce.

Prenups and postnups set to become legally binding

Pre-nuptial agreements (prenups) and post-nuptial agreements (postnups) are becoming increasingly common in the UK.

Around 20% of couples sign prenups before marriage today, up from just 8% in the 1990s, according to research by the Marriage Foundation.

Prenups and postnups are written contracts made before a marriage or civil partnership that outline how assets will be split in the event of separation, divorce, or death.

In the UK, these agreements are not currently automatically enforceable by courts in England and Wales. Instead courts are simply told they should consider them unless doing so would be unfair, so long as the agreements were entered into freely and with full understanding.

This means that there is a degree of uncertainty around when the agreements made in prenups and postnups apply and when they do not.

However, as part of this new set of reforms, prenups and postnups are set to become enforceable contracts that “are not subject to substantive scrutiny by the court” as part of the new framework proposed by the government, eliminating much of this uncertainty.

This would allow couples to make legally binding agreements about financial arrangements in the event of divorce, though the consultation adds that safeguards would still need to be met.

Cohabiting couples set to get automatic right to inherit

The new framework is also set to extend new rights to couples when a partner dies without a will.

Under the current rules, when a couple have been living together for years but have remained unmarried there is no automatic right for the surviving partner to inherit a portion of the other’s assets if they die without leaving a will.

However, if the proposed laws come in, qualifying couples will receive an automatic right to inherit parts of their partner’s estate with similar rights as spouses or civil partners even if they are unmarried and have not left a will.

Investment trusts are often a sound investment but picking one that stands out from the crowd can really boost your returns.

So if you’re trying to decide where to invest for the second half of the year it could pay to see which trusts and sectors have outperformed the rest over the last six months.

The top funds and stocks for DIY investors have reflected a slant towards technology so far this year. Investors who followed that trend were rewarded, as technology-focused investment trusts delivered greater returns than any other sector.

According to the Association of Investment Companies (AIC), an industry body representing the UK’s investment trusts, the average investment trust performed better than the UK stock market’s flagship large cap index, returning 9.4% during the first half of the year compared to the FTSE 100’s 5.7%.

Some investment trust sectors generated average returns well above this level.

The top-performing investment trust sectors of H1 2026

Tech was the top-performing investment trust sector, returning over 50% in the first six months of the year.

“The historic boom in AI spending continued to drive returns in the first half of 2026, most obviously in the technology sector,” said Annabel Brodie-Smith, communications director at the AIC.

^{Source: theaic.co.uk / Morningstar. Share price total return in % to 30/06/26.}

Tech and AI might be more heavily represented in the top-performing investment trust sectors than is initially apparent: the theme is also having a significant impact “in Asia and emerging markets where some of the world’s largest AI hardware and microchip manufacturers are based”, said Brodie-Smith.

It has also been a good six months for global small caps, with the sector returning 23.7% on average to make it the fifth-best-performing investment trust sector. The average Japan-focused investment trust, meanwhile, returned 18.2%.

Which investment trusts were the top performers in H1 2026?

While technology was the top-performing investment trust sector overall, the top-performing individual investment trust came from the commodities sector.

Baker Steel Resources (LON:BSRT) returned over 65% in the first six months of the year. The trust is a diversified commodities investment trust; it holds producers of precious metals like gold and silver, but as of 31 March its portfolio has the largest weighting towards tungsten producers – making up 23% of assets.

^{Source: theaic.co.uk / Morningstar. Share price total return in % to 30/06/26.}

Technology is unsurprisingly a recurring sector in the rest of the 10 top-performing investment trusts list. Three of the trusts – Polar Capital (LON:PCT), Manchester & London (LON:MNL) and Allianz Technology (LON:ATT) – are all designated to the technology and innovation sector by the AIC, while Seraphim Space (LON:SSIT) and Schiehallion Fund (LON:MNTN) have significant overlap with technology as a theme.

Asian and emerging market trusts like Pacific Horizon (LON:PHI) also featured amid the AI boom. Pacific Horizon’s top two holdings as of 31 May were chipmakers Samsung and Taiwan Semiconductor.

“The strong performance is extremely welcome, but this is only a snapshot. It is important to remember that investing is a long-term commitment and that any sector or trust should form part of a broader, diversified portfolio,” said Brodie-Smith.

Baltimore-based Constellation Energy, a $90 billion company, generates electricity on a vast scale. And AI's voracious appetite means that electricity is now becoming a very valuable commodity, and the companies that can generate it reliably, cleanly and at scale will see a lot more attention than they're currently getting.

Investors have re-priced entire industries, assuming AI will transform the global economy. Electricity gets less attention, yet the chips, AI models and data centres are all useless without power. Vast data centres consume enormous quantities of power to train and run increasingly powerful models. Electric vehicles, battery factories, semiconductor plants, air-conditioning systems, industrial re-shoring and electrification more generally are all pulling in the same direction.

Tap into the great electrification with Constellation Energy

Constellation Energy (Nasdaq: CEG) owns the largest fleet of nuclear reactors in the US and has more nuclear power stations than anyone else at a time when hyperscalers are searching for reliable and cost-efficient power. Investors increasingly view Constellation less as a utility and more as the owner of scarce infrastructure – an essential asset – which explains its appeal as a long-term growth stock.

Constellation Energy currently generates about 10% of US clean energy. It produces enough electricity to power about 27 million US homes. It is the largest nuclear-energy company in the country and its power stations sit alongside a fleet of gas, hydro, wind, solar, geothermal and oil-fired assets. These produce 55 gigawatts (GW) of capacity.

To put that into perspective, the UK's recent winter peak demand for electricity was typically around 60GW, according to the National Energy System Operator. Constellation has 2.5 million customer accounts across the US and counts 80 of the country's 100 biggest firms by revenue among them.

Results in May showed first-quarter sales up 64% from $6.8 billion to $11.1 billion year-on-year. While impressive, roughly $2 billion-$3 billion of that reflected the acquisition of Calpine, a largely gas and geothermal power generator. Constellation Energy generated roughly $25 billion of revenue over 2025 as a whole. Earnings per share were $2.74 in the quarter, up 28% over the year and beating analysts' estimates by 14 cents.

The firm's nuclear fleet achieved an excellent 92.3% capacity factor, meaning its reactors were producing electricity at close to their maximum potential for almost the entire period. Management isn't seeing any slowdown in demand from the hyperscalers, with projected spending levels continuing to rise to reflect the growing need for computer processing.

Management has reaffirmed its expectation of 2026 earnings per share of around $11, up from $9.39 and $8.67 in 2025 and 2024 respectively. It's targeting 20%-plus annual earnings per share through to 2029 led by higher prices and rising demand, including improved long-term contracts.

Analysts have $13.50 pencilled in for 2027. Their 12-month share-price target is $362, about a third higher than now. Of course, in a world hungry for electricity, existing generation capacity may prove considerably more valuable than investors currently assume.

Don't chase the chips

The curious thing is that investors can currently buy a company expected to grow earnings by more than 20% annually at a valuation broadly in line with the wider market. Usually, investors are asked to pay a substantial premium for that combination of growth and strategic importance. The market's comfortable paying premium valuations for businesses that consume computing power. But it's a lot less interested in businesses that sell the vast amounts of electricity that makes such computing possible now and in the future. Look beyond that “utility” label and there is an opportunity to be had.

The immediate objection is that electricity is hardly scarce. If demand goes up, the power generators can build more capacity. But new power stations need planning permission, endless environmental reviews, financing, engineering expertise, political support and years of construction. And then transmission networks need upgrading.

This is where Constellation Energy's nuclear fleet becomes particularly interesting. Investors spend a great deal of time discussing technological moats. Yet there may be few barriers to entry that are more formidable than a collection of fully operating nuclear reactors. The market's growing interest in Constellation Energy reflects a simple reality: it already owns large-scale electricity infrastructure that is built, connected and delivering cleanly at scale. Building more is possible, but doing so quickly is another matter.

Nobody can yet say with certainty which company will dominate AI. What already seems clear, however, is that the modern economy wants far more electricity. Investors have spent the first phase of the AI boom chasing the chips. The second phase may belong to those pumping the power. Investors may find it easier to back the latter than gamble on the eventual winners of the AI race.

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Dr Douglas Williams is a veteran senior executive and board member for several biotech companies. During his time at Biogen, ZymoGenetics, Amgen Immunex and Seattle Genetics, he was involved in the development of several multibillion-dollar treatments, including Enbrel, Tecfidera and Spinraza.

Matthew Partridge: The time and cost of clinical trials has been seen as one of the big stumbling blocks to the emergence of new drugs. Do you see any developments that could help speed up the process?

Douglas Williams: Anything you can do to speed up the process is beneficial – after all, time is money. I think the real benefits will come as we become more efficient at targeting better-defined populations of patients [those who meet highly specific and uniform criteria, thus making it easier to gauge the exact effect of drugs]. In a field with a high rate of failure, improving the chances of success by even a small percentage can have a huge impact on the bottom line.

Matthew Partridge: Have the recent changes at the US Food and Drug Administration (FDA), the regulator of federal health, helped or hindered the clinical-trial process?

