Weekly Update: UK Inflation Pressure, ISA Questions, Private Market Optimism & Bitcoin’s Latest Surge

This week’s briefing unpacks four key trends that reflect the ongoing push and pull shaping markets and investor sentiment as we head into June.

We start with UK inflation data, which could delay rate cuts from the Bank of England once again. At the same time, crypto adoption continues its upward trajectory, with a new all-time high injecting fresh momentum into the market. Private investment shows positive signs, bolstered by growing investor confidence. On the flip side, while ISAs remain a stable option for 2025/26, there are rising concerns about their future viability among investors and savers.

We’ll also take a quick look at movements in the US markets. For now, read on for a snapshot of the key dynamics influencing the investment landscape for UK investors.

Private Capital Surges Across UK, Fueling £29.4bn Investment

• Private equity and venture capital investment into UK businesses soared 44% in 2024, rising to £29.4bn from £20.4bn the previous year, according to the British Private Equity and Venture Capital Association (BVCA). The data reflects growing investor confidence in British enterprise, with a significant tilt away from London and towards regional growth.
  
  
• Small and medium-sized businesses accounted for 90% of the nearly 1,600 firms that received funding. Notably, nearly 70% of private-capital-supported jobs are now located outside London, underscoring the decentralisation of the UK innovation economy. In total, private capital now supports 2.5 million jobs, up from 2.2 million in 2023.
  
  
• Private capital now contributes nearly £200bn annually to the UK economy, representing around 7% of GDP – up from 6% the year prior. The trend reflects a robust private market ecosystem that is increasingly crucial to national economic resilience and productivity.
  
  
• The BVCA praised the industry’s geographic reach, with chief executive Michael Moore stating, “This industry’s investment touches all four corners of the United Kingdom,” but warned that continued international competitiveness is vital amidst geopolitical uncertainty and shifting tax regimes.
  
  
• “To enable this level of investment to continue, it is important that the government ensures that the UK remains an internationally attractive destination for private capital investment,” Moore concluded.

April Pushes UK Inflation to 3.5% – Highest in Over a Year

• UK inflation ‘unexpectedly’ rose to 3.5% in April 2025, according to the Office for National Statistics (ONS), marking the sharpest increase in over a year. The Consumer Prices Index (CPI) climbed from 2.6% in March, driven by surges in utility bills, council tax, and transport costs.
  
  
• The main drivers were: water and sewerage bills, which rose by 26.1% – the fastest rate since privatisation – while gas and electricity prices rebounded due to changes in the Ofgem price cap. The spike is particularly notable given the Bank of England and City economists had forecast a slightly lower increase of 3.4% and 3.3% respectively.
  
  
• This inflation jump coincides with added cost burdens for businesses, including increases in the national minimum wage and employer national insurance contributions. Monica George Michail of the National Institute of Economic and Social Research said these pressures are likely to keep inflation elevated for several months, potentially prompting only one interest rate cut this year.
  
  
• Businesses are certainly feeling the squeeze. According to the British Chambers of Commerce, 55% of companies now expect to increase prices. The group labelled the situation “a perfect storm” as firms juggle wage hikes, global tariffs, and rising overheads, creating a climate of suppressed growth and more cautious spending.
  
  
• ING analysts noted services inflation jumped from 4.7% to 5.4%, but expect it to retreat towards 4.5% in the summer, potentially supporting a quarterly rate cut trajectory through 2026.
  
  
• While Chancellor Rachel Reeves said she is “determined to put more money in people’s pockets,” Shadow Chancellor Mel Stride argued, “Families are paying the price for the Labour chancellor’s choices.”

ISA Limit Secured at £20,000, But Potential Overhaul Looms

• Chancellor Rachel Reeves has confirmed the £20,000 annual tax-free ISA allowance will be preserved through to the 2025/26 tax year. The reassurance comes amid concerns about potential cuts or reforms to the very popular savings and investment vehicle.
  
