Author: IntaCapital Swiss

Bond Investors Edging Towards Emerging Markets

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Investors in global bonds are eyeing a number of better-performing emerging markets, as they are currently a safer bet than their peers in the richer developed world, and some countries, such as South Korea, are delivering stronger returns. The strong performances seen in several emerging economies are due, according to experts, to governments cutting debt, improving their current account balances and getting to grips with inflation. Analysts also note that these economies have become attractive to bond investors due to a reversal of fiscal fortunes in industrial nations such as the Group of Seven* (aka the G7), where safe-haven status is eroding amid rising debt-to-output ratios.

*Group of Seven / G7 – This is an informal political forum for the leaders of seven advanced democratic economies, including Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Originally, it was known as the G8 until Russia was suspended in 2014 for the annexation of Crimea. The group meets annually to discuss and coordinate policy on major global issues such as economic governance, international security and climate change. The leader of the European Union (currently Ursula von der Leyen) has an unofficial seat at the table, enjoys all the privileges and is often dubbed the 8th member.

Analysts predict that at the close of business in 2025, and in terms of annual bond gains this year, it is set to be the strongest for emerging markets since the Covid-19 pandemic. Investors have become really impressed with a number of emerging market economies as they are now, for the first time in seven years, demanding the smallest premium over treasuries in the sovereign dollar-debt market. Indeed, for several AA-rated issuers, the spread has declined to an impressive 31 basis points, which in today’s world is a record and data released shows that, since the end of last year, average local currency debt yields have been below that of treasuries.

Experts advise that the ‘Carry Trade’ ** has become an influential tool in investing in local currency emerging market bonds, where low-interest rate volatility has favoured investment in this asset class. Sovereign and local bonds are not the only beneficiaries of the carry trade; currencies have also benefited, such as the Egyptian pound and the Nigerian Naira, both delivering 20% returns year-to-date when funded out of US Dollars. However, as one moves along the emerging market credit curve, the risk-to-reward ratio increases exponentially. Emerging market experts advise that political instability and debt distress are constant threats in a number of these economies and can be found mainly in Africa and Latin America. Also, for serious capital to be deployed, investors look to those countries with a sovereign risk of AA.

**Carry Trade – This is a financial strategy whereby an investor will borrow money at a low interest rate and invest in an asset with a higher interest rate with a view to profiting from the difference (known as the interest rate differential). Whilst this is mostly done in the foreign exchange markets, it is also applied to commodities, bonds and other assets.

However, according to analysts, there has been a palpable change in investment strategy in the emerging markets arena, with investors looking to commit directly to these economies without using the carry trade due to key macro fundamentals moving into favourable positions. It has also been noted that in the face of global trade and geopolitical dislocations, emerging markets have been resilient and have preserved fiscal governance, including balance of payments sustainability, resulting in inflows into the fixed income market, all of which is expected to continue into 2026.

UK Chancellor Raises Taxes by £26 Billion in November Budget

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Yesterday, the 25th of November, was a very chaotic day for the Chancellor of the Exchequer, Rachel Reeves, as the OBR (Office for Budget Responsibility) released in error details of the budget that had not already been pre-briefed to the media. As the chancellor rose from her seat, the house was filled with cheers from the Labour benches, but the enthusiasm quickly faded, returning only when she announced the end of the two-child benefit cap.

However, there was no hiding place for the chancellor as the brutal facts of this budget hit home. Despite promising no more increases in taxes after the 2024 autumn budget, where taxes were raised by £40 billion, she raised taxes by a further £26 billion.

On top of that, data released by the OBR showed declining growth, therefore undermining one of the chancellor’s main priorities of tackling the cost of living. Also, further data showed that the budget will have no significant impact on output by 2030. 

In the budget, Chancellor Reeves announced in excess of 80 policies, which included tax rises, allowing her to double her “Fiscal Buffer” to £22 billion, which, in doing so, kept her manifesto pledge on not raising the rate of income tax. However, the OBR announced that the latest Labour budget has taken the overall tax intake to the highest on record. Observers have noted that this budget has straddled the line between keeping the Labour backbenchers happy and not upsetting the bond markets, but the so-called smorgasbord approach (a large number of small measures) will create a significant gap between the winners and losers.

Winners 

*The Bond Market – Markets were surprised by the chancellor as she announced a higher-than-expected buffer of £22 billion. In response to the signal that the government was going to be borrowing less than was originally suspected, sterling rallied against the US Dollar to $1.32, and the FTSE 100, led by the banks, was up by 1%. The gilt market rallied to this news, with bonds climbing, pushing down the 10-year yield for the fifth day in a row to 4.42%, and the 30-year yield dropped 11 basis points on the news from the DBO (Debt Management Office) that it would sell fewer long-dated bonds.

*Low-Paid Workers and Pensioners – State pensioners will gain an increase of up to £575 per year, the equivalent of 4.8% pa, whilst those on a minimum wage will get an increase of 4.1%.

*Investment/Fund Managers and Advisers/Consultants – The chancellor is encouraging more savers to invest in stocks and shares from April 2027 by cutting the annual cash limit for ISAs from £20,000 to £12,000.        

*Household Heating – The chancellor has provided relief to households by reducing the average energy bills by £150, though she did not cut VAT. This measure included removing a scheme that funds efficiency upgrades for homes, and abolishing a number of green levies that support renewable electricity.

