Recent US tariffs are causing significant disruption in international markets, potentially impacting everyday finances for millions of UK households—from mortgage payments to pension values and savings returns.
Though the President has temporarily suspended some duties on imports, a 10% levy on goods exported from the UK to the US remains in place. This creates economic instability and undermines the competitiveness of British businesses.
Despite better-than-expected UK GDP growth figures of 0.5% recorded in February, experts caution that the economy’s underlying strength is precarious and vulnerable to worldwide economic shifts.
Marcus Brookes, Chief Investment Officer at Quilter Investors, commented: “While the ‘pause’ on reciprocal tariffs may offer a glimmer of hope, the fundamental situation for the UK remains unchanged. This ongoing global uncertainty will do little to bolster either consumer or business confidence, and we can expect sluggish growth.”
Financial planner Ian Futcher at Quilter added that this tariff-induced economic instability could prompt the Bank of England to lower interest rates in an effort to stimulate growth—a move with implications for various financial aspects.
Impact on Your Finances
- Mortgages: The current market conditions are already influencing UK swap rates, which lenders use to price fixed-rate mortgages. Some lenders have responded by reducing mortgage rates, and further adjustments may occur.
- Savings: Lower interest rates generally translate into reduced returns for savers, particularly on easy-access accounts. Furthermore, tariff-driven inflation could further erode real returns.
- Pensions & Annuities: Pension pots, frequently invested in stocks and bonds, are susceptible to global market fluctuations. Individuals nearing retirement may experience greater-than-expected volatility. Annuity rates, closely linked to gilt yields, could also decline.
- Investments: Global equity markets have shown considerable volatility in response to tariff announcements. While diplomatic efforts offer some hope, persistent tariffs on Chinese goods pose risks to corporate profits and overall economic stability.
“Homeowners with variable or tracker deals could benefit if the Bank of England intervenes,” Futcher noted. “It’s wise for borrowers to ensure their paperwork is in order at least six months before their current deal expires, allowing them to swiftly secure a competitive rate when the time comes. Given how mortgage pricing often reacts to economic developments, being prepared can substantially impact monthly repayments.”
“Savers should be proactive—locking in fixed-term deals while high rates are still available or considering a diversified investment strategy tailored to their individual timeframe and risk tolerance,” Futcher advised.
“For those contemplating converting pension savings into a guaranteed income stream, timing is critical,” Futcher emphasized.
“Attempting to ‘time’ the market is rarely beneficial,” Futcher cautioned. “Remaining invested and maintaining a long-term perspective often produces better results.”
As the global economy faces headwinds, UK households are being encouraged to evaluate their financial standing.
The prevailing message across all areas of personal finance—from mortgage decisions to retirement planning—is one of enduring uncertainty. However, proactive preparation can significantly mitigate potential downsides.
Strengthening your financial position now, securing stable returns where possible, and resisting impulsive reactions are crucial steps toward navigating the current environment.
Futcher concluded: “Governments may set trade policy, but individuals frequently bear the brunt of its consequences. The most effective approach is to remain informed, adaptable, and focused on long-term goals.”
