Weekly Briefing: Borrowing Above Forecasts, State Pension Review, US Investment & Property Price Shifts

This week’s briefing uncovers updates on multiple fronts: UK government borrowing jumps sharply; speculation about tax rises; a record-breaking dip in housing market asking prices; and what Labour’s early review of the state pension age could mean for long-term fiscal planning. Meanwhile, across the Atlantic, we cover how U.S. tariffs are reshaping global pharma investment.

Keep reading for a closer look at how these developments are shaping the road ahead.

Millions may face delayed retirement as Labour reviews state pension age

• The Work and Pensions Secretary, Liz Kendall, has announced a review of the UK’s state pension framework, sparking fears that the pension age could rise sooner than planned. While the current age is 66, it's already set to increase to 67 by 2028 and to 68 by 2046. This new commission may recommend accelerating that timeline, with significant implications for millions of future retirees.
  
  
• Official population data shows around 800,000 people reach the state pension age each year. If the pension age were pushed forward, between five and six million people could be affected. Past efforts to speed up increases have faced resistance, but the review comes amid mounting financial pressure on the welfare system and a broader shift in demographics.
  
  
• Kendall acknowledged the challenges in asking people to work longer, especially as more working-age adults report long-term health conditions. She noted that society hasn’t caught up with the reality of longer lives and more complex caregiving responsibilities, with many people now supporting both children and ageing parents.
  
  
• The Secretary warned of a looming “tsunami” of pensioner poverty, driven by unaffordable housing and inadequate savings. Young people, she said, often struggle just to cover rent, leaving little to save for retirement. For those unable to buy a home, retirement could mean continuing to pay rent or mortgages on a fixed income.
  
  
• In an effort to encourage saving, Kendall proposed innovations like “sidecar funding,” which would allow savers to bolt on accessible emergency funds to their pensions. She reaffirmed Labour’s commitment to the triple lock for pensions, though critics argue the policy is becoming increasingly unaffordable in the long term.
  
  
• A taskforce led by Labour peer Baroness Drake will also explore the barriers to pension saving, with nearly half of working-age adults reportedly contributing nothing to private pensions. As Kendall concluded, “My big worry is that so many young people have not got at the moment a hope in hell of getting on the housing ladder... That is what is driving this sort of tsunami of pension and poverty that I think is coming our way.”
  
  
• From a personal investment perspective, this review adds yet another layer of uncertainty to long-term financial planning. If the state pension age rises earlier than expected, individuals may face a longer gap between stopping work and receiving pension income, adding more pressure on private savings, investments, and other income streams.

UK property prices see record July drop, but buyers stay active

• UK property prices recorded their sharpest July decline in over two decades, with the average new asking price falling by 1.2% (£4,531), according to Rightmove. This could reflect a market correction where sellers are being forced to adjust expectations in the face of high housing supply and increased buyer selectivity.
  
  
• London saw the steepest regional decline, particularly Inner London, where prices fell by 2.1%. Factors influencing this trend include recent stamp duty changes, broader economic uncertainty, and sellers’ efforts to remain competitive.
  
  
• Activity remains strong: sales agreed are up 5% compared to July 2023, and buyer inquiries have increased by 6%. Rightmove’s experts suggest this reflects a healthy market where buyers are ready to act, but only if pricing is realistic. Sellers who fail to adapt, risk having their homes linger on the market amid intense competition.
  
  
• Affordability is also gradually improving. Falling mortgage rates and rising wages have helped buyers navigate a landscape that was far more hostile just a year ago. However, Rightmove has revised its forecast for annual price growth in 2025 from 4% down to 2%, citing the continued high number of properties on the market.
  
  
• Colleen Babcock of Rightmove said sellers need to be savvy in pricing their homes, especially with a large supply of alternatives available to buyers. She called it a “stand-out pricing” environment where being too ambitious can backfire.
  
  
• “What’s most important to remember in this market is that the price is key to selling... The decade-high level of buyer choice means that discerning buyers can quickly spot when a home looks over-priced compared to the many others that may be available in their area,” Babcock concluded.