*High Street Retailers – The chancellor announced that lower business rates (permanent) will be enjoyed by shops, hospitality and leisure companies who have properties valued at under £500,000. The savings will be funded by an increase in rates on properties valued in excess of £500,000.

*The Young Generation – For those classified as young people who have been out of work for over 18 months, the government will provide training, education and guaranteed work in a bid to tackle long-term youth unemployment.

Losers

*Mansion Tax – The chancellor has raised a levy on houses worth £2,000,000 and over, and experts suggest that 60% of taxable homes are in London. The levy, due to come into effect in 2028, consists of a surcharge of £ 2,500 pa rising to £ 7,500 on homes worth more than £5,000,000. Reaction from professionals inside the property market was one of relief as they felt it could have been much worse, as trial balloons floated before the budget suggested that the chancellor might force homes in the two highest bands of council tax to pay more, drawing in many more homes than the new mansion tax.

*Online Casinos – The chancellor announced a doubling of duties from 20% to 40% for remote gaming companies, prompting a fall in the share price for many British gaming companies. Online casinos have been growing rapidly, with data showing that in 2024, the sector made £12.6 billion, and the treasury expects to earn an extra £1.1 billion a year from increases in taxes by 2029 – 2030. Three major gambling companies, including the Rank Group, have already warned of job losses and have revised profit forecasts downwards.

*Owners of Electric Vehicles – The chancellor has slapped electric vehicle owners in the face by announcing a pay-per-mile tax on electric vehicles and some hybrid vehicles. Starting in April 2028, electric car owners will pay a road charge of 3p per mile, and hybrid plug-in owners will pay 1.5p per mile. In order to collect the tax, mileage will be checked once a year, typically via the MOT, or for new cars around their first and second anniversary.

*Salary Sacrificed Pensions – Currently, employees can use salary sacrifice to pay up to £60,000 of contributions into their pension scheme, with NICs and income tax relief available on the full amount of the contribution. However, under the chancellor’s new threshold of £2,000, any amounts above this figure will incur NICs at standard rates.

*Landlords – Under the November budget, the chancellor has targeted property income through an increase in tax of 2% starting in April 2027, plus new separate Property Tax Bands of 22% (basic rate was 20%), 42% (higher rate was 40%) and 47% (additional rate was 45%). Rumours of National Insurance charges on rental income did not come to fruition in this budget, with landlords breathing a sigh of relief.

*Student Loans – Sadly for students, the chancellor announced that from April 2027, the salary at which they must repay their student debt will be frozen at £29,385 for three years. The new measure applies to graduates with plan 2 loans** and the vice-president of the NUS (National Union of Students) for higher education has said that when repayments begin, the salary being earned by a graduate could be dangerously close to the minimum wage.

**Plan 2 Student Loans – This is a type of UK government income-contingent repayment student loan for undergraduate courses, primarily for students from England and Wales who started their courses between September 2012 – July 2023 (England) and September 2012 onwards (Wales).

The chancellor said her autumn budget is “a budget for fair taxes, strong public services and a stable economy, and in the face of challenges on our productivity, I will grow our economy through stability, investment and reform.” Welfare spending was £16 billion higher than forecasted back in March this year, including a £3 billion decision to remove the cap on child benefits, all of which was loudly cheered by left-wing MPs.

The government’s number 1 ambition is to grow the economy; however, the OBR (Office for Budget Responsibility), the budget watchdog, has announced that this budget has not moved the needle on growth and will have “no significant impact on output by 2030”. The leader of the opposition, Kemi Badenoch, strongly criticised the chancellor, and in a fiery speech labelled it a “smorgasbord of misery”. She accused Reeves of breaking promises and implementing tax hikes that punish hard-working people and reward welfare.

Overview of the Eurozone Economy 2026

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Based on forecasts from experts and analysts this month, the eurozone economy is expected to see modest, stable growth in 2026. Such growth will be driven by domestic demand, with inflation close to the ECB (European Central Bank) target of 2%, with various models showing an inflation rate of between 1.8% to 1.9%. It is expected that the zone will continue to enjoy low unemployment; however, the outlook is clouded by persistent global trade tensions, persistently high government debt levels, and heightened geopolitical risks.

Germany

Analysts suggest that over the next ten years, Germany will run an annual budget deficit of circa 4% of GDP, increasing its debt-to-GDP ratio by between 20 and 30 percentage points. However, Germany has a current debt ratio of under 65% and it is felt that in 2026, there is little to worry about regarding the country’s fiscal health, with an estimated growth in GDP of 1.2% – 1.4% due to increased spending on defence and infrastructure. This is higher than predictions made earlier in 2025, where the figure was circa 0.8% in potential growth. Experts predict that the government will use part of its fiscal package to invest in technology-related growth areas (less susceptible to trade tensions), rather than relying on traditional industries such as auto manufacturing.

France

Experts predict that the French economy will grow modestly at about 0.9% (below the eurozone average), against a backdrop of rising unemployment, political instability, and fiscal uncertainty, reflecting a government budget that has already failed to pass through parliament four times this year. Inflation has been forecasted to rise to circa 1.30% – 1.60%, which analysts have attributed to higher energy and food prices. Public debt is set to increase to 120% of GDP by the end of 2026, whilst the government deficit is expected to decline to circa 4.9% of GDP.

It is expected that a rebound in the services sector will offer some relief, whilst currently the industrial sector is on the wane, especially in the aeronautical market. On the domestic front, budget uncertainty and political instability have had a negative impact on business and consumer confidence; however, the economy on the whole is shielded from many global trade issues due to a more diverse export profile.