  
• A formal consultation is now planned to explore how the UK ISA market could be overhauled. Though no firm proposals have been announced, the review may lead to changes, particularly in how cash ISAs operate, to encourage broader investment into equities and long-term growth assets.
  
  
• The ISA system currently allows investors to allocate their £20,000 allowance across cash ISAs, stocks and shares ISAs, and Innovative Finance ISAs, with full transferability between products. This flexibility has proved essential for many ISA users.
  
  
• Reeves stressed the importance of maximising investment returns for individuals, especially as traditional savings vehicles often underperform equities over the long term. She noted that too much capital remains in low-yield bonds and cash, which risks undermining household financial resilience over time.
  
  
• The Chancellor’s remarks hint at a broader policy aim to boost retail participation in capital markets – a recurring theme in government rhetoric since 2023. Policymakers are increasingly looking to leverage the £1.4tn held in ISAs to power economic growth through more productive investment.
  
  
• “I do want people to get better returns on their savings... At the moment, a lot of money is put into cash or bonds when it could be invested in equities,” Reeves said.

US Stock Market Insight

• A quick glance at the US markets shows some notable movement. While the S&P 500 currently sits around the same level as when we last covered it, that masks a period of significant volatility.
  
  
• As always, opinions are split. Some see the recent rebound as a sign the recovery is nearly complete, setting the stage for further growth. Others argue it’s a short-term rally within a broader downtrend, pointing to overbought conditions similar to the period following the post-COVID crash.
  
  
• Both scenarios are plausible. The most reliable way to benefit remains long-term investing, where time in the market tends to outweigh timing it. For those looking to capitalise on short-term price moves, a more cautious approach is warranted until the picture becomes clearer.
  
  
• Should the market retrace further, it could present a compelling entry point for investors prepared to buy quality at a discount.

Bitcoin Breaks $111,000

• Bitcoin has soared to a new all-time high of over $111,000, rewarding long-term holders with healthy profits. The rally comes after a volatile 2025, shaped in large part by Donald Trump’s presidency and the evolving global macroeconomic backdrop.
  
  
• BTC first hit $109,000 on Inauguration Day in January amid hopes for crypto-friendly policies. Although initial optimism faded – especially after controversial tariffs pushed Bitcoin down to $75,000 in April – regulatory progress and growing institutional adoption have reignited market momentum.
  
  
• The White House has confirmed it will treat seized Bitcoin as an investment, though it disappointed markets by ruling out buying BTC for national reserves. Nonetheless, legislative progress in the US Senate, as well as surging hedge fund interest, has underpinned Bitcoin’s renewed appeal as a strategic asset.
  
  
• One firm, Strategy, now holds 576,230 BTC – worth approximately $63bn – generating profits north of $23bn. The crypto’s appeal stems in part from its scarcity: with a maximum supply of 21 million coins, it offers a hedge against fiat currency debasement and rising global debt levels.
  
  
• So think momentum is to continue into the second half of 2025, with key events like Bitcoin 2025 in Las Vegas and rising geopolitical and fiscal uncertainty encouraging investors to seek protection outside traditional assets.
  
  
• “Bitcoin has become not just a speculative play, but a strategic hedge,” wrote Nigel Green of deVere Group. “In a world where sovereign credibility is fraying, investors are shifting decisively into assets that can't be diluted or manipulated.”

Final Note

From stickier-than-expected inflation and postponed rate cuts to bold moves in private capital and digital assets, the recent signals are mixed but meaningful. For savers and investors alike, understanding the interplay between economic policy and new asset classes like crypto will be key to navigating what comes next for our investment markets. 

In a world where central banks hesitate, governments consult, and markets look beyond London and fiat currencies for returns, the opportunity lies not in chasing headlines but in reading between them. Whether it’s deploying capital into high-growth ventures or rethinking the role of Bitcoin in a diversified portfolio, the call to action is clear: stay informed and stay agile.