Douglas Williams: It's all a bit chaotic at present. You're seeing reversals of long-standing policy with political interference in what should be scientifically driven decisions. The “willy-nilly” nature of the Department of Government Efficiency's (DOGE) cuts has also led to a brain drain at the FDA itself, with some of the most experienced staff leaving.

Matthew Partridge: The FDA is seen as a gold standard when it comes to getting drugs approved first. Could there come a day when drug companies start looking to regulators in Europe or elsewhere?

Douglas Williams: This is already happening at the front end of the clinical-trial process, where Australia has become a key destination for early phase-one studies [the first of three stages of clinical trials, when scientists test the safety of the drug]. The regulatory process there is relatively quick and streamlined, making it a cost-effective place to run studies. And Australia's consolidated healthcare system makes the process of finding patients and enrolling them in studies more efficient.

Similarly, I've been working with Chinese companies and the system's low cost of capital, overall efficiency and rapid trial process are remarkable.

Matthew Partridge: The Trump administration has been threatening tariffs on drugs. Do you see geopolitical issues as a major risk for the drug and biotechnology sectors?

Douglas Williams: I do think there is logic in wanting to onshore some of the manufacturing for crucial drugs. There has been this enormous migration offshore from the US on the manufacturing side. So to try to bring some of that back, certainly for vital components of key drugs, makes a lot of sense. But there are surely better ways to achieve this than tariffs, which are a blunt instrument.

Matthew Partridge: Do you think America's dominance of the biotech and drug sectors is at risk?

Douglas Williams: I think that it's very much at risk for a variety of reasons. There definitely need to be some major changes to the FDA to bring the regulatory regime closer to what's happening in China and Australia. Firms are moving to the latter for early-stage studies, although people will still want to enrol patients in later-stage trials in the US and Europe.

The other thing that's happening in the US that I worry about from a longer-term perspective is that the reduction in the National Institutes of Health's funding for basic science grants is chasing away a whole generation of PhD students and postdoctoral candidates. This is already starting to create a hole in the pipeline for talent, and the longer this goes on, even if it's just for the four years of the current administration, the longer it will take to rebuild.

The engine driving the innovation that creates new companies in the sector and allows for new intellectual property to be created and new breakthroughs to take place is being eroded.

Matthew Partridge: What should the UK do to make itself more friendly to biotech and pharma companies?

Douglas Williams: The UK can streamline the process of starting studies and enrolling patients quickly and easily through the NHS, and raising patients' awareness of the trials on offer. More specifically, it could learn a lot from what the Chinese have done around streamlining the rules governing which particular regulatory bodies you need to secure approval from to begin a trial.

Matthew Partridge: Turning to the wider sector, GLP-1 drugs are changing the way we deal with weight-loss, diabetes and perhaps other conditions as well. Do you think the firms that pioneered GLP-1s are going to be able to stay ahead of the competition, or will it be like the computer industry, where firms such as IBM were unable to maintain their control of the industry?

Douglas Williams: The biotech industry is based on the expectation that there will be a rotation of dominance, as patents only last a certain amount of time before rivals are allowed to produce generic versions of a drug, causing prices and profits to collapse. But until that happens, the first-movers in this area, such as Novo Nordisk and Eli Lily, will dominate it. They've also pursued new approaches for delivering the drug – shifting from injectables to oral tablets, for instance. So they're creating scope for multiple waves of innovation, which could extend their dominance.

However, biotech is ultimately all about building a better mousetrap: there are other young companies coming in that are attempting new methods that don't come with the side effects, such as muscle loss, that are associated with the GLP-1s, for instance.

Matthew Partridge: Are there any other big leaps forward that could take place in the next five years or so?

Douglas Williams: I find the work around the role of sleep in dementia and brain conditions very interesting, and the idea that deep sleep can help combat those conditions is certainly an elegant theory. Neurology, in general, has become much hotter from an investment perspective. I'm involved with several companies in the neuropsychiatry sector, including being chair of Draig Therapeutics, a Cardiff-based company developing treatments for major depressive disorder.

The analogy people have used is that neurology is going to become the next oncology, where the precision approach to well-defined populations of patients is going to dominate drug development. So, you'll essentially be treating slices of the populations that have a particular broad definition of a disease.

Matthew Partridge: What about advances in medical imaging, such as MRIs and CT scans?

Douglas Williams: During my career, I was involved in the early development of some of the first approved drugs in the amyloid reduction arena and what really turned the tide was being able to understand what these drugs were doing inside the brain; it's hard to do without some way of looking at the target. I think faster and more effective scanning technology has already fed back into neurology-drug development.

Matthew Partridge: Do you think in five years' time the range of treatments for neurological conditions, things like dementia, could be radically different?

Douglas Williams: Yes, there's so much activity in this area, a reflection of the problems posed by ageing populations.

Matthew Partridge: How is AI going to change drug development?

Douglas Williams: It depends on your definition of drug development. Taking the all-encompassing view, where a fully integrated company does the discovery, drug development, manufacturing and sales and marketing, it will change the whole process. One example is in manufacturing. Already, we can take real-time data from the bioreactors that are used to manufacture proteins, and AI can use this to tweak the process to make sure that you maximise productivity. There's an increasing amount of work now on using AI in the clinical-trial process, both in terms of designing the trials and dealing with back-office operations.

I've been in this field for 40 years, and it's remarkable what some of the young companies I'm involved in are doing with AI. I'm optimistic that in the next ten years, we'll start to see the impact of AI on designing new molecules and finding new drugs too.

Matthew Partridge: Do you think that there will still be a need for actual scientists, rather than AI alone, to be involved?

Douglas Williams: Without question. If you ask ChatGPT or Claude a question, how the question is worded matters a lot, and that's where the role of the scientist really shows itself – the better the question, the better the answer. So, there will always be a place for the human element in terms of driving science.

Matthew Partridge: Have investors in the sector learnt to tune out political noise and focus on the long-term growth story?

Douglas Williams: I think so. Stock market valuations have risen while mergers and acquisitions have proliferated, which is always healthy because it gives investors capital to put back to work. So a virtuous circle has developed. There's never been a more amazing time in terms of the tools that we now have for drug development, while our understanding of biology continues to expand.

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UK small and mid-cap stocks have been in the shadow of their larger peers, but are beginning to reassert themselves. Since the start of April, the FTSE 250 has outperformed the FTSE 100 by around 6% – a notable development given ongoing macroeconomic and political uncertainty. Investors are increasingly recognising the opportunity, particularly as valuations for UK small and mid-cap stocks remain well below historical levels. At the end of the first quarter, the FTSE 250 was around 21% below its long-term average compared with a more modest 4% discount for the FTSE 100.

The FTSE 100 is often favoured for its global diversification and income profile, but small and mid-cap stocks offer many of the same characteristics. More than half of revenues are generated overseas and dividend yields of around 3% are broadly competitive with large caps. Some domestically focused UK businesses face headwinds from softer demand, cost inflation and the wider economic backdrop, but others continue to deliver strong growth and resilient earnings. The breadth of international exposure is also important, spanning sectors from mining to US infrastructure, defence and global industrial production – providing access to a wide range of end markets.

Three UK small and mid-cap stocks to invest in

AJ Bell (LSE: AJB) is well positioned within UK asset management, benefiting from long-term structural growth, supported by favourable demographics and a gradual decline in state provision for retirement. The platform market has expanded at an annual rate of around 11% since 2018 and AJ Bell continues to gain market share, with roughly two-thirds of the addressable market still yet to move onto platforms. Its diversified model spans both adviser and direct-to-consumer channels, supported by strong client retention. Around 81% of revenues are recurring, complemented by excellent Trustpilot ratings.

Ongoing investment in the brand, technology and pricing is driving growth in customer numbers and earnings, underpinned by a strong record of execution from the management team.

Helios Towers (LSE: HTWS), an Africa-focused telecoms tower operator, is supported by sustained investment from mobile-network operators looking to expand coverage and improve the quality of service. Key growth drivers include increasing mobile penetration, rising data usage and the rollout of 4G and 5G networks. Mobile connectivity plays a central role in everyday life across the region, reflecting its importance not just for communication but also as critical payments infrastructure. Helios benefits from a scalable, largely contracted revenue model that provides good earnings visibility. The company is also building long-duration infrastructure assets, designed to generate cash flow and returns while supporting the continued rollout of its tower network.

Paragon Banking (LSE: PAG) focuses on specialist lending across the buy-to-let and commercial sectors. Sentiment remains cautious, but the stock trades on seven times earnings and a yield of 6% and there is an ongoing £100 million share buyback programme. It continues to deliver attractive returns of around 17% while maintaining strong credit quality, having successfully lent through multiple cycles. Its focus on professional landlords – typically less affected by government intervention – alongside a well-structured funding base, supports the case to buy for long-term investors.

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Asset finance is seeing a huge surge in demand, according to new data from the Finance & Leasing Association, while bank lending to small and medium-sized enterprises (SMEs) remains more or less flat

Asset finance advances to SMEs grew 8% year-on-year in April, the FLA's figures reveal, with lending across the first four months of the year up 6% compared with the same period of 2025. Firms across the UK took on almost £11 billion worth of asset finance between January and April.

The figures suggest that SMEs may be more optimistic about their short- to medium-term prospects than recent surveys of business sentiment have suggested. Asset finance is typically used to fund the cost of investment in business assets – plant and machinery, IT equipment or transport, for example – often as firms seek to expand or diversify their activities. The business takes out a loan to fund the purchase, with the asset then used as collateral against the lending; repayments are made over the lifetime of the asset.