Spain

Predictions for growth in the Spanish economy are somewhat at variance with analysts and experts who predict growth from anywhere between 1.9% (OECD – Organisation for Economic Co-operation and Development) to 2.3% (European Commission). Growth will be primarily driven by strong investment and private consumption supported by purchasing power gains and employment growth. Experts suggest that inflation is expected to be moderate and hit an average of 2.0%, with drivers being a reduction in energy inflation as well as a moderate decrease in the price of food. The housing market is expected to continue enjoying the current upward trend, which is being driven by a fall in interest rates, population growth, improved purchasing power, and buyers from overseas.

The government budget deficit is expected to decrease to 2.1% of GDP, and the debt-to-GDP ratio is expected to fall below 100% for the first time since 2019. According to several analysts, negative impacts on growth are expected from global uncertainty, which may be driven by weaker economic activity among some of Spain’s key trading partners in the eurozone and tensions in the global trading arena. However, the continued implementation of the NGEU (Next Generation EU Funds) will help boost investment, particularly in construction and urban renewal.

The Netherlands

Experts suggest that in 2026 the Dutch economy will experience a decline in growth with predictions of a circa 1.00% – 1. 30% increase, primarily driven by strong domestic demand from household consumption and government investment and spending. On the domestic front, household consumption and government spending are expected to be the main drivers of economic growth, supported by rising real wages and public investment programmes. Inflation is expected to gradually recede but will remain above the eurozone average of 1.8% – 1.9%, mainly due to prices in the services industry and potential tax changes. The government deficit is predicted to widen to around 2.70% of GDP, whilst public debt is expected to remain below 50% of GDP.

On the unemployment front, the labour market is expected to remain tight with unemployment only marginally rising between 4.0% – 4.2%. Negative impacts on growth are expected from exports and business investments, which are projected to be suppressed by ongoing global uncertainties, including trade tensions and a political landscape with the potential to impact long-term investments in defence, energy, and housing. Indeed, geopolitical uncertainty and potential US tariffs on imports of EU goods pose a significant downside risk to the Dutch economy, which is highly export-oriented, and any escalation could lead to a reduction in export growth and reduced business investment.

Italy

Analysts predict that in 2026, the Italian economy will enjoy a modest growth in GDP of circa 0.80%, driven by public investment from the NRRP (National Recovery and Resilience Plan), with growth also being driven by domestic demand rather than by net exports. Predictions for inflation in 2026 vary, with the European Commission anticipating a figure of 1.30% whilst the OECD and the IMF (International Monetary Fund) predict figures of 1.80% and 2.00% respectively. The government deficit is projected to recede to an estimated figure of 28% of GDP, whilst estimates vary for gross public debt, with the IMF and the European coming in at 137.90% and 138.30% respectively of GDP.

Experts suggest that a negative impact on growth may come from the employment sector, where declining labour productivity is a persistent issue for the Italian economy. Global factors such as geopolitical tensions, potential trade tariffs from the United States, and weaker demand in key European markets will also pose risks to Italy’s growth and export performance. Analysts expect Italy’s net external trade to have a slight negative impact on growth, as imports are likely to outpace exports in 2026.

Greece

Analysts predict the Greek economy is projected to continue its GDP growth in 2026, with the European Commission expecting a figure of circa 2.20%, whilst the Greek Fiscal Council estimates a growth figure of 2.40%. Growth is expected to be driven by domestic consumption and government investment supported by European Union funds. Inflation is expected to decrease to circa 2.30% to 2.40% whilst unemployment is predicted to fall to approximately 8.6%. Also, the debt-to-GDP ratio is expected to continue its downward path, falling below 140% by year-end 2026. The European Commission has predicted that the government’s general balance is expected to be a surplus of 0.3% of GDP.

Positive factors that may influence growth are EU funds, including RRF (Recovery and Resilience Facility), that are expected to support investment and consumption, and the government’s final budget for 2026 includes a focus on tax reform and social support to boost growth and household incomes. Several analysts have suggested that tourism will continue its strong performance into 2026 and is expected to be a significant driver of the Greek economy. It should be noted that under the EU RRF, the Greek government is under pressure to complete projects by the August 2026 deadline, or else funds may be withdrawn.

Belgium

Experts suggest that the outlook for the Belgian economy in 2026 is one of moderate growth with estimates around the 1.10% – 1.20% mark. This marks a gradual recovery from 2025, where growth, according to data released, is currently at 1.00% and growth is expected to be supported by a rebound in exports, moderating wage growth and a pick-up in import demand. However, this is dependent on political stability and the effective implementation of structural reforms to address fiscal challenges, plus a potential risk from a slower-than-expected recovery in demand from the European Union.

Inflation is expected to reduce to circa 1.60% – 1.80% due to lower prices of goods and energy, whilst the unemployment rate has been projected as a small increase to 6.20% due to a short-term consequence of reforms in both the labour market and pension arena. Analysts advise that the budget deficit is expected to rise to 5.5% GDP, mostly due to increased spending in the defence sector and rising interest payments on the public debt, which is predicted to continue upward to circa 109.80% of GDP.

