The Money Brief #6 - 25th May 2026

Three weeks ago we covered the Bank of England's (BoE) worst-case scenario of inflation hitting 6%. This week, the data moved the other way. April inflation came in well below expectations. However, unemployment hit a new high, and most of us are still feeling the squeeze at the pumps and at the shops. The story of the UK economy this week isn't a single direction. It's a tug-of-war.

This week, the ONS delivered a surprising report.

UK CPI inflation (the 12-month rate at which prices are growing) came in at 2.8% for April. Most expected higher: the Bank of England, market analysts, and other key sources had pencilled in 3.0% or above.

So why did it fall?

In April, the new energy price cap kicked in and lowered the average annual dual-fuel bill by £117 to £1,641. Electricity prices alone fell 8.4% on the year, welcome relief for most UK households. Food inflation also eased, from 3.7% to 3.0%.

But is this just temporary relief?

Next Wednesday, 27th May, Ofgem announce the next price cap covering 1st July to 30th September. Cornwall Insight, the most-trusted energy forecaster in the UK expects the cap to rise by around 13%, taking the typical bill back up to £1,850. That's a £209 increase, driven by wholesale price spikes in March and April following the outbreak of the Iran war.

In short: April's reduction is likely to be wiped out… and then some.

Other parts of the basket are still climbing too. Motor fuel prices are up 23% year-on-year the highest annual rise since September 2022. The government's extension of the fuel duty freeze in the Spring Budget kept this from being worse, but the pumps are still feeling the war directly.

The Bank of England has consistently signalled that 2026 would be a volatile year for UK inflation. April's data doesn't change that, it just shows us how much policy intervention is doing the work.

Stay close to the data. We will.

House prices are rising. Sellers are cutting. Banks are paying you 5% to save.

Three signals from three corners of the housing and lending market, and they all point the same way. Whatever the Bank of England decides on 18 June, the market is already telling us where it thinks rates are heading.

Signal 1: The housing market is splitting in two.

Rightmove's May House Price Index showed asking prices rose 1.2% to an average of £378,304 slightly ahead of the typical May increase. Sounds positive. But look closer:

The headline is a seller's market. The data underneath is a buyer's market. Sellers pricing realistically are moving on. Sellers pricing ambitiously are sitting on the market for over four months and being forced to cut anyway.

Signal 2: Banks are pricing for higher for longer.

This week Nationwide launched a new 5% Member Exclusive Bond, paying 5% AER for 18 months up to £10,000, available to around 16 million members. It's currently the best 18-month fixed savings rate on the market.

Banks don't lock in 5% for 18 months if they expect base rate to fall. They do it when their internal forecasts say rates will stay sticky or potentially rise.

Signal 3: Gilt markets are saying the same thing.

The yield on the UK 10-year gilt (the interest rate the government pays to borrow over 10 years) sat at 5.19% on 18 May, close to a 28-year high. UK lenders use gilt yields to price fixed-rate mortgages. When gilts rise, mortgage rates follow.

What it means for you

This week's CPI surprise gave the BoE room to cut rates on 18 June. But the housing market, the savings market, and the bond market are all telling a different story. They're not pricing in a cut. They're pricing in stickier rates and potentially a rise over the next 6-12 months.

If your mortgage deal is ending in the next 6 months, it could be worth understanding where current rates sit and what a fee-free mortgage broker might find for your circumstances. If you have savings sitting in a low-rate easy access account, the Nationwide Bond and similar fixed-rate options elsewhere in the market may be worth comparing.

Sources: Rightmove, Nationwide, ONS, UK Debt Management Office

You probably don't know which pension fund your workplace pension is in. You're not alone. Over 99% of people never look.

Last week we covered the American AI giants quietly sitting inside UK workplace pensions through global tracker funds. This week, the UK side of that pension. How well is it actually performing against its own benchmark? And the data is, frankly, alarming.

Two big reports landed in May that should make every UK worker stop and check.

Finding 1: Most UK workplace pensions are underperforming the market they're supposed to track.

Analysis from Investing Insiders, published in February and updated in May, looked at over 5,900 medium-to-high risk pension funds and compared their five-year returns to the FTSE 100. The results were stark:

Put simply: nine out of ten UK pension funds in the higher-growth categories failed to keep pace with the UK stock market index they were measured against. The default funds most UK workers are auto enrolled into.