Certainly, this type of finance has notable advantages over other forms of credit. It enables businesses to make major asset purchases without having to find significant amounts of capital on their balance sheets or to fund the investment from trading. The firm can put the asset to work at once, but spread the cost of financing it – typically over terms ranging from one to seven years. The impact on cash flow should therefore be manageable and any pots of capital can be deployed elsewhere in the business.

Often, the finance company – which may be a subsidiary of the business selling the asset – will also take on responsibility for maintaining the asset. There may be a regular servicing contract or access to specialist support if a repair is required. The finance provider may even promise to provide a replacement if the asset develops a fault that can't be quickly fixed.

The downsides of asset finance

Another plus point is that businesses don't have to find additional collateral to set against the finance. The lender has recourse to the asset itself if the business defaults on repayments, but no other security is needed. For early-stage businesses and those with relatively few tangible assets, this can be particularly useful.

Secured credit of this type will also usually be cheaper than, say, taking out a business loan from the bank. Since the lender has a claim on a fixed asset, such loans represent less of a risk and can be priced accordingly.

One potential downside is that the business may not enjoy full ownership of the asset until the end of the term. There may even be usage restrictions – a mileage cap on a vehicle, for example. And firms will also need to be prepared to commit to a relatively long-term agreement, even though they may not have a good idea of what the trading environment will look like in a couple of years' time.

Overall, however, asset finance can work very well for SMEs – in asset-intensive industries, but in service sectors too, where firms need to invest in technology or logistics, say. That said, the terms and conditions of asset finance vary significantly and are often bespoke. Take professional advice from a finance broker with expertise in this area before committing your business to a particular finance agreement.

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In a major speech on Monday, Andy Burnham, our prime-minister-in-waiting, at last deigned to give us some clues about his plans for the country, including a massive transfer of power to the cities and regions. Apparently, the key to unlocking growth is to devolve power to city mayors and local councils and a proposed “No. 10 in the North”. Burnham promises a programme of council-house building, to bring the utilities under tighter public control and to restore the high street to its former glories.

There was a lot of waffle and not much in the way of concrete proposals, but he was at least trying to seriously address some of the structural flaws in the British economy.

And he is not just trying to chuck money at the issue, as most of his predecessors have done, even if the main reason is that the money has unfortunately run out. The problem, however, is that the country does not actually need more devolution. What it needs is more wealth creation.

Andy Burnham is repeating a failed experiment

There are three major problems with a focus on the regions. First, Britain has already had a 25-year experiment in devolution, with both Scotland and Wales having their own governments and assemblies and, in the case of Scotland, even limited powers over taxation. And the results? Unfortunately, dismal.

Scotland's growth has started to lag the rest of the UK, while spending has grown so fast that were it an independent country, its deficit would be running at an alarming 9% of GDP. As for devolved tax powers, it turns out they are only ever used to make taxes go up, not down.

As for Wales, it has been even worse, with close on 20% of the working-age population now living on benefits, traditional industries wiped out, and with living standards that are now among the lowest in Europe. If devolving power was so great for the local economy, there is not much sign of it so far.

Next, devolution will just create yet more government and more spending. Devolution in Scotland and Wales has mainly created just an extra layer of politicians, all of whom have to justify their existence by spending more money and passing yet more regulations. That is how Wales ended up with a 20mph speed limit in urban areas right across the principality, even if it slows down commerce by adding to the cost of every delivery. Or how Scotland ended up with rent controls even though they never work. It seems extraordinary that anyone could look at Britain in 2026 and decide that what it really needed was yet more government and higher levels of spending. Yet that is Andy Burnham’s only prescription.

Andy Burnham is micro-managing decline

What the British economy needs is not more power for the regions, but more power for businesses and consumers. With all his talk of “ending 40 years of neoliberalism”, it seems to have escaped Andy Burnham's notice that the government has never been more powerful than it is now. It accounts for 45% of GDP directly and micro-manages trade and business in a way that it never used to.

Take the living wage. According to a recent report from the Centre for Cities, in 42 of Britain's 63 largest cities the living wage is now above two-thirds of median earnings. In effect, what everyone earns is now decided by the government.

Or take energy prices. What you pay as a consumer is determined by the price cap from Ofgem, and the amount factories pay is decided by a complex series of green levies, and the wholesale price for wind and solar is set by a range of long-term, state-controlled agreements.

In Scotland, the government is planning price caps for basic foods and it probably won't be long before that is introduced nationwide (the chancellor has already publicly criticised the supermarkets for raising prices too quickly). The number of prices that are set in a free negotiation between the buyer and seller, which is the way it is meant to work, is getting smaller all the time.

It is hard to see how yet more state intervention is going to help anyone. If this is the best that Andy Burnham has to offer, it is going to be a long, hard slog until the next election.

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Healthcare is particularly well placed to benefit from artificial intelligence (AI), which is revolutionising data-heavy industries. If there's one thing AI can do better than anything else, it is to sort, analyse and draw patterns from data. And if there is one sector with more data than anywhere else, it's healthcare.

AI tools and increased computing power give us the ability to interpret CT scans in milliseconds; comb through drug-trial data in minutes rather than months; and discover new treatments by analysing hundreds of historical studies. This is unlocking results that researchers could only have dreamed of five years ago.

Moreover, demand for healthcare is unlikely to be hurt by AI. Humans won't stop getting ill as tech gets better. They may even require more healthcare as AI unveils more solutions to previously incurable diseases and extends lifespans.

Yet the market does not seem to care about this healthcare revolution. Investors are going all-in on the market's leading AI companies, but they are ignoring this thematic play.

AI can help healthcare profit margins recover

The valuation of the global healthcare sector is trading broadly in line with its own long-term history, according to broker Panmure Liberum. However, when adjusted for normalised profit margins, it's trading at levels not seen since the 2009-2012 period. That is because margins have fallen from 10% to 6%-7% over the past five years as costs have risen – a trend that AI should help to reverse.

Healthcare sector is trading at a discount

The overall healthcare sector is trading at a discount of roughly 50% to the MSCI All Countries World Index (ACWI) on a normalised earnings basis. That said, in the pharma sub-sector, the opposite is true. It looks cheap on a price-to-earnings basis, but verges on the expensive when margins are adjusted back to historical levels (14% vs 18% today).

Still, both sectors deserve a premium valuation. Over the past ten years, the MSCI ACWI Healthcare and MSCI ACWI Pharmaceuticals sectors have booked revenue growth of 7.6% and 5.9% per annum, respectively, compared with 2.5% for the wider MSCI ACWI. Earnings have grown at 5.9% and 7.1% respectively, against 4.5% for the ACWI.

The best ways to invest in healthcare

One way to play this theme is Worldwide Healthcare Trust (LSE: WWH), managed by specialist investment advisor OrbiMed (over $20 billion in assets under management with a focus on healthcare). The trust has been hurt by its overweight exposure to China and biotech over the past five years, but this paid off in 2025 when it outperformed its peer group by seven percentage points. Over the long term, it has beaten the MSCI World Health Care by 2.3% per year since 2010. The shares are at a 7% discount to net asset value (NAV).

Polar Capital Global Healthcare (LSE: PCGH) is more exposed to the undervalued healthcare sector than to biotech. The trust traded at a discount of about 12% four years ago, but is now trading at a premium and has been issuing shares this year. It has outperformed its benchmark by 39.2% over the past five years. After a restructuring last year, it has leaned into low valuations by adding gearing of £40 million (9.7% of NAV).

RTW Biotech Opportunities (LSE: RTW), the Biotech Growth Trust (LSE: BIOG) and International Biotechnology (LSE: IBT) all sit at the more speculative side of biotech. While they are trading at near double-digit discounts, their positioning means investors should be more cautious.

BioPharma Credit (LSE: BPCR), managed by specialist investor Pharmakon, takes a different approach by making loans secured against companies' drugs and products. It has a great record – just one loan since 2009 hasn't performed as expected. The trust is trading at a 5% discount to NAV and yields 10.9%.

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Some analysts have proclaimed that AI is more important and will be more transformative for human development than the creation of the railways. With the world's largest technology companies now spending more than $1 trillion a year expanding their presence in the market, there's no doubt this theme will dominate for the foreseeable future.

However, as investors focus on the so-called hyperscalers – Alphabet, Microsoft and Amazon – which are building their AI infrastructure at an alarming rate, as well as chip manufacturers such as Nvidia and Micron, which are supplying the industry, not much attention is being directed to the infrastructure that will power this revolution. This is where bottlenecks are now starting to throttle growth.

The energy grid needs an upgrade to power AI

The critical one is the power grid. In the US, for example, the grid is around 50 years old and was not designed to handle the current level of rapid growth in demand. The graphics processing units, or GPUs, that underpin AI data centres today are vastly more energy-intensive than their previous counterparts.

Research compiled by Goldman Sachs and JPMorgan estimates that by 2027, AI server racks will require 50 times more power than the equivalents that formed the backbone of cloud infrastructure five years ago.

The computing power of any facility consumes only around 60% of the total energy requirement. The rest is taken up by cooling systems and other infrastructure.