Key economic drivers for 2026 are increased investment, where analysts advise that gross fixed capital formation is expected to rebound, supported by improved financial conditions. Further boosts to investment will come in the form of significant public expenditure on infrastructure projects financed by the European Union’s RRF, plus increased spending on the defence sector. Increased export growth is predicted for 2026, helped by improving cost competitiveness; however, as with other countries, U.S. tariffs and continuing trade uncertainty could dampen the outlook for exports to the United States and key eurozone partners.

Turkey

According to a number of financial commentators, the outlook for the Turkish economy is a continuation of the disinflation process, along with a moderate and resilient GDP growth, which is expected to grow by 3.80% rising to USD 1.84 trillion. Inflation forecasts suggest a figure of 23% by the end of 2026, with the central bank setting a target of 20% for the same period. The economy of Turkey is expected to maintain its monetary easing cycle throughout 2026; however, the government must guard against key risks, which are domestic political uncertainty and persistent inflationary pressures. The budget deficit is expected to narrow, with the World Bank advising a figure of 3.60% of GDP, with other projections suggesting that the labour market will remain stable.

Positive signs for the economy are the continued implementation of orthodox economic policies by the government, which is seen as crucial for restoring fiscal discipline and reducing inflation. Furthermore, the government’s medium-term economic programme outlines structural reforms aimed at transitioning towards high-value-added industries and a green economy.

Poland

Experts are predicting that in 2026, the Polish economy will continue its strong growth, forecasting a growth rate of 3.50% of GDP, supported by public investments and European Union funds. The forecast for inflation is expected to be in the region of a decrease of 2.90% – 3.80%, whilst wages are expected to rise by circa 7.60%. However, due to persistent government spending, the public debt-to-GDP ratio is expected to increase in 2026, whilst rising further to 70% in 2027.

There are several risk factors to be considered, and whilst the absorption of EU funds is critical for growth, the successful implementation depends on meeting certain reform requirements. On the fiscal front, excessive government spending, especially on social and defence programmes, is increasing debt levels and putting pressure on the budget, despite fiscal consolidation plans by the government. As already advised, inflation is expected to fall, but persistent wage growth and other price pressures could have a negative impact on reducing inflation.

In 2026, the Polish economy is expected to outperform the European Union average, with primary drivers being strong domestic demand based on rising wage growth and significant public investment financed by EU funds, especially RRF (Recovery and Resilience Facility). However, as mentioned above, the government cannot afford to miss the deadline.  The national currency (Zloty) is expected to remain stable, benefiting from prospects of strong growth. However, predictions may well be subject to external pressures such as geopolitical tensions and global trade policy, where U.S. tariffs could potentially affect demand from Germany.

On the equities front, analysts suggest that the outlook for the Eurozone in 2026 is one of cautious optimism, with modest gains being driven by strategic spending and attractive valuations, but caution is advised due to a strong euro and political uncertainty. European equities are trading at a significant discount compared to their counterparts in the United States, making them an attractive option for investors. The ECB (European Central Bank) has finished (or just about finished) its quantitative easing or rate-cutting cycle, with many analysts predicting that rates will remain stable at 2% throughout 2026, and an environment containing stable rates is usually conducive and supportive of equity markets.

What Happens if the U.S. Supreme Court Rules President Trump’s Tariffs Illegal?

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President Donald Trump’s tariffs are now subject to a ruling by the U.S. Supreme Court (SCOTUS). On 5th November, the Court heard consolidated oral arguments in Learning Resources Inc v Trump and V.O.S. Selections Inc v Trump, two high-profile cases challenging President Trump’s use of the IEEPA*** (International Emergency Economic Powers Act) to impose global tariffs, specifically the Trafficking Tariffs* and Reciprocal Tariffs**. SCOTUS has agreed to fast-track its decision, expected in late 2025 or early 2026. A ruling against the administration would severely restrict the President’s ability to impose global tariffs and would significantly weaken the White House’s bargaining position in ongoing trade negotiations.

*Trafficking Tariffs – these are recent U.S. import taxes imposed by the Trump administration to address what it declared a national emergency relating to illegal immigration and drug trafficking, particularly fentanyl. The tariffs target goods imported from Mexico, China, and Canada, countries identified as key points in the drug supply chain into the United States.

**Reciprocal Tariffs – these tariffs are designed as a retaliatory or “tit-for-tat” measure, imposing import taxes that match tariffs charged by trading partners. Their main objectives are to correct trade imbalances, level the playing field, and pressure other countries to reduce their tariffs. Earlier this year, President Trump argued that the trade imbalance between the U.S. and many partners was excessive, and therefore imposed punitive tariffs that far exceeded those used by other countries exporting to America.

***IEEPA – the International Emergency Economic Powers Act (1977) gives the President authority to declare a national emergency and regulate international economic transactions in response to external threats. This may include imposing sanctions, freezing assets, or other restrictive measures. Historically, it has been used to counter threats such as terrorism and cybercrime. Under President Trump, however, IEEPA was invoked to justify the imposition of import tariffs, a use now being legally contested.

President Trump has warned that it would be “devastating for our country” if SCOTUS rules against his tariffs, calling the cases “two of the most important in our history”. Experts suggest that an adverse ruling could force the government to pay more than $100 billion in refunds. It would also eliminate much of the leverage the administration currently uses in trade negotiations and could create significant uncertainty in geopolitical discussions with the EU, China, and other trading partners.

