As the dust settles on 2025 there is no better time to take stock and review a year whose turbulent headlines obscured surprisingly strong returns for markets and investors alike.
You could be forgiven for thinking otherwise. At any point, a cursory glance at this year’s news – dominated by war, political theatrics, trade tensions and most recently AI Bubble concerns and the budget – would justifiably instil a sense of gloom.
This is something I’ve witnessed first-hand with many clients, who expected their investments to reflect the apparent decline they are seeing in the world. However, this was not the case as, by contrast, markets had a notably strong year.
By highlighting this, I am not trying to undermine the fraught state of the world. Instead, I wanted to emphasise the cognitive dissonance positive market returns have created when set against the negative backdrop of the year’s events.
Considering this, I’ve attempted to try and reconcile this dissonance by collating: The Good, The Bad and the Ugly of 2025.
The Good: A quietly impressive year for global stocks
Given I have deferred structure to the final ‘Fistful of Dollars’ film, it’s perhaps most appropriate to begin across the pond. Whilst not exclusively a US phenomenon, artificial intelligence (AI) has emerged as the new frontier with the ‘Magnificent Seven’ (not the gunslingers), investing into the technology and its infrastructure, driving markets to all-time highs.
Despite record growth, there remains a sense of unease when quantifying AI’s value, leading to assertions of the ‘AI Bubble’. Without delving into that here I would recommend anyone interested read in-house specialist, Ben Barringer’s thoughts, here.
Reverting back to this side of the pond, UK and European equities have been among the standout performers this year. This puts them well ahead of the US market in sterling terms, helped by both robust earnings and a stronger pound.
Another factor that has buoyed the UK economy compared with more industrial peers is a potential oversight in American tariffs, which apply primarily to goods rather than services. Bearing in mind we are the second largest exporter of services in the world. This has led the UK’s business & financial services to overtake goods exports for the first time since 2020[1] and better insulates the British economy when compared with industrial peers dependent on exporting goods, such as Germany.
The best ‘wins’ have been made in personal finance, where there has been an uplift in under thirty-fives putting financial plans in place. In fact, they are now more than twice as likely to have a financial plan than those over fifty-five[2] , according to a recent study by Moneybox. The study also notes a rise in financial resilience amongst the British population, as persistent cost-of-living challenges and the increasing tax burden have motivated people to proactively engage with their finances.