Finding 2: A single percentage point makes a six-figure difference.

Pension contributions of £250 per month over 45 years grow to around £495,000 at a 5% annual return. The same contributions at 4% grow to £373,000.

That's a £120,000 shortfall from a single percentage point difference. Compound growth is unforgiving over a 45-year career.

Finding 3: Almost nobody is paying attention.

Nest, the UK's largest workplace pension scheme with 13.8 million members, reports that over 99% of its members have never moved from the default investment option they were automatically enrolled into. They have no idea what their money is invested in, what fees they're paying, or whether their fund is performing.

What it means for you

If you have a UK workplace pension and you've never checked which fund you're in, you're in the same position as roughly 99% of the country. That's not a judgement. It's by design. Auto-enrolment was created to get more people saving, not to make them confident investors.

But the data is clear. The default option is not always the best option. And the gap between a good performer and a poor performer can be measured in tens of thousands of pounds over a career.

This week's One Thing To Know section walks through three practical things you can do to find out where your pension actually sits.

Sources: Investing Insiders (Five-Year Pension Fund Performance Tables 2026), Nest, MoneyWeek, GB News

A quiet week for crypto news. A noisier one for crypto prices.

Two weeks ago Bitcoin was knocking on $82,000. Last week we covered it sitting around $78,000 after the CLARITY Act vote. This week, it's pulled back further.

The current picture:

No single trigger for the move. A mix of profit-taking after the CLARITY Act vote, broader risk-off sentiment from global markets, and Bitcoin failing to convincingly break through the $82,000-$86,000 resistance zone.

On the CLARITY Act: no material progress this week. The bill cleared the Senate Banking Committee on 14 May (covered in last week's brief) and now sits with the full Senate, awaiting reconciliation with the separate House version that passed last year. Polymarket, the prediction market platform where traders bet on real-world events, currently gives the bill a 60% chance of passing in 2026. Down from higher odds earlier in the month.

The unresolved issues remain the same. Law enforcement safeguards, conflict-of-interest provisions, and questions over how the SEC and CFTC will split day-to-day oversight in practice.

The pattern crypto investors will recognise: regulation takes time. The CLARITY Act's progress so far has been steady but slow, and the next major milestone is unlikely before June. Patience required.

Sources: CoinDesk, Coinpedia, Polymarket, Senate Banking Committee

Crypto assets are high-risk and largely unregulated in the UK. Values are extremely volatile. You could lose all the money you invest. This is not investment advice. Never invest more than you can afford to lose.

For most people, the cost of living is a personal experience. This week, the UK employment data shows just how hard it's hitting workers.

Three figures from this week's ONS labour market release tell a connected story.

UK unemployment hit 5.0% in the three months to March 2026. That's up from 4.5% a year ago, and the highest rate since the height of the pandemic in 2021. In real numbers, that's an extra 192,000 people out of work compared to last year.

The vacancies: down to 705,000. That's a five-year low. The number of people chasing each available job is now at its highest since 2021. If you've been job hunting recently, you're not imagining it. The market is genuinely tighter than it has been in years.

The payrolled workforce: down 210,000 in a single year, with 100,000 jobs lost in April alone. Hospitality and retail are leading the contraction, with employer National Insurance increases and rising minimum wage costs squeezing the sectors that employ the most entry-level workers.

Where it hits hardest: youth unemployment is now 16.2%. That's the highest level in over a decade. For context, that's 1.81 million people aged 16+ unemployed. For people just starting careers, the door isn't just harder to push open. It's almost closed.

And the pay picture: real wage growth is just 0.3%.

Put simply: your pay packet is technically growing, but only by a fraction of a percent vs inflation. After tax, after rising bills, after the energy cap rise coming in July, most households will feel poorer at the end of the year than the start, despite a pay rise.

What it means for you

This isn't just a labour market story. It's the visible end of a chain of policy and economic decisions that's been building for years.

The UK's tax burden is now at its highest level since 1949, with public spending close to 45% of GDP. Levels last seen during the 2008 financial crisis and the 1970s oil shock. Businesses are absorbing rising National Insurance contributions, higher minimum wages, and elevated energy and borrowing costs. The result is predictable. Fewer permanent hires, slower wage growth, more redundancies in the sectors that employ the most people.