If SCOTUS rules for the plaintiffs and strikes down Trump’s use of IEEPA to impose blanket tariffs, the President does retain several alternative legal mechanisms to reintroduce similar measures. These include:

Section 338 of the Tariff Act of 1930, which authorises the President to impose tariffs of up to 50% (or more in certain cases) on countries that take discriminatory trade measures against the U.S. However, there are limitations, including a 50% tariff cap unless discrimination persists and a mandatory 30-day delay in tariff collection.

Section 122 of the Trade Act of 1974 allows tariffs to address a large balance-of-payments deficit. However, there are limitations in which the President can only impose a global tariff of 15% and for a maximum duration of 150 days. This may be less appealing to the current administration.

Section 232 of the Trade Expansion Act empowers the President to impose tariffs on national security grounds targeting specific sectors. There is a no tariff cap imposition or time limit, but it does require an extensive investigation process by the Department of Commerce. This must also be sector-specific, giving the President far less latitude than IEEPA.

While the President has additional legal avenues available, he will be hoping that SCOTUS dismisses the cases and rules in favour of the administration. Analysts note that the Court will need to weigh the increased costs borne by U.S. companies, the impact on America’s global reputation, and whether ruling against the President would diminish U.S. leverage in trade negotiations, geopolitical affairs (including the Russia–Ukraine war and Gaza), and international economic relations.

The Record-Long U.S. Government Shutdown Has Come to an End

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Global shares rose on Monday, 10th November, largely driven by sentiment that the historic U.S. federal government shutdown was finally nearing an end. The day before, on 9th November, the U.S. Senate advanced an agreement that would potentially reopen the federal government and end a shutdown then in its 40th day, which had furloughed federal workers, disrupted air traffic, and delayed food aid programmes.

On Wednesday, 12th November, the Senate voted on a House-passed procedural bill amended to fund the government until 30th January 2026. The Senate passed the measure and sent it back to the House of Representatives, where it was approved the same evening by a vote of 222–209. As in the Senate, Democrats largely opposed the bill because it did not include their key demand: renewal of subsidies for Affordable Care Act insurance policies, which are set to expire on 31st December 2025.

Later that evening, at 10:24 p.m. EST, President Donald Trump signed the legislation into law, officially ending the longest government shutdown in U.S. history (43 days). Experts estimate it may take federal workers until the end of the year to clear the accumulated backlog. Transport Secretary Sean Duffy indicated that current flight restrictions at major U.S. airports could take up to a week to lift. Delta Airlines’ CEO reported that over 2,000 flight cancellations linked to the shutdown will negatively affect the company’s quarterly earnings, with holiday bookings down by approximately 5%–10%.

According to data from the Congressional Budget Office (CBO), the shutdown cost the government USD 3 billion in back pay for furloughed workers and USD 2 billion in lost tax revenue, mainly due to reduced IRS tax-compliance activities. The CBO further estimates that the total impact on the U.S. economy could range between USD 7 billion and USD 14 billion, with Q4 GDP potentially falling by 2% due to reduced government spending. In a letter dated 29th October 2025 to the House Budget Committee, the CBO director noted: “Although most of the decline in GDP will eventually be recovered, the CBO estimates that USD 7–10 billion will not be recovered.”

Federal Reserve officials are now preparing to determine whether to cut interest rates again at their December policy meeting. Unfortunately, limited data availability — due to the shutdown’s impact on the Bureau of Labour Statistics (BLS) and the Bureau of Economic Analysis (BEA) – may hinder their decision-making. However, it is hoped that all necessary data will be available by the meeting on 10th December 2025, unlike the previous meeting on 28th–29th October, when they had only partial data.

The legislation signed by President Trump only funds the federal government until 30th January 2026. This stopgap gives Democrats ample time to renew their demands for the reinstatement of Affordable Care Act insurance subsidies, which will have expired by 31st December 2025. Should lawmakers fail to reach an agreement on this contentious issue, the American public may once again have to brace for another federal government shutdown.

Switzerland Close to Agreeing a Lower Tariff Rate with the United States

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The Swiss government is reportedly close to agreeing a reduced tariff rate of 15% with the White House. However, experts caution that no deal will be finalised without the explicit approval of President Donald Trump. Switzerland has been subjected to one of the highest tariffs — 37%, announced by President Donald Trump at the end of July this year and implemented on 7th August. The measure has posed a serious threat to key Swiss exports such as watches, precision machinery, pharmaceuticals, and chocolate, making them significantly more expensive in one of their largest markets compared with products from countries facing lower tariffs.

According to sources close to the negotiations, Swiss Economy Minister Guy Parmelin has maintained regular contact with U.S. trade authorities, including a constructive video conference last Friday with Jamieson Greer, the U.S. Trade Representative. Earlier this week, President Trump stated that he was “working on a deal” to reduce tariffs on Swiss exports to the United States, though he did not specify an exact rate.

Swiss officials have reportedly offered a package of investment proposals and pledges aimed at reducing the U.S. trade deficit. This includes greater market access for American energy firms in Switzerland, increased spending on U.S. defence equipment, and a commitment to expand gold refining capacity within the United States. Analysts suggest these concessions have paved the way for a possible breakthrough on tariffs.

In addition to official negotiations, when talks stalled in September, progress may have been revived by a charm offensive from prominent Swiss business figures — Rolex CEO Jean-Frederic Dufour, Cartier-owner Chairman Johann Rupert, and billionaire Alfred Ganter, co-founder of Partners Group, a key stakeholder in both Universal Genève and Breitling. Their visit to the Oval Office is believed to have improved the diplomatic tone, though it remained the task of Swiss officials to deliver a deal compelling enough to win over President Trump.