As the hyperscalers expand, they are learning that Silicon Valley moves much faster than the rest of the world. GPUs have become 50 times more energy-intensive over the past five years, but global energy output has risen by just 1%-3% per year. In the real world, it can take five to seven years just to secure permits and sign initial contracts to build the power infrastructure. This has started to change in the past two years, but there's still a long way to go. According to the International Energy Agency (IEA), global electricity consumption by data centres will double to 945 terawatt-hours (TWh) by 2030, representing roughly 3% of global demand for electricity. That's roughly the same as adding 34 Hinkley Point C-scale nuclear-power plants to the global grid. Between 2025 and 2030, data-centre electricity consumption is expected to grow by 15% per year, four times the growth rate of total electricity consumption across all other sectors.

Electricity consumption from accelerated AI data centres, the most intensive units that train AI models, will rise by 30% annually. In the worst-case scenario, the IEA estimates that global data-centre demand for electricity could exceed 1,700 TWh by 2035, nearly 5% of global demand for electricity. If the industry becomes more efficient at utilising power, that figure could fall to 970 TWh. If the electricity industry fails to rise to the challenge, demand could be limited to 700 TWh by 2030, nearly 25% below the base-case scenario.

This bottleneck is most apparent in the US and China, where the most time and energy are being spent on AI development. China and the US will account for nearly 80% of global data-centre electricity consumption growth to 2030, according to the IEA. The US, in particular, is facing a projected power access shortfall ranging from 10.4 gigawatts (GW) up to 49GW by 2028, even though projections from the US Energy Information Administration (EIA) show the grid adding 86GW of new utility-scale electricity-generation capacity in 2026, the largest single-year rise since 2002.

Rise of the ‘Bring Your Own Power’ model for data centres

To get around some of these issues, data-centre providers are increasingly seeking to innovate. The “Bring Your Own Power” (B-Y-O-P) movement, for example, is bypassing grid-connection bottlenecks by building on-site microgrids, utilising utility-scale batteries, solar panels, fuel cells and wind and gas turbines. Elsewhere, data-centre operators and hyperscalers are working with utility providers to purchase and install natural-gas power stations.

Data-centre providers are also shifting their attention to gas-rich zones such as the Permian Basin in Texas and New Mexico, where natural-gas pipeline capacity is severely constrained (gas prices recently dropped below zero despite the war in the Middle East). Companies are building off-grid data centres directly at these extraction sites, monetising otherwise stranded gas that would have zero economic value.

For example, Microsoft (Nasdaq: MSFT) and Chevron (NYSE: CVX) are partnering to build a $7bn, 2.5GW off-grid natural-gas power complex in Pecos, Texas, specifically to supply Microsoft's AI data centres under a 20-year agreement. Williams (NYSE: WMB), a pipeline company transporting a third of the natural gas moving across the US, is developing “Neo”, a $2.3 billion project utilising gas turbines paired with battery energy storage systems (BESS) for a major hyperscaler. This is the company's fifth BYOP agreement.

Some providers are also turning to AI to help mitigate AI's impact on power grids. A recent report from the World Economic Forum notes that “power-flexible” AI factories can dynamically modulate their electricity use, throttling energy-intensive tasks such as model training during periods of stress for the grid and routing more mundane tasks (such as answering simple questions on ChatGPT) to other locations. This flexibility enables data centres to capitalise on the volatile nature of renewable-energy generation.

Energy prices take the strain

As the utility market has struggled to adapt to the surge in demand for electricity, prices have responded. Wholesale electricity prices have jumped across all global markets, and the impact is particularly acute in the US. In some eastern US states, prices have risen 76%. According to the Bureau of Labour Statistics, across the country, electricity prices are rising nearly 61% faster than general inflation. The entire supply chain is feeling the pain. Lead times for the production and delivery of grid equipment have skyrocketed. Standard electricity transformers now take 128 weeks to deliver, compared with just 16 weeks in 2019. In some cases, specialist transformers are being delayed for nearly three years.

The production of highly efficient combined-cycle gas turbines can take up to four years, more than double the length recorded in 2022, and across the entire supply chain analysts put the average price rise at 30% across all grid equipment. There's also been a dramatic shortfall in the number of construction engineers and electricians, with the figure put at nearly 300,000 construction engineers and electricians in the US over the next decade. There are no quick solutions to any of these problems. While producers try to scale up output to meet rising demand, it looks as if they will continue to hold all the cards for the next five years at least.

There are three ways for investors to play this trend. There are the companies that generate power, those that make equipment for power stations, such as gas turbines, and those that manufacture cables and equipment to transmit electricity from A to B.

Tap into the AI energy boom with power players

One of the hottest plays is GE Vernova (NYSE: GEV). Created as part of General Electric's break-up, GE Vernova specialises in designing, manufacturing and maintaining equipment for the power-generation industry. Its technology provides roughly 25% of the world's electricity and the group has an order backlog of $163 billion, or 3.5 times sales. Its order backlog for gas turbines sits at around 100GW – around 2.5 times the UK's total daily electricity consumption. UBS has modelled 14% annual organic sales growth for the group through 2028 based on its current order backlog, with a 22.7% Ebitda margin by 2028, up from 8.4% in 2025.

Unlike the GPUs that power data centres, which have an estimated average life of around five to eight years, gas turbines can last up to three decades, locking in a multi-decade service contract for Vernova. The firms also offers kit for firms running older units (20 years and upwards) to help improve reliability and efficiency. Despite this growth and its key market position, there's a lot priced into the stock at a mid-30s price-earnings (p/e) ratio, but UBS argues that the valuation is worth it given the revenues and potential for margin growth.

Rolls-Royce (LSE: RR), which came close to a government bailout in the pandemic, is now one of the world's most sought-after power engineers. For the year to the end of 2025, the company reported a 12% jump in underlying revenue to £20 billion and underlying operating profit rose by 41% to £3,462 million, equating to a margin of 17.3%. Profit growth was driven primarily by the power-systems arm (25% of revenue), where the divisional margin expanded by 430 basis points to 17.4%. The firm put this down to “growth driven by data centres” and it's hoping its “power-dense” next-generation diesel and gas engines will continue to drive growth. Its technology is in demand as data-centre providers seek alternatives to bypass ever increasing queues for power-grid connections. The FTSE 100 company recently noted that orders across gas and diesel engines in the first quarter was around 50% higher than last year and March was a record month. Power Systems' order backlog was £7.3 billion at 31 March.

But Power Systems isn't just about data centres. The business also produces battery energy-storage systems and engines for Leopard tanks. What's more, last year Rolls-Royce conducted the world's first successful test of a high-speed marine engine running on pure methanol. There's also the company's nuclear business. A long-time supplier of nuclear reactors to the Royal Navy, Rolls-Royce has begun moving into the civil market with its small modular reactors (SMRs). In June last year, Rolls-Royce's SMR was chosen as the sole provider in the Great British Energy – Nuclear competition to build three SMR units in the UK.

Rolls-Royce SMR also received a strategic investment from CEZ Group, alongside a commitment for up to six units in the Czech Republic. In mid-June, the division was selected to deliver three SMRs on Sweden's west coast in partnership with Videberg Kraft. Based on current estimates, Rolls-Royce is trading at a forward p/e of 38.2, falling to 32.7 in 2027, according to average analysts' estimates. Those have ticked higher after the company's latest upbeat trading update and Berenberg has pencilled in a forecast of £8 billion of share buybacks over 2026-2028, split by £2.5 billion in 2026, £2.7 billion in 2027 and £2.8 billion in 2028, with scope for more cash returns if cash flow beats projections over the coming months.

A US peer of Rolls-Royce is BWX Technologies (NYSE: BWXT). Like its UK counterpart, BWX has the backstop of a US Navy contract in its back pocket to support its general operations – it has been the sole nuclear-fuel provider to the US Navy for more than 70 years. It's now seeking to grow in the civil market, where it provides specialised, complex, high-precision equipment used in nuclear reactors, including steam generators, reactor-pressure vessels and piping. It has an order backlog of $8.7 billion (around 2.2 years of revenue) bolstered by the recent $1.4 billion set of contracts through the US Naval Nuclear Propulsion Programme. However, at nearly 50 times forward earnings, there's a lot baked into the current share price.

How to invest in the undersea cable kings

The energy-transfer market is more concentrated than the other two potential investment segments. The renewable-energy transition has triggered an unprecedented global demand for ultra-high-voltage subsea cables to transport power from offshore wind and solar sites to urban centres, a market that did not exist 15 years ago. It's currently dominated by a European oligopoly consisting of Prysmian (Milan: PRY), Nexans (Paris: NEX), and NKT (Copenhagen: NKT). These companies emerged as the winners in what was an incredibly competitive market, with lots of smaller players that couldn't keep up with the capital-spending commitments required to manufacture vast undersea sea cables.

High-voltage direct-current (HVDC) cables can be thick, and they must be kept completely straight during manufacturing, which often requires companies to hang them inside skyscraper-high warehouses. The capital required to build this infrastructure runs into the billions. For example, the 500-kilometre Eastern Green Link 2 (EGL2) project in the UK, the single largest ever investment in electricity-transmission infrastructure in the country, has a price tag of £4.3 billion, with £2.7 billion of that for the cable itself.