Meanwhile, the path back to lower interest rates isn't as clear as last week's CPI surprise might suggest. As covered in Rates & Mortgages, the housing market, the savings market, and the bond market are all pricing in rates staying sticky for longer. The energy price cap rise in July will reverse much of April's inflation drop. The Bank of England's room to cut on 18 June is narrower than the headlines suggest.

So the chain looks like this. Costs stay high. Taxes stay high. Rates don't fall meaningfully. Businesses can't expand or pay more. Wages don't outpace inflation. Households feel poorer, even with a pay rise.

Until one of those links breaks, the squeeze continues. The data this week shows it's still tightening, not easing.

If you or someone you know has been affected by recent redundancies, MoneyHelper offers free, government-backed guidance on managing finances during job transitions.

Sources: ONS Labour Market Overview May 2026, Indeed Hiring Lab, House of Commons Library

Last week's brief covered the American AI companies, Anthropic, OpenAI, Nvidia, quietly sitting inside UK workplace pensions. That might sound contradictory. UK pension, US companies. How?

The answer: most UK workplace pensions don't actually hold UK-only assets. The default funds your contributions are auto-enrolled into typically invest in global tracker funds, which hold shares in major companies around the world. The largest of those companies are American tech giants. Apple, Microsoft, Amazon, Google, Nvidia. Plus their suppliers and partners.

So whether you've actively chosen to invest in big US tech or not, you almost certainly already do. You just don't know it.

That's not a problem. It's how globally diversified investing works. But it does mean you should understand what's actually inside your pension before assuming you know what you own.

Three simple checks. Each one takes less than ten minutes. You don't have to act on anything you find. Just knowing puts you ahead of the 99% who've never looked.

1. Find out who manages your pension.

Look at your most recent payslip or check with your HR team. The provider is usually one of the big names. Nest, Aviva, Legal & General, Scottish Widows, Standard Life, or Royal London. Once you know, register on their app or website. You'll usually need your company pension reference or policy number to sign up. Both can be found on your payslip, an old pension statement, or by asking your HR or payroll team directly. Most setups take five minutes once you have those details ready.

2. See what you've got in there.

Once you're logged in, you'll see your current pension value and the name of the fund you're invested in. It's often called something like "Default Lifestyle Fund" or "Retirement Pathway 2050". Most providers will then let you click through to see the actual holdings, usually in a 'how your funds are invested' section. This is where you might be surprised. American tech, global banks, energy giants, all sitting in your "UK" pension.

3. Take a look at the performance.

Your provider will show you how your fund has performed over the last year, 3 years, and 5 years. You don't need to compare it against anything yet. Just see it. Get familiar with the numbers.

A quick note on benchmarks. The FTSE 100 returned around 84% over the last five years, and the S&P 500 returned even more. Those numbers are real, but they're also unusually high. The last five years included three years of 20%+ returns and one year of nearly 20% losses in 2022. They were shaped by the pandemic, post-pandemic recovery, geopolitical events, and a surge in tech valuations.

A more typical long-term annual return from a diversified pension fund is around 5-8%. That's the level most people should expect across a 30 or 40-year career, with good years and bad ones along the way. Anything significantly above or below that range over a five-year period is worth understanding, not panicking about.

That's it.

No need to switch funds. No need to increase contributions. No need to do anything other than know what you have. Awareness is the first step. The 99% who never look are the people most exposed to underperformance over a 30 or 40-year career.

For free, government-backed guidance on understanding your pension and what options are available, MoneyHelper is the best starting point. They are independent, FCA-aware, and cost nothing.

A surprise inflation drop, a labour market under strain, banks pricing in higher-for-longer, AI giants quietly sitting in your pension fund, and Bitcoin still finding its footing. The economy this week wasn't a single story. It was a tug-of-war.

If you found this useful, the easiest thing you can do is keep reading. Each week we cover what's happened, why it matters, and what it could mean for you. No jargon. No 30-minute reads. Just clarity.

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Next week: Ofgem confirm the July price cap on Wednesday 27 May. We'll cover what it means for your bills, and the BoE meets two weeks later on 18 June. Both decisions land inside the next three weeks. We'll be ready.

See you Monday.

Ellis

themoneybrief.co.uk

The Money Brief. Not financial advice. The Money Brief provides news and commentary for informational purposes only. We are not FCA-regulated. Crypto and investments can go down as well as up. Always consult a qualified adviser before making financial decisions.