Analysts suggest that this potential agreement comes at a critical moment, as early signs indicate that high tariffs have begun to harm the Swiss economy. The Swiss National Bank recently stated that the economic outlook “has deteriorated due to significantly higher tariffs,” with unemployment rising to its highest level in four years. Financial commentators warn that tariffs are weighing on economic growth, with Q3 output (adjusted for sports events) expected to have contracted by 0.2%. Nonetheless, a 15% tariff would represent a highly positive development for Swiss industry, particularly the watch sector, given that the United States accounts for 19% of all Swiss watch exports.

Lukoil Declares Force Majeure in Iraq

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Russian oil major Lukoil has declared a force majeure at its Iraqi oilfield West Qurna-2, as it struggles under the recently imposed sanctions by the United States. The declaration marks the most significant fallout from the sanctions as President Trump continues his efforts to broker peace between Russia and Ukraine. Lukoil, which has considerable exposure to international markets, has already failed in its attempt to sell its foreign assets to Gunvor (a Swiss commodity trader), after the United States signalled its opposition to the deal.

West Qurna-2, located approximately 40 miles (65 kilometres) northwest of the port city of Basra, is considered the jewel in the crown of Lukoil’s assets and is among the world’s largest oilfields. The company has maintained a global presence through upstream oil and gas projects, as well as refining and fuel retail networks across Europe, the Middle East, the Americas, and Central Asia. Outside Russia, Lukoil accounts for around 0.5% of global oil output, equivalent to approximately 500,000 barrels per day (BPD).

Lukoil owns 75% of West Qurna-2, which, according to data released in April this year, was producing about 480,000 BPD. However, following the declaration of force majeure, Lukoil now has the right to suspend contractual obligations. Experts note that the field will not be shut down entirely, as operations have been handed over to two state-run Iraqi companies. Indeed, SOMO (Iraq’s State Oil Marketing Company) has already cancelled three Lukoil cargoes scheduled for loading in November. Furthermore, Iraq has halted all crude and cash payments to Lukoil since the new sanctions came into force.

Analysts report that, according to an unnamed Iraqi official, if Lukoil fails to resolve the force majeure conditions within six months, the company will be required to cease production and withdraw from the project entirely. Lukoil’s ongoing difficulties have prompted what experts describe as a scramble across Europe to maintain operations at the company’s assets ahead of the 21st November deadline, when all dealings with Lukoil must cease. In Bulgaria, for example, the government has taken steps to assume full control of the country’s largest refinery to safeguard jobs. Several countries have also requested that Washington issue licences allowing them to continue operating Lukoil’s assets beyond the November cut-off date.

Despite Lukoil’s declaration of force majeure in Iraq, crude oil prices opened lower today, with analysts observing that market sentiment remains largely bearish due to projections of oversupply. Many oil market commentators suggest that with OPEC production increasing, global demand slowing, and economic growth weakening across major oil-consuming nations, bearish sentiment continues to dominate the supply side.

Bank of England Keeps Interest Rates on Hold

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In a knife-edge vote, with Governor Andrew Bailey casting the deciding ballot, the MPC (Monetary Policy Committee) voted 5–4 to keep interest rates on hold at 4.00%. It was a narrower margin than expected, with one poll of economists prior to the announcement predicting a 6–3 vote in favour of keeping borrowing costs unchanged. Indeed, two Deputy Governors of the Bank of England, David Ramsden and Sarah Breeden, along with the rest of the minority, voted for a 25-basis-point rate cut. It was also the first time that Sarah Breeden voted against the majority since joining the MPC in 2023.

Although inflation remains almost double the Bank’s target, officials announced after the vote that they believe inflation has now peaked at 3.8%. The MPC also signalled that rates could fall to 3% by 2028, while some analysts predict that cuts could come sooner. Experts suggest that Governor Bailey’s deciding vote was influenced by several factors, one being his desire not to appear biased towards the government, particularly with the Chancellor’s Budget just around the corner. It is also thought he preferred to wait and see what fiscal measures the Chancellor will announce, especially as she has been signalling a short-term increase in taxes.

Minutes released from the MPC meeting showed that Governor Bailey was the most dovish among the majority. In a written statement, the Governor said: “We still think rates are on a gradual downward path, but we need to be sure that inflation is on track to return to our 2% target before we cut them again”.

A number of market experts have described this as a “dovish hold”. Governor Bailey also remarked that “upside risks to inflation have become less pressing since August”. Analysts suggest that another reason for maintaining rates was the Governor’s preference to wait for further evidence that inflation is continuing to decline.

Interestingly, several financial experts believe that the Bank of England’s latest inflation forecast has paved the way for an interest rate cut (estimated at 25 basis points) when the MPC meets again on 18th December. Data shows that the Bank of England has cut interest rates five times since Labour won the general election on 4th July 2024. Following today’s decision, Governor Bailey noted that “the MPC would have an opportunity to consider the Budget before its 18th December meeting”.

If, as suspected, the Budget includes tax increases, analysts predict that weaker demand could follow, pushing inflation lower in 2026 and thereby creating a plausible case for a rate cut in December.

Taking a Fiscal Holiday from the UK

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How Wealthy Individuals Can Protect Their Capital, Leverage Arbitrage, and Live Free While the Storm Passes

Introduction

There are moments in history when prosperous individuals face more than the usual commercial and personal challenges. They face governments intent on taxing away their achievements, cultures that punish success, and fiscal systems that transform aspiration into liability. Today’s United Kingdom increasingly reflects that predicament.