The global high-voltage submarine cable market is expected to grow at a compound annual growth rate of 17.3% over the next decade. Production hit 7,000 kilometres in 2025, an all-time high, and the major players are rapidly ramping up production. Prysmian is drawing on its experience in this market to expand in the DC inside-building segment – essentially wiring up the power inside data centres. The company believes it will become a one-stop shop for data-centre construction contracts, building long-haul subsea connections and shore-based transmission infrastructure, and then for infrastructure throughout the building to power GPUs and air-conditioning units.

Management has estimated that overall global demand for DC power will expand at a compound annual growth rate of 33% over the next five years, with the bulk of this coming from AI-related data-centre growth. Analysts have pencilled in earnings growth of 25% for 2026, followed by 23% for 2027, with a net profit of €1.7 billion projected for 2027, up nearly ten times from 2020. Based on these projections, the shares are trading at a 2027 p/e of 24.9, which doesn't seem too demanding for a high-growth business operating in an oligopoly.

Prysmian is around three times the size of its smaller peers, both of which are using their growing profitability and cash flow to expand into newmarkets. Of the two, Paris-listed Nexans is the cheapest, trading at a 2028 p/e of around 13 based on management's growth targets. The group has laid out a road map to achieve an adjusted Ebitda of €1.2 billion by 2028 (up from about €750m) through growth in its three main businesses: PWR-Transmission, PWR-Grid and PWR-Connect. Sales are already locked in with a backlog of €7.9 billion by early 2026, enough to cover sales through to 2028.

Deals will also be a major part of the future growth plan. It recently added US-based Republic Wire to the stable to bulk out its US arm (about 15% of revenue). Republic reported sales of €52millionmn in its latest fiscal year and will be a key conduit for Nexans to enter the US data-centre market. Nexans plans to use Republic Wire's established channels to sell its own comprehensive offering of medium-voltage and grid technology into premium US end markets. The acquired business is currently finalising a significant expansion programme, which will increase its production capacity by about 30% by the end of 2026.

How to play coal

Another FTSE 100 company that's strategically well placed is National Grid (LSE: NG). Although still small compared with the US and Chinese markets, the UK data-centre market is the largest in Europe. National Grid believes demand for electricity in the UK will increase by 30% by 2035 to 290GW with a 90% increase in installed generation capacity to 370 TWh. To meet this demand, the company is investing £41 billion by 2031 to expand its regulated asset value by 60% to £60 billion. It is also going to invest £29 billion to expand its US business to a regulated asset value of £45 billion, with a focus on its key markets of New York and Massachusetts. The shares currently look cheap, selling at a forward p/e of 13.9.

One sector investors could also consider is coal. According to Global Energy Monitor, more than 2,200GW of coal-powered generation still operates worldwide, with another 710GW under development. China is scaling up its coal-output market to meet increased demand for energy and a total of 32 countries are proposing, or building, new coal plants to meet the growing need for power. At the beginning of June, Donald Trump announced plans to build two new coal plants in Alaska and West Virginia under the Defence Production Act, adding to the US coal fleet, which supplies 15% of the country's demand for power. Alliance Resource Partners (Nasdaq: ARLP), Peabody Energy Corp (NYSE: BTU) and Warrior Met Coal Inc (NYSE: HCC) are three left-of-field plays worth considering here.

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Why is air conditioning becoming a necessity?

Until recently, the UK scarcely needed to consider air conditioning; now it is a pressing economic and political issue. A sweaty, sleep-deprived country is wondering what has happened to the traditionally underwhelming British summer – the “three fine days and a thunderstorm” of blessed memory. For centuries, summer's lease hath, famously, had “all too short a date”.

This year, though, it's an all too long one – kicking off with a killer heatwave in May, and smashing temperature records before we even got to July. The Climate Change Committee warns that 92% of homes are at risk of overheating by 2050 because they are “built for a climate that no longer exists”. If you live in a sweltering flat in a city, or have a bedroom at the top of a loft-converted house, you'll already know that.

How has the heatwave affected Britain?

Tens of millions of people across southern England have been unable to sleep properly, or have had their working lives upended by the failures of public transport or the closure of overheating schools. Writ large, all that makes for a massive public-health and economic issue that we are only beginning to understand.

Extreme heat is especially hard to cope with for older adults and those already ill: the summer of 2022 caused 60,000 excess deaths across Europe (according to a 2023 paper in Nature), the vast majority among people aged over 65. The World Health Organisation puts the number even higher, at 175,000 a year. Extreme heat hits children even harder, says George Monbiot in The Guardian. They have higher metabolisms and lower sweating rates, and their thermal comfort levels are, on average, 1.9˚C-2.8˚C lower.

What a heatwave means for the UK economy

Researchers at insurance group Allianz have found that extreme heat is now a “structural economic risk” for Europe. Productivity losses intensify sharply above a critical 30˚C threshold – a three percentage point decrease in productivity for each degree of heat – and cooling costs rise sharply.

Under an entirely possible stress-test scenario – in which the five hottest years between 2014 and 2024 are repeated sequentially over the next five years – they project a hit to output of 5%-7% for the most exposed economies: $240 billion for France, $147 billion for Italy, $131 billion for Germany and $120 billion for Spain (the UK wasn't included in the study).

“The heatwave is not an exception, it is a direction,” said Katharina Utermohl, one of the co-authors. “Extreme heat costs all of us as workers, as businesses, as taxpayers, and there is a difference between countries that adapt and those that wait.”

Will air conditioning save us?

It will certainly be part of the response, along with other cooling measures. Air conditioning has emerged in recent weeks as the new hot topic in the online culture wars, with American blowhards bashing lily-livered Europeans for being too soft to fire up the air-con and cool themselves down.

The difference in take-up is indeed stark. In Europe, only around 19% of homes have air conditioning compared with 88% in the US. That's largely because Europe's housing stock is much older than in the US and its mitigations against heat – thick walls, small windows, shutters and so on – have developed over centuries.

Europe has also been cautious about widespread adoption of a technology, which, bluntly, can easily disfigure the built environment. But the reality is that the take-up of air-con in Europe is already rising due to the heating climate, with southern Europe being first to embrace it.

Is Europe warming up to air conditioning?

Penetration has doubled in Europe overall since 1990, but in hot countries it has risen much faster. More than half of Italian homes now have air conditioning, a doubling since 2013 – a trend that's true of the continent as a whole. In France, 28% of homes now have air-con, in Germany it's 6%, and in the UK 4%, a doubling in the past three years.

There's no reason to think that trend won't continue and accelerate, even without the promptings of US observers. Europe's climate is heating faster than any other continent (due to its proximity to the north pole). As that continues, it will seem ever more silly to argue that heating homes to a safe, liveable temperature is necessary, but that cooling them to the same level – saving lives and making life bearable – is somehow an extravagance that should be frowned upon.

Is air conditioning bad for the environment?

Environmentalists have long argued that it contributes to global heating by consuming energy and raising temperatures in urban areas. That is reflected in official policies. The government denies there's an “air-con ban”, but nor is it straightforward to install. Most homes don't need formal planning permission for air conditioning, which falls under “permitted development”. But that does not include flats – often more difficult to keep cool than houses – where planning permission is required, and is hard to get. The rules require developers to prioritise passive cooling and use air-con as a last resort.

What needs to change?

Policymakers need to catch up with changes to the climate and technology and let the market get on with meeting growing demand, says John Burn-Murdoch in the Financial Times.

The rising demand for air conditioning now aligns with the rapidly rising supply of solar energy, which will be most abundant when it is most needed to power cooling. Moreover, the potential for air-to-air heat pumps both to heat and cool buildings without burning gas means that the net impact on emissions could even be negative.

“Far from encouraging this, regulations in countries including the UK and France continue to disincentivise and even restrict these technologies.” That's not sustainable. There were once sound arguments against Europe adopting air-con en masse, but that's no longer the case.

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What exactly is an emerging market? You can debate all sorts of measures of economic development and levels of income as the cut-off point, but as far as the financial world is concerned, what matters most is whether the stock market is part of the MSCI Emerging Markets (EM) index or not.

The AI boom is starting to stretch this line of reasoning, as we have noted a few times in recent weeks. The performance of a handful of stocks that are integral to the semiconductor sector means the index is increasingly heavy in tech (now 43% of the total). It has almost 50% in two economies – Korea and Taiwan – that are clearly advanced, wealthy countries. Yet while AI has made this very obvious because of its impact on the index, the underlying point has been true for much longer. Korea and Taiwan are “emerging” under MSCI's market-access criteria, but they fully emerged in an economic sense a while ago.

Is China an emerging market?

You can go further. The third largest weight is China, at about 20%. China's GDP per capita in purchasing power parity (PPP) terms is still firmly in emerging market territory – it's about half of the UK's, for example – but this disguises enormous variation between the wealthier coastal provinces and those further inland. It is also by far the world's second-largest economy in nominal terms. To what extent can we view it as a traditional emerging market?

Note, too, that all these three countries – almost 70% of the index – are in East Asia. At this point, is the MSCI EM vastly different to the little-quoted MSCI AC Asia, which adds nearby Japan into the mix? The chart above suggests not.