UK borrowing exceeds expectations, fuelling pressure for fiscal change

• Government borrowing surged to £20.7 billion in June,  £6.6 billion more than the same month in 2024 and well above the Office for Budget Responsibility’s forecast of £17.1 billion. This marks the second-highest June borrowing figure on record, driven primarily by a sharp rise in debt interest payments, which more than doubled from £8.0 billion to £16.4 billion.
  
  
• This increase in borrowing and interest payments is likely to add pressure on Chancellor Rachel Reeves ahead of the Autumn Budget. While the government remains committed to its fiscal rules, including the aim to fund day-to-day spending from tax revenues by 2029-30, economists warn that these goals are starting to slip out of reach.
  
  
• Rob Wood from Pantheon Macroeconomics estimates Reeves has gone from having £9.9bn of “headroom” to facing a £13bn fiscal shortfall. To close this gap, she may need to raise taxes or cut spending by over £20bn. This has already prompted calls within Labour ranks to tax wealthier households more heavily.
  
  
• Spending increases also played a role in the borrowing spike, with public sector expenditure up £4.3 billion (excluding debt interest payments), meanwhile, tax and social contributions rose £6.1bn.
  
  
• Tory voices have criticised Labour’s approach. Andrew Griffith called the figures “shocking,” demanding immediate spending cuts to avoid autumn tax rises. However, Reeves has so far resisted major tax pledges, walking a careful line between fiscal restraint and political caution.
  
  
• “There is no denying that fiscal developments have been very disappointing so far this financial year,” said Philip Shaw of Investec. “Rachel Reeves will almost certainly be investigating potential revenue-raising measures.”

AstraZeneca invests $50bn in U.S. as pharma braces for tariffs

• AstraZeneca plans to invest $50 billion in the United States by 2030, in a bold move to boost domestic drug manufacturing and R&D capabilities. The announcement, made by CEO Pascal Soriot in Washington, reflects industry-wide anxiety over Donald Trump’s return to office and his push for U.S.-based pharmaceutical production.
  
  
• The investment will fund a new drug manufacturing facility in Virginia and expand operations across Maryland, Massachusetts, California, Indiana, and Texas. This is part of AstraZeneca’s wider ambition to hit $80 billion in annual revenue by 2030, with half of that coming from the U.S., up from 40% in 2024.
  
  
• Trump’s proposed tariffs on pharmaceutical imports have created urgency across the sector. Drugmakers, historically spared from trade tensions, now find themselves under pressure to onshore operations.
  
  
• Soriot also defended the need for other countries to pay more for drugs, arguing that America has carried an unfair share of global R&D costs. With the U.S. worth $635 billion annually, AstraZeneca sees compliance with domestic policy as essential to protecting its revenue.
  
  
• The shift is also being driven by resilience concerns. COVID-19 and global supply chain disruptions exposed structural weaknesses in international pharma supply, and U.S. regulators are now demanding tighter domestic control over drug production and clinical trial logistics.
  
  
• “The United States cannot build or carry the cost of R&D for the entire world,” Soriot said. “Drug prices need to rise elsewhere and equalise with other countries, effectively contributing more to research and development costs.”

Final Note

As this week's stories continue to unfold, across several sectors the economic mood feels tense. Policymakers, businesses, and markets are all adjusting to new realities. Key government financial data has revealed yet another layer to the growing challenges facing both the Government and the Bank of England. Coupled with an early review of the state pension age, it will certainly be of interest to see how policymakers plan to address these mounting pressures in the months ahead—and we’ll be sure to keep you updated along the way.

The record drop in housing market asking prices may prove to be a short-term correction, triggered by shifting dynamics in supply and demand. It remains to be seen how these movements in the property market will feed through into the wider economy.

Meanwhile, in the US, tariff pressures are having far-reaching consequences. While companies, like AstraZeneca, are ramping up investment in response, the negative effects of these measures are also becoming increasingly apparent.

Back in the UK, attention now turns to the next crucial interest rate decision from the Bank of England, due on the 7th of August. With inflation, growth, employment and fiscal pressures all in play, it will be important to watch how the data evolves over the coming days and what direction policymakers will choose to take.

As always, at GCV, we will strive to keep you updated as all things related unfold.