Taxes are rising, rhetoric is hostile, and those who have built fortunes through effort, intelligence, and enterprise are being portrayed as the problem rather than the solution. For those who have created and preserved wealth, the question is no longer whether to act, but how to act intelligently.

One elegant solution is the Fiscal Holiday — a temporary, structured exit from the UK tax regime that enables wealth to be protected, income optimised, and a lifestyle enjoyed, without permanently cutting ties.

This article explores in depth how a Fiscal Holiday works, why the timing is ideal, and how it can be structured for maximum advantage.

Why Wealthy Individuals Are Looking for Alternatives

Political Climate in the UK

A far-left Labour government is committed to increasing taxes on income, capital, and inheritance. Those who employ people, create jobs, and generate prosperity are increasingly targeted as a source of revenue for redistribution.

Rising Taxation and Reduced Freedom

  • Income tax thresholds are frozen, creating stealth taxation.
  • Inheritance tax reforms are openly discussed.
  • Capital gains tax increases are likely.
  • Non-domicile status is being eroded.

For individuals with significant assets, this means one thing: escalating tax burdens that diminish wealth and restrict freedom.

Global Alternatives Are Attractive

At the same time, jurisdictions such as Switzerland continue to offer stability, discretion, and attractive financial tools. Swiss banks provide access to Lombard lending — secured loans against investment portfolios — at interest rates well below UK borrowing costs.

Combined, these conditions create an opportunity for intelligent arbitrage.

The Concept of a Fiscal Holiday

A Fiscal Holiday is not permanent emigration. It does not require renouncing British ties or liquidating assets. Instead, it is a temporary restructuring of one’s residency and financial flows to achieve three goals:

  1. Avoid punitive taxation during unfavourable political cycles.
  2. Leverage global banking tools for arbitrage profits.
  3. Enjoy lifestyle freedom while preserving the option to return.

In essence:

  • Unlock liquidity from UK assets.
  • Invest those funds in secure gilt instruments.
  • Use them as collateral for Swiss franc Lombard loans.
  • Deploy the loans into lifestyle assets — such as a yacht — while stepping outside UK tax residency.
  • Offset borrowing costs in the UK through rising rental income.
  • Unwind the structure when conditions improve.

How the Fiscal Holiday Works – Step by Step

Step 1: Borrow Against UK Assets

Raise liquidity against UK property or real estate portfolios. These assets are typically illiquid but can be pledged to raise significant borrowings.

Rental income from UK holdings often offsets interest expenses, especially with rental yields rising due to housing shortages. This allows liquidity to be raised at little or no net cost — and sometimes even with positive cash flow.

Step 2: Transfer Liquidity Offshore

Transfer the borrowed funds to a Swiss private bank — the global benchmark for discretion, security, and sophisticated wealth management.

Step 3: Acquire UK Gilts

Invets the offshore funds into UK government gilts. Advantages include:

  • Security of principal (UK sovereign debt).
  • Predictable income streams.
  • Strong collateral value for Swiss banks.

Long-dated gilts yielding 4–5% can be particularly effective.

Step 4: Pledge Gilts for Lombard Loans

Pledge the gift portfolio to a Swiss private bank to obtain Lombard loans in Swiss francs (CHF).

  • Typical loan-to-value: 65–75%.
  • Interest rates: significantly below gilt yields.
  • The result: a net arbitrage profit.

Step 5: Deploy Lombard Proceeds

Use the loan proceeds — in CHF, euros or USD — to purchase lifestyle assets such as a yacht.

The yacht offers:

  • Offshore residency (a floating home).
  • Global cruising freedom.
  • Charter potential for income generation.

Step 6: Non-Residency & Fiscal Safety

By living offshore — aboard a yacht or in low-tax jurisdictions — individuals can remain outside the UK’s Statutory Residence Test, ensuring freedom from UK taxation on global income during the Fiscal Holiday.

Step 7: Reversal and Return

When UK fiscal conditions improve, the process can be reversed:

  • Sell or refinance the yacht.
  • Repay Lombard loans.
  • Liquidate gilts if necessary.
  • Repay UK property borrowings.
  • Re-establish UK residency with wealth fully preserved.

The Added Advantage: Rental Income

UK rental income currently favours landlords:

  • Chronic undersupply of housing.
  • High mortgage rates are pushing demand for rentals.
  • Rising rents provide consistent income growth.

For wealthy individuals with real estate portfolios, this trend is highly favourable. When borrowings are raised against property, the interest expense is usually — and often more than — covered by incoming rental income.

Thus:

  • Borrowings can be fully covered by rent.
  • Rental income rises even as debt costs remain stable.
  • The Fiscal Holiday is self-funding without diminishing core wealth.

A Comprehensive Worked Example

Let’s build a more detailed model.

Assets

  • UK property portfolio: £20 million.
  • Net rental yield: 5% (increasing annually).
  • Current rental income: £1 million per annum.

Step 1: Borrow Against Property

  • £5 million facility secured against portfolio.
  • Interest cost: 4% = £200,000 p.a
  • Rental income covers interest, leaving £800,000 surplus.

Step 2: Transfer Funds Offshore

  • £5 million transferred to a Swiss private bank.