A “true” emerging market ETF

The practical investor may be happy enough. After all, if returns are good, why split hairs about definitions? Yet it's important to understand where returns are coming from, how an end to the AI boom might change this, and what the options are if you want more traditional emerging market exposure.

I have previously mentioned Barings EMEA Opportunities (LSE: BEMO) and BlackRock Frontiers (LSE: BRFI). Both are interesting, but neither is broad (BEMO is Eastern Europe, Middle East and Africa, while BRFI excludes the eight largest emerging markets).

Instead, we could look at a relatively new exchange traded fund (ETF): WisdomTree True Emerging Markets (LSE: WEMP). This drops China, Korea and Taiwan, with India and Brazil as the largest positions. There is very little tech; you get a classic emerging-markets portfolio with more than 35% in financials.

To my mind, this goes too far for most investors as a standalone holding. It might be preferable to just cap exposure to the big three. Still, owning this alongside a conventional EM fund would be one way to get more balance in a portfolio.

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The Magnificent 7 stocks (Mag 7) are starting to look mediocre. The group, which is made up of Nvidia, Alphabet, Apple, Microsoft, Amazon, Tesla and Meta, has been in the vanguard of the AI boom. Between the beginning of 2023 and the start of this year, the seven US technology mega-caps added $15 trillion in value between them and grew to account for a third of the entire S&P 500 by market capitalisation, say Emily Herbert and Tim Bradshaw in the Financial Times. Yet over the past month, they have collectively lost $2.2 trillion in value. Many of these firms are “hyperscalers”, with plans to lavish about $1 trillion on AI data centres. Investors are increasingly sceptical about whether such huge sums will ever generate a meaningful return.

Microsoft's and Meta's shares are in a “bear market”, having fallen more than a fifth from their peak, says David Goldman on CNN. The others are down at least 10%. There are growing signs of nervousness about technology valuations. The Nasdaq index fell every day last week. Korea's Kospi, which plays host to some major AI plays, has been on a wild ride this year, including another 10% plunge on 23 June.

Magnificent 7 stocks decline, but semiconductors soar

Yet while the Magnificent 7 stocks are falling out of favour, a boom in the firms selling computer chips to them at eye-watering prices has “more than made up the difference”. Micron's shares have gained 265% this year, Samsung is up 144%, and Intel has surged 254%. The semiconductor industry alone now accounts for 19% of the S&P 500's market value. The iShares Semiconductor exchange-traded fund (ETF) rocketed a staggering 110% in the first half of the year, says Ines Ferre for Yahoo Finance.

That pushed the US technology sector to its best first-half performance in three years, the slump in the Magnificent 7 stocks notwithstanding. AI data centres require specialised computer kit, but there is now an acute shortage and “it takes years to build new production facilities” for chips, says James Mackintosh in The Wall Street Journal. The result has been soaring prices: Micron's have “quadrupled” in the past year. Consumers have been caught in the crossfire, with Apple hiking prices for its computers. The net effect is “an enormous transfer of cash” from the AI hyperscalers to memory-chip makers. The problem for the AI industry is that firms such as ChatGPT-maker OpenAI were already loss-making (venture capital has been subsidising an expensive grab for market share). Now the maths looks even more challenging for the businesses that started the AI boom.

In retrospect, the best thing to do over the past six months would have been to go long chip stocks while shorting software firms, says John Authers on Bloomberg. Korea's chip-dominated Kospi stock market index has almost doubled since 1 January, while the S&P 1500 software index is down 17.5%. US technology-related capital expenditure is now slightly above the 5% of GDP peak it reached in 2000 during the dotcom bubble. By attracting “more capital than they can productively use”, investment bubbles ultimately “sow the seeds of their own destruction”.

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The energy transition – a global process of shifting from fossil fuel-based power production to renewable energy – is coming along apace, and the commodities underpinning it offer enticing opportunities for investors.

Even in the US under president Donald Trump and his ‘drill baby drill’ agenda, renewables usage is on the rise. Renewable energy generation in the US increased 10% in the first four months of 2026 compared to the same period a year before, according to data from the US Energy Information Administration, driven by a 21% increase in utility-scale (above one megawatt) solar power. Renewable sources generated more than half the country’s energy during that period, and the proportion increased from the previous year.

The International Energy Agency (IEA) expects more than double the amount of renewable power capacity will be added globally between 2025 and 2030 than in the previous five years.

But it’s an often overlooked theme that has become less fashionable for investors in recent years.

“The sentiment around renewables, decarbonisation and ESG… has been a bit less strong over the past few years, but the reality of it is none of this investment has stopped,” Rosa Leo, equity investment specialist at Aberdeen Investments, told MoneyWeek.

“When we talk about investment in renewables and the green energy transition, it’s not just a decarbonisation story, it’s also an energy security story,” Leo added.

Why energy transition materials can offer diversification

Compared to other commodities, many energy transition materials have distinct structural supply and demand imbalances that could push up prices over the long term.

“Many metals face a supply deficit in the years ahead, due to a lack of investment in exploration and discovery, as well as long lead times for new mines,” Mark Burridge, manager of the SVS Baker Steel Electrum Fund, told MoneyWeek.

Unlike gold, the price of which is largely dictated by interest rates, long-term decarbonisation policies and new growth industries underpin demand for energy transition materials.

“As a result, they offer lower correlation to traditional equities and bonds while adding structural portfolio growth,” explained Asad Farid, portfolio manager of the JSS Sustainable Equity – Strategic Materials fund.

“Supply cannot respond quickly to demand spikes,” said Farid. “Because new projects require four to seven years of lead time, producers retain pricing power.”

Some of the most critical energy transition materials occupy strategic supply chain bottlenecks, meaning national governments often guarantee to buy output in advance at locked-in prices.

“Consequently, these producers see more resilient and predictable earnings growth than traditional commodities,” said Farid.

What are some of the most important energy transition metals?

Copper

Front and centre in the energy transition is copper, because almost every new aspect of the energy transition involves some form of electrification – and copper is the most efficient conductor of electricity available.

That makes it one of the most appealing long-term opportunities available, according to Leo, from Aberdeen. It goes beyond the energy transition: “the tech industry, data centres, they all require copper.”

This is driving demand higher while supply is suffering due to under-investment over the past decade or so: according to Leo, copper’s supply shortfall could reach 30% in the next 10 years.

Major copper producers include Southern Copper Corporation (NYSE:SCCO), Anglo American (LON:AAL) and Antofagasta (LON:ANTO).

Rare earths

Rare earth minerals comprise a range of heavy metals which, contrary to what their collective name implies, are not especially rare – but are very difficult to extract from their naturally-occurring compounds.

They have distinct magnetic properties that make them essential for various applications in clean energy and modern technology – meaning that like copper they have an overlap with the cyclical economy.

Like copper, rare earths have an overlap with the cyclical economy because they are key components in the majority of tech hardware.

“The only country that has really invested in [rare earth extraction] is China,” said Leo. “It’s quite emblematic of the geopolitical aspect and relevance of the minerals: developed countries outside of China really are reliant on China for their supply of these minerals.

“So we expect huge investments from countries worldwide, especially in extraction and especially in miners outside China,” she added. “The price of rare earths is going up, and their geopolitical significance is increasing.”

Uranium

Nuclear power is one of the most reliable forms of renewable energy, and has come back into favour following decades of neglect.

There are currently around 80 nuclear reactors under construction globally, with another 120 planned, according to the World Nuclear Association.

“This is going to have an impact on uranium demand,” said Leo. “This is another area in which we see huge opportunities, especially when it comes to the uranium extraction market.”

Lithium

Most energy storage and electric vehicle (EV) batteries are based on lithium, making it a crucial commodity for the energy transition.

According to the IEA, the global lithium-ion battery market grew by more than 20% in 2025 and now exceeds $150 billion.

And as with many energy transition materials, demand is growing faster than supply.

“Lithium [supply] is tightening as stationary storage demand accelerates alongside strengthening EV sales in Europe and China,” said Farid. “The supply response is likely to lag for some time.”

Aluminium

“Aluminium is critical for grid infrastructure and lightweighting,” said Farid.

It is a key component of solar panels, as well as electric vehicles (its light weight allows some of the additional weight of heavy batteries to be offset).

Aluminium supply is tight: around half of Middle Eastern production of the metal has been lost as a result of the conflict.

“This deficit is exacerbated by rising power costs from AI driven data centre demand, and Western protectionist measures limiting scrap outflows to Asia,” Farid added.

How to invest in energy transition commodities

If you want to invest in the energy transition, one way to do so would be to buy contracts on the commodities themselves – but this isn’t the recommended approach, largely because many of the materials involved have fairly shallow markets.

Instead, Leo recommends buying the companies that produce the commodities or put them to use.

Aberdeen’s Future Raw Materials ETF (LON:ARAW) takes this approach and holds energy transition material producers: top holdings currently include the likes of uranium producer Cameco (TORONTO:CCO) and Southern Copper.

The Baker Steel Electrum Fund also holds Cameco alongside a portfolio of speciality and precious metal producers, including aluminium producer Norsk Hydro (OSLO:NHY). Norsk Hydro is the top holding in the JSS Sustainable Equity – Strategic Materials fund as of 31 May.

Andy Burnham's arrival at London Euston, on the authentically late-running 10:43am Avanti West Coast service, reminded some of Barack Obama's “Hope express” from Chicago to Washington in 2008 and others of the secret “sealed train” carrying Vladimir Lenin to St Petersburg in 1918.

