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The Mearns & Company Monday Espresso is your essential five-minute investment briefing, equipping you with everything you need to know for the week ahead. Marlborough's Multi-Asset Solutions Investment Team summarise market events over the past seven days and preview the key events in the week ahead, while also sharing their expert insights.
Monday Espresso Podcast - 1st December 2025
[00:00:00] Rory Dowie: Good morning and welcome to the podcast. Today's Monday the 1st December. My name is Rory Dowie, Portfolio Manager here at Marlborough. Today I'm delighted to be joined by Eddie Kennedy. Eddie's Head of our Personal Portfolio service. So Eddie, great to have you. Firstly, good morning.
[00:00:14] Edward Kennedy: Good morning to you, Rory.
[00:00:15] Rory Dowie: Busy week here in the uk, but I guess before we get into the meat of that, how did markets get on last week?
[00:00:21] Edward Kennedy: Markets were actually pretty strong last week, Rory, even though it was a shortened trading week for the US as it was Thanksgiving holiday on Thursday. US finished up 3%, followed the field, Japan, and the broader emerging markets were also up 3% and closer to home Europe finished up about two and a half percent. The UK did lag, but it was still up 1.8% for the week. Last week brought us to the end of November, and November was volatile. At one point, the S&P 500 was down 4.7%. But only finished a month down 0.5%. This was the first monthly loss since Liberation Day back in April.
[00:01:00] Rory Dowie: So a more volatile month in the markets. But a strong week last week meant that losses weren't too bad. Equity markets only finishing marginally down. And I guess for our listeners, highlighting the importance of not being too reactive when markets get volatile as often markets can recover quite quickly from those losses.
[00:01:16] Rory Dowie: And clearly that was the case over November. I suppose the main event Eddie, here in the UK was Rachel Reeves'. Much anticipated budget. Seems like it's been dominating the news for the last few weeks. What can you tell us about that?
[00:01:27] Edward Kennedy: Yeah, that was announced on Wednesday. We did write a note about this. We called it the 'Hokey Cokey'.
[00:01:32] Edward Kennedy: I must admit, I stole that sort of from a radio four BBC broadcast. I can't remember the name to give them credit. So the proposals were floated late and hastily withdrawn. Income tax hikes were in before being scrapped. Replaced by extended fees and thresholds, the income levels at which higher tax rates come into force.
[00:01:53] Edward Kennedy: The irony was not lost that the Office of budget responsibility OBR revealed the context of the Hokey Cokey budget before Chancellor Reeves had a chance to put it through Parliament. We will take some of the headlines. Let, let's look at some of the main things that happened in the budget. The first one really was the freezes on income tax thresholds.
[00:02:14] Edward Kennedy: Now, this is going to happen for an additional three years till April, 2031. People Optum refer to this as a stealth tax through what is called fiscal drag. As the thresholds don't change, people earn more money as wages can increase. And go into higher brackets. The second one I would talk about really is introduction of national insurance on salary sacrifice, pension contributions over £2,000.
[00:02:42] Edward Kennedy: That starts from April, 2029, and I think maybe the third big takeaway was a new property tax for homes valued more than 2 million taken into effect from 2028. Collectively, these and other tax changes are expected to raise about 26 billion. An additional tax revenue by 2030.
[00:03:04] Rory Dowie: Yeah, so lots of noise and uncertainty leading up to the budget, but it seems as if, you know, I guess it was fairly mundane overall.
[00:03:10] Rory Dowie: I mean, we all remember the mini budget back in 2022 where the bond market collapsed, mortgage rates skyrocketed overnight. Everyone was sort of holding their breath to see if, you know, those bond vigilantes might attack again. But I guess the question, Eddie, how did this budget affect the budget deficit?
[00:03:23] Rory Dowie: That's how much governments are earning relative to how much they're spending, and how did markets importantly react to it?
[00:03:29] Edward Kennedy: If you recall, back in March the office of budget responsibility or the OBR anticipated the government's day-to-day tax revenues and spending would reach balance by 20 29, 20 30 with a surplus or headroom they like to call it, of 9.9 billion.
[00:03:48] Edward Kennedy: That figure was now increased to 21.7 billion surplus, which provides the government with a bit more flexibility. Markets responded swiftly on budget day. At the out outside when nobody are actually released the data early, you've seen a sell off in Sterling and government bond prices go weaker. But by the time Rachel Reeves delivered her address, both had reversed course Boyd by improvement in forecast Headroom, the UK stock market moved marginally higher, broadly in line with global markets.
[00:04:20] Rory Dowie: Thanks Eddie. So generally well digested by the market, so that's good to see after what we saw back in 2022 with that many budgets. So much better this time round. I guess hopefully the Bank of England might come through with a rate cut in December as well, so we'll be keeping an eye on that too.
[00:04:35] Rory Dowie: Anything our listeners should be looking out for this week?
[00:04:38] Edward Kennedy: This week coming up you've got economic data in the US, including spending and inflation expectations. You've also got some inflation data in Europe.
[00:04:47] Rory Dowie: Brilliant. Thanks for that, Eddie. Thanks for joining to all our listeners. Hope you found that useful and wishing you a great week ahead.