Step 3: Acquire Gilts

  • £5 million invested in long-dated gilts at 4.5%.
  • Annual return: £225,000.

Step 4: Lombard Loan

  • Gilts pledged at 70% loan-to-value.
  • Lombard loan: £3.5 million equivalent.
  • Interest rate: 1.75% (CHF).
  • Annual cost: ~£61,000.

Step 5: Arbitrage Profit

  • Gilt income: £225,000.
  • Lombard loan cost: £61,000.
  • Net Arbitrage profit: £164,000 p.a

Step 6: Yacht Purchase

  • £3.5m Lombard proceeds used to buy a 40-metre yacht.
  • Yacht offers global mobility and potential charter income of £400,000–£500,000 p.a

Net Result

  • The UK property portfolio continues to generate £1m in rental income, offsetting UK borrowing costs.
  • Arbitrage generates £164,000 annually in Switzerland.
  • Yacht provides both lifestyle benefits and income.
  • UK tax residency is suspended — shielding global gains.

After 5 years:

  • Yacht sold or refinanced.
  • Loans repaid.
  • Assets intact.
  • Wealth preserved and enhanced.
  • UK residency can be re-established.

Lifestyle Benefits of the Fiscal Holiday

Beyond financial advantages, the Fiscal Holiday offers:

  • Freedom of Movement: Live globally without fiscal constraint.
  • Exploration: Cruise the Mediterranean, Caribbean, or beyond.
  • Privacy: Reduced scrutiny via offshore structures.
  • Quality of Life: More time for family, travel, and personal pursuits.

Key Risks and Considerations

  • Residency Planning: The UK’s Statutory Residence Test must be managed carefully.
  • Currency Exposure: GBP/CHF exchange rates require hedging.
  • Liquidity: Gilt maturities should align with Lombard terms.
  • Yacht Costs: Operating expenses must be budgeted or offset through chartering.
  • Exit Timing: Political cycles influence the optimal window for re-entry.

Why Switzerland Is Central

Switzerland remains unmatched for:

  • Political stability and neutrality.
  • Competitive CHF lending.
  • Expertise in Lombard structuring.
  • Discretion and professionalism.

No other jurisdiction combines all these advantages.

Conclusion

A Fiscal Holiday is not about fleeing the UK permanently. It is about strategic timing, financial intelligence, and lifestyle freedom.

By leveraging UK property, offsetting borrowings with rental income, acquiring gilts, securing Lombard loans in Switzerland, and investing in lifestyle assets such as yachts, wealthy individuals can:

  • Shield themselves from punitive taxation.
  • Generate ongoing arbitrage profits.
  • Maintain rising income streams.
  • Enjoy global freedom and privacy.
  • Retain the option to return when conditions improve.

In short, it is a strategy that protects wealth, preserves dignity, and ensures that success is enjoyed — not penalised.

For those with foresight, the time to plan a Fiscal Holiday is now.

Bitcoin Continues to Fall After October Crisis

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Yesterday, Tuesday 4th November, Bitcoin fell 7.4%, dropping below the $100,000 mark ($96,794) for the first time since 23rd June this year. Experts in the sector suggest that Bitcoin holders, as well as cryptocurrency investors in general, have been selling this risk-on asset amid growing concerns over current stock valuations, which have likely been driven to unsustainable heights by the Artificial Intelligence (AI) trade. Bitcoin has now fallen 20% from its record high reached in October. While there was some recovery earlier today in New York, traders in the options markets are, according to analysts, placing bets on further declines.

Analysts suggest that one reason for the latest fall in Bitcoin’s price is that long-term holders of the cryptocurrency have, over the last month, offloaded approximately 400,000 coins with a combined value of $45 billion. Unlike the forced leveraged selling seen last month, the current decline is more measured, representing a continued sell-off in the spot market. This price fall has also diverged from the usual pattern where bursts of volatility stem from liquidations in the futures market. Data released by CoinGlass — a cryptocurrency derivatives data analysis platform providing real-time information- shows that since yesterday morning, around $2 billion in crypto positions have been liquidated.

One market expert has stated that a market imbalance is emerging. As leverage remains relatively subdued, attention has turned to long-term holders who are now selling Bitcoin. There appears to be a growing disconnect between these long-term sellers and first-time buyers, which is shaping a market no longer driven solely by sentiment. Analysts have observed that since major holders with between 1,000 and 10,000 Bitcoins (so-called “mega-whales”) began offloading large portions of their portfolios, and since last month’s crash, overall demand has waned.

Other analysts, however, suggest that despite the absence of specific bad news, the market is fatigued and struggling under multiple pressures. There are ongoing concerns regarding the trade war, whether tariffs will hold, and whether the Supreme Court will decide if such tariffs are legal. Added to this are the continuing government shutdown, spiralling public debt, overpriced stocks, and caution over U.S. interest rates. Furthermore, one analyst commented that fundamentals remain weak across the board following last month’s major sell-off.

Market commentators remain divided over Bitcoin’s near-term future. One analyst suggested that now Bitcoin has fallen below the $100,000 threshold, it could drop as far as $70,000 before resetting and recovering. Others, however, believe that Bitcoin will gradually climb back if economic and geopolitical conditions improve, particularly if the United States-China trade talks yield a stable agreement. Despite a recent outflow from Bitcoin ETFs, experts remain broadly optimistic that fund managers could see gains over the coming months, though with fundamentals still fragile, Bitcoin’s price outlook remains uncertain.

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