As “Comrade Burnham” hurtled south, tracked by helicopters, he made a symbolic reunion with his Westminster past: changing out of his trademark black T-shirt into a suit. He escaped the press scrum at Euston via “a hidden VIP exit”, reports The New Statesman, making off in a black cab. A niggling question – which could be a clue to future policy – is whether he claimed his Delay Repay refund.

Andy Burnham, the son of a BT engineer and a GP receptionist, “is shaped by his lifelong faith”, says The Spectator. He's “a Catholic communitarian”, steeped in the teachings of Derek Worlock, which emphasised “solidarity with the disadvantaged and working-class dignity”. He made it to Cambridge University, where he was “as happy on the football pitch as he was dissecting Middlemarch”, and from there he made a pretty textbook professional progression to Westminster.

After a spell on trade magazines – including Tank World Management and Passenger World Management – Burnham got his big break in politics in 1994 as a researcher for Labour minister Tessa Jowell, notes the BBC. There followed a spell with the Transport and General Workers' Union and a post with the government's Football Task Force before his own election as MP for Leigh in 2001. He climbed the ladder of the Blair government, making his Cabinet debut in 2007 under Gordon Brown.

In the ensuing decade of party turmoil, Andy Burnham twice stood for the leadership. “I've never met anyone more ambitious in my life,” a senior Labour figure, who worked closely with him in Manchester, told the Financial Times. But back then he didn't stand out. Even a year ago, says The New Statesman, the inaugural mayor of Greater Manchester was “nobody's idea of a premier”. Detractors in the party (a dwindling number now) snipe that he dodged the tough battle to unseat Corbynism and swanned off to Manchester in 2016, where the hard yards of economic revival had already been laid. The city's “spiky” council leader, Richard Leese, took to calling him a “glorified bus conductor” in private – because the reward for having an unwelcome mayor foisted on the council was “the ability to take back control of their buses”.

What can we expect from Andy Burnham?

Andy Burnham has something of a reputation for flip-flopping when expedient, but supporters say there's nothing wrong with pragmatism if it's grounded in solid values: Burnham's are “genuine”. What seems to count for the public is his interpretation of “northern soul” – an offer of hope, playing on a certain nostalgia for the past, that might also find fertile ground in the south. Last year's sell-out Oasis/The Verve tour could be seen as a subliminal Andy Burnham warm-up act.

Critics have dismissed Burnham's speech on “rewiring” Britain as a repurposed version of Boris Johnson's “levelling up” agenda. But for the moment, the lack of policy detail – and his unknown choice of chancellor – confer an everyman advantage. The “northern insurrectionist” espoused by the left is now wooing the very bond market he once vowed not to be “in hock” to, and has appointed a blue-chip team of economists and his old Blairite chum, James Purnell, as chief of staff.

Which Andy Burnham will we get? Aside from “evangelical zeal”, Burnham's great strength over a decade in Manchester was his ability to hold the city's “byzantine system together”, says the Financial Times. In this, his greatest reinvention yet, that might count.

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If you’re a frequent flyer, having an airport lounge membership like Priority Pass or Dragonpass can make travelling significantly more comfortable.

Rather than waiting at a crowded terminal, airport lounge access can mean complimentary food and drinks, Wi-Fi, quiet workspaces and even shower facilities.

You can get lounge passes with certain packaged bank accounts or credit cards with airport lounge access, but that’s not the only way. You could book one-off visits to some airport lounges, for instance, or access global lounge networks by buying a membership – such as with Priority Pass or Dragonpass.

What is Priority Pass?

Priority Pass is an airport lounge programme that gives members access to more than 1,900 lounges across 856 airports in 142 countries.

Your membership may also include benefits such as complimentary Wi-Fi, meals and drinks, shower facilities and dining credits at select restaurants.

The lowest membership tier doesn’t give you free access to lounges – instead, you pay an annual fee and discounted rate on visits. However, no matter what membership you have, you will need to pre-book your slot for an extra £6 to guarantee a space when it gets busy.

Here’s a complete breakdown of membership fees.

What is Dragonpass?

Dragonpass is an airport lounge programme that offers access to more than 1,400 lounges, over 200 fast-track security lanes and around 2,500 travel experiences worldwide.

While Priority Pass gives you access to more airport lounges, Dragonpass is more focused on offering a premium experience, whether it’s meet-and-greet services, dining discounts, spa treatments or fast-track security.

The lower membership tier only gives you one free visit, after which you have to pay for entry. However, you will need to pre-book your slot for around £6 per visit to guarantee a space during busy periods, no matter which membership tier you’re on.

Here’s a complete breakdown of membership fees.

Should you buy a Priority Pass or Dragonpass membership?

For many travellers, Priority Pass offers better overall value thanks to a significantly larger lounge network globally. If your priority is finding a lounge wherever you fly, it’s generally a better option.

However, when it comes to costs, Dragonpass is cheaper and a better choice if you regularly travel through airports where you can take advantage of its fast-track security and premium services like spa and wellness centres.

Before buying either membership, it’s worth checking which lounges are available at the airports you typically go to. It might be that some airports support Priority Pass or Dragonpass but not both.

Is an airport lounge membership worth it?

Whether an airport lounge membership is worth paying for depends on your travel habits. If you only take a handful of flights a year, paying for individual lounge access can be more cost-effective than buying an annual membership.

However, if you fly several times a year, particularly on long-haul or international trips, and want to access an airport lounge, you could save with a membership. Lounge entry usually costs between £35 and £50 per visit, so frequent travellers could save money while enjoying a quieter and more comfortable airport experience.

It’s worth considering whether you already have access through another financial product. Many premium credit cards, travel reward cards and packaged current accounts include Priority Pass or Dragonpass membership as a benefit, meaning you may not need to buy a separate membership.

On 13 January, 1913, when King Rama VI sent Thailand's first wireless message from the Saladaeng Radiotelegraph Station in Bangkok, he could never have foreseen that more than a century later, in the same spot, guests would be sipping cocktails by the pool, scrolling on smartphones and communicating in real time. Back then, this whole area was little more than rice paddy – open, flat and far enough from the city's sprawl to minimise any interference with the radio waves. The radiotelegraph station that stood here marked Thailand's connection to, and arrival in, the modern world. Soon a road was built to link it to the city centre, named after this new technology: Witthayu (meaning wireless). Bangkok has never looked back.

Fast forward to 2016, and a group of property developers working on site discovered the radiotelegraph station's foundations beneath their feet. Working closely with conservationists, archaeologists and the Fine Arts Department, they unearthed hundreds of artefacts – fragments of delicate bone china, faded floral tiffin tins, perfume bottles and grainy photographs. As the site's construction began, so did a plan to create a museum dedicated to the history of the area and its former inhabitants – mostly merchants and traders from southern China, followed by the cadets from the military academy and, later, the stallholders from the Suan Lum Night Bazaar. The Wireless House Museum now bridges this past and present, and I can just about make it out from where I’m standing, 20 floors up at 189 Wireless Road – The Ritz-Carlton hotel – with the green canopy of Lumphini Park stretching out before me.

The Ritz-Carlton opened in December 2024 and is part of the new $3.9 billion One Bangkok development, another marker of the city’s current iteration. The skyscrapers glisten above the busy artery of Wireless Road as it is today – full of tuk-tuks, motorbikes and SUVs – the Wireless House Museum sitting to one side, complete with a partial former radio mast. The Ritz-Carlton’s 260 rooms have floor-to-ceiling windows that maximise the views of the park and the ever-changing cityscape beyond.

My suite – an Amaranth Corner Suite – has balconies on both sides, so I can catch the sunset without leaving my room.

Designed by Skidmore, Owings & Merrill together with Thai firm A49, the building sits next to One Bangkok’s shopping centres, where people flit between air-conditioned stores or pause to take in the outdoor sculptures dotting the pedestrianised courtyard, including a mirrored S-Curve sculpture by Anish Kapoor. It’s a contemporary space that roots Bangkok firmly in 2026 – a far cry from when I first came here 29 years ago to visit the night market that stood on this very spot.

The Ritz-Carlton, Bangkok has world-class cuisine

The hotel's interiors are sleek and confident. Thai design studio PIA created a space that plays on the concept of “two civilisations”, marrying Bangkok's heritage with a classic elegance – polished tiles, contemporary artworks, water features and plenty of marble and gold. I particularly liked all the black-and-white photographs depicting old Bangkok.

On the seventh floor, the outdoor pool is a godsend from the city's heat. Cabanas are coveted on sunnier days, but there are always enough loungers to go around. The spa downstairs offers traditional Thai massage – and after a full day of sightseeing in Bangkok, you will need one. But it's in the food and drink where The Ritz-Carlton really shines. The hotel has four bars and restaurants, and each one is excellent.

Duet by David Toutain is the main event. The 32-seat fine-dining restaurant sits within a glasshouse on the seventh floor overlooking Lumphini Park. Toutain – whose Paris restaurant holds two Michelin stars – and chef de cuisine Valentin Fouache present a modern French eight-course tasting menu made with seasonal ingredients, with wines or zero-proof pairings to match. The dishes range from Brittany brown crab with vanilla and kaffir lime, to gamba roja prawns with morels, to Hokkaido scallop with XO sauce and Jura yellow wine, each arriving with its own provenance card.

The finale – 80% Chiang Mai chocolate with buckwheat, passion fruit and cocoa nibs, and a rum-soaked sponge – is every bit as good as it sounds. This is cuisine that’s worth travelling for. Book a table, even if you’re not staying at the hotel (9,000 baht (£205) per person, with wine pairing).

Then, there's Lily's, the all-day dining room, also on the seventh floor. Breakfast here is an epic affair spanning multiple rooms and stations – possibly one of the most ambitious and well-presented spreads I encountered in Southeast Asia. By night it's more relaxed, and the banquettes and tables take on a low-lit brasserie vibe. My bowl of mussels with green-curry pesto, alongside buttered asparagus, truffle fries and chilled glass of Chablis, was a highlight of my trip. This is the kind of bistro cooking that Bangkok does brilliantly.

On the lobby floor, which sits high above street level, is Caleo bar. I was working my way through a Moroccan gimlet when the staff appeared with a box of postcards and an offer to send one anywhere in the world. It's a small gesture, but it's the sort of gesture you remember.

If you're staying in one of the suites, you also have access to the 23rd-floor Club Lounge, which is a cool and calm place to enjoy breakfast away from the bustle, or a light lunch or afternoon tea for that matter. Sundowners are served in chilled glasses. Service is faultless. When I mentioned my fondness for Thai herbal inhalers, which are a local staple, the staff set up a tray of ingredients so I could make my own to take home, then gave me two more as a gift. I also took a Thai cookery class and a guided walking tour of the flower market and Song Wat Road, an up-and-coming neighbourhood with trendy coffee shops, vintage clothes stores and more new galleries and bars I've bookmarked for my next visit.

Experience everything under one roof at The Ritz-Carlton, Bangkok

The Ritz-Carlton combines all the things this city does well – great food, hospitality, a relaxing lounge and a peaceful wellness space – packaged into a single address. The restaurant credentials are serious, the design is assured without being showy, and the location, right on the edge of Lumphini Park, gives it space to breathe and makes it central enough to reach most places easily.

Bangkok has always moved fast and been one of the most exciting cities in the region. The signals it's sending now are worth tuning into.

Katie was a guest of The Ritz-Carlton, Bangkok. From 17,500 baht (£400) a night, excluding fees and taxes, but including breakfast based on two people sharing. Visit ritzcarlton.com for details.

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Brits are facing major changes to ISA rules from April 2027 as the government tries to foster a culture of investing in the UK.

The reforms, as confirmed in the 2025 Autumn Budget by chancellor Rachel Reeves, will see a new annual cash ISA limit of £12,000, down from the current £20,000 ISA allowance, for under 65s.

The £20,000 annual ISA allowance – which also covers stocks and shares, innovative finance ISAs and lifetime ISAs – will remain.

A new 22% charge on cash held within stocks and shares ISAs will also apply, while retail investors will be banned from having a stocks and shares ISA made up wholly of money market funds.

Under 65s will also not be allowed to transfer money from stocks and shares ISAs into cash ISAs.

However, how these new “anti-circumvention” rules apply to those aged 65 and over is more nuanced.

How will the new ISA rules apply to 65-year-olds and older?

Government guidance states that the 22% charge on interest earned on cash in a stocks and shares ISA will apply to those aged 65 and over.

Meanwhile, the prohibition on 100% cash-like investments (money market funds) will also remain in place for those aged 65 and over.

However, individuals aged 65 and over will be able to transfer money from stocks and shares ISAs into cash ISAs when the new rules come in from April 2027, unlike those aged under 65.

Jason Hollands, managing director at wealth management company Evelyn Partners, said the new rules were adding an unneeded layer of complexity for all investors and “undermine the tax-free promise”.

He added: “We've never had different rules applying to different people depending on age.”

Hollands welcomed that 65-year-olds and over will be able to transfer money from stocks and shares ISAs into cash ISAs when the new rules come into force, allowing them to free up more liquid cash and avoid paying tax on cash held within stocks and shares ISAs.

A HM Treasury spokesperson said: “Parking cash long term in a non-cash ISA to earn tax-free interest isn't investing. These changes will push more people towards investments that actually grow their money, and industry leaders including Nationwide and the Building Societies Association back us on this.

“Savers can still hold up to £12,000 in a cash ISA, and those 65 and over keep the full £20,000 allowance.”

How exactly do the new anti-circumnavigation rules apply?

The 22% charge on cash held within stocks and shares ISAs will apply to any interest paid on it.

A number of investment platforms such as Bestinvest, AJ Bell and interactive investor, pay interest on cash held within a stocks and shares ISA.

Individuals will not have to declare any interest paid to HMRC as it will be paid by investment brokers.

Cash-like assets, like money market funds, will be allowed within stocks and shares ISAs, so long as they don’t make up 100% of the portfolio.

Investments such as shares, funds, investment trusts, ETFs and bonds, including gilts, will not be treated as cash-like assets under the new rules.

Transfers from stocks and shares ISAs will not be allowed for investors aged under 65, although they will be able to transfer money from a cash ISA to a stocks and shares ISA. This rule doesn’t apply to investors aged 65 or over.

Assuming no Labour MP throws their hat into the ring to challenge him, Andy Burnham looks set to be the UK’s next prime minister – and he could assume the office as soon as 17 July.

You might be wondering what a Burnham administration could mean for your money, in particular your investments. After all, the UK’s stock market has had an eventful year so far: the FTSE 100 reached its all-time high of 10,935 on 27 February, just before the Iran war broke out. It fell off sharply over the following weeks, and while much of the lost ground was recovered by the end of March, it still has not regained its late February highs.

UK stocks have been undervalued compared to international counterparts for some time, and while that’s a positive for value-focused investors, the hope is that something will, at some point, catalyse a revaluation so their prospects rise.

Could the UK’s seventh prime minister in 10 years be that catalyst, or is it more unwelcome news as far as the UK’s stock market is concerned?

“If Andy Burnham does get the keys to Number 10, he'll face a supremely tricky balancing act,” said Susannah Streeter, chief investment strategist at wealth manager Wealth Club.

The apparent prime-minister-in-waiting outlined his vision for the country on 29 June in a speech that majored on strengthening regional autonomy, but was otherwise light on detail.

“Investors will be looking for a clearer roadmap showing how growth can be boosted sustainably without unsettling bond markets or putting further strain on already stretched public finances,” said Streeter.

How UK stocks have reacted to the prospect of prime minister Burnham

There is widespread skepticism about how effectively Burnham can meet these challenges. Equally, it is yet one more source of turbulence for a market that could probably do without it.

“I think what the markets would like to see is some stability,” Jo Rands, portfolio manager on UK equity income at asset manager ClearBridge Investments, told MoneyWeek.

It is notable, though, that UK stocks have not reacted strongly (in either direction) since Keir Starmer announced he would step down, and Burnham emerged as his almost nailed-on replacement.

While some sectors have experienced jitters – Rands highlighted potential nationalisation concerns impacting the utilities sector – on aggregate there has been little reaction. The FTSE 100 gained 0.7% on 22 June, the day Starmer announced his resignation, and rose a further 0.6% between then and 30 June.

“The markets have been thinking about this potential change for a while,” said Rands. “Last year we were talking about the risk for UK equities thinking about the local elections, and the implications that could have on the market. So it’s been rumbling away in the background.”

Uncertainty itself, in other words, was already priced in. What is still not certain – and will likely have the greatest impact both on the UK economy and UK stocks – is who Burnham chooses to replace Rachel Reeves as chancellor.

“A week ago, when you looked at the prediction markets, Wes Streeting was the favourite,” said Rands. “Markets quite liked that.” But Ed Miliband appears to have become the more likely candidate in the meantime, and the markets are less keen on the prospect of him in number 11, according to Rands.

Whoever takes the role will be the primary person responsible for executing the precarious economic balancing act that Burnham will face – an unenviable task.

Why UK stocks offer diversification

The good news is that the UK stock market is not the same thing as the UK economy. The large cap stocks of the FTSE 100 are predominantly global companies who derive their revenue from all over the world – so they can perform strongly even if UK growth slows.

“A lot of people conflate UK equities with the UK economy,” said Rands, adding that it’s often more the mid- and small-cap end of the UK market (accounting for around 12% of its total value) that are heavily exposed to the domestic economy.

UK stocks also offer rich sources of diversification. Compare the top ten holdings of the S&P 500 and the FTSE 100:

*Based on weightings in the Vanguard S&P 500 UCITS ETF (LON:VUAG) and the Vanguard FTSE 100 UCITS ETF (LON:VUKG), which track the respective indices, as of 31 May.

Five of the S&P 500’s top ten holdings are designated as Information technology companies – with two of the other five being represented by Alphabet’s two different share classes. But given that all of the exceptions are members of the ‘Magnificent 7’ group of AI-relevant stocks, it’s fair to say that all of them are tech companies in a fundamental sense, if not according to their official designations.

The FTSE 100, meanwhile, has six different sectors included in its top ten companies, none of which include more than two companies.

“Global indices are predominantly US, which are predominantly tech,” said Rands. “In the UK, it’s spread across a number of different sectors.”