For months, policymakers, businesses and trade watchers in Washington had been bracing for a turbulent spring and summer around the future of the USMCA, the trade pact binding the United States, Canada and Mexico.

But, to quote former UK Prime Minister Harold Macmillan, “Events, dear boy, events.” The war with Iran has dominated Washington’s attention, stripping away much of the political heat that was expected to surround the pact’s renewal.

Instead of a noisy fight over the agreement’s future, the USMCA has slipped into the background. The Iran conflict has absorbed the White House’s attention and, in practical terms, has become one of the best developments for keeping the trade pact out of the headlines.

Earlier this year, there were concerns the US might use the renewal window to force a confrontation with Canada and Mexico, or even threaten withdrawal. President Trump had already cooled on the deal he once signed, raising questions about how aggressively Washington would approach the next phase.

But with foreign policy dominating the administration’s agenda, the US has taken a more measured approach. It has confirmed it will not extend the agreement for another 16 years, while stopping short of more dramatic action.

Part of that restraint reflects a belief inside the administration that the trade relationship has already been reshaped.

US Trade Representative Jamieson Greer argues the White House’s tariff strategy has fundamentally altered North America’s economic ties, changing the balance with Canada and Mexico in ways that make a more confrontational approach unnecessary. But if trade does become more politically driven, the US auto industry could be the biggest loser.

British households have taken the heaviest hit to their wealth of any advanced economy since the pandemic, a sobering benchmark for a country that once prided itself on rising prosperity.

The average Briton is now more than a fifth poorer than five years ago, according to UBS. Of the 37 countries the Swiss bank surveyed, none has seen a steeper decline.

Typical individual wealth has dropped by roughly £28,500 since 2020 once inflation is stripped out, leaving the median adult with assets of just over £95,500 last year. That makes the British marginally better off than the French, but poorer than the Dutch and the Italians, a ranking that would have seemed improbable a decade ago.

Wealth here is measured by the value of assets such as property and shares, and it has been eroded at pace after inflation surged in the wake of the pandemic and Russia’s invasion of Ukraine. Britain absorbed a worse inflation shock than most of its peers as energy costs jumped, a squeeze that continues to shape the wider picture on living standards.

A cooling housing market has deepened the slump. Remarkably, British families have fared worse over the past five years than households in Turkey, Bulgaria, Mexico and Kazakhstan.

The UBS findings underline the scale of the task facing Andy Burnham as he prepares to become the next prime minister. In his first major speech since returning to the Commons, the MP for Makerfield said this week: “We cannot go through another decade like the one we have just had. We need a new determination to raise the living standards of every person in this land.”

Separate figures from the Office for National Statistics, published on Tuesday, showed that Sir Keir Starmer had failed to deliver on his pledge to improve living standards, with families now worse off than they were before he entered Downing Street.

The UBS data show the wealth of a typical individual has tumbled by more than 23 per cent on both the mean and median measures since 2020, ground down by a spike in inflation that peaked at 11.1 per cent in October 2022.

Paul Donovan, chief economist at UBS Global Wealth Management, said: “The UK had a brief period of notably higher inflation than Europe did, and that has distorted the real numbers. You had a couple of years of quite high inflation, partly because of the various peculiarities of our energy pricing structure.”

The housing market has added to the strain. UK house prices have risen by 26 per cent since the start of 2020, according to the ONS House Price Index, but consumer prices have climbed by 32 per cent over the same stretch, meaning the real value of the money tied up in the typical home has been quietly whittled away.

Donovan added: “There is a considerable weight to real estate as a form of wealth because it is the largest asset that most people own. A change in the relative performance of your local real estate market can have a notable bearing on, in particular, the median wealth level over time.”

The fall in wealth has landed alongside incomes that have struggled to keep up with prices, a double squeeze on households. At the same time, the tax burden is set to climb to its highest level since the Second World War, driven in part by the long freeze in income tax thresholds, an issue explored in Business Matters’ coverage of Britain’s record property tax burden.

The picture is not uniformly bleak across the globe. The biggest gains came in South Korea, where average wealth rose 55 per cent, along with Russia and Croatia. Among G7 economies, the largest rise was in Japan, where median wealth climbed 51 per cent.

The data arrived as the Institute of Directors said business confidence fell again in June. Anna Leach, the group’s chief economist, said it pointed to an urgent need for ministers to back economic growth.

“Businesses need to see meaningful improvements in areas like regulatory cost, tax complexity and swiftness and consistency of government decisions to fundamentally unlock spending and get growth going,” she said.

A Treasury spokesman was more upbeat: “We have the right economic plan. Inflation is holding steady, the UK led G7 growth at the start of the year, and the IMF and OECD have both upgraded growth forecasts. Real wages have risen more in the last year than in the first ten years of the previous government.” That claim of steadier prices chimes with the latest ONS inflation reading, though for many households the damage to accumulated wealth has already been done.

Jamie Young

Jamie is Senior Reporter at Business Matters, bringing over a decade of experience in UK SME business reporting.
Jamie holds a degree in Business Administration and regularly participates in industry conferences and workshops.

When not reporting on the latest business developments, Jamie is passionate about mentoring up-and-coming journalists and entrepreneurs to inspire the next generation of business leaders.

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The tech and energy sectors have helped propel investment in the region

The West Country has become the fastest-growing investment market in Britain, new research has revealed. The region recorded the biggest percentage increase in equity investment of any area of the UK in 2025, driven by large tech and energy megadeals.

Investment into smaller businesses in the South West more than doubled to £687m last year – an increase of 104 per cent compared with 2024 – according to the British Business Bank’s Small Business Equity Tracker.

It comes despite a 13 per cent fall in the number of deals to 121, as investors concentrated capital into fewer, larger deals.

These included £187m raised by Bristol tech business The Smarter Web Company through nine deals in 2025, and two growth-stage rounds of £105m for Salisbury-based energy company Rockhopper Exploration and £100m for clean energy company Low Carbon, which has a presence in Bristol and Exeter.

The megadeals also doubled the South West’s share of UK equity investment from three per cent the year before to six per cent in 2025.

Across the rest of the UK, deal values fell overall by four per cent and volumes by 17 per cent.

Ed Tellwright, director for the South West at British Business Bank Local Growth Team, said: “Thanks to a handful of large deals the South West has bucked the national trend and seen the fastest equity growth in the UK. But the funding environment remains challenging, especially for seed stage and non-AI businesses.

“That’s why we remain committed to helping smaller businesses get the finance they need to start, scale and stay in the UK, and that includes activity concentrated at early stage where market declines have been most pronounced.”

Between 2023 and 2025, the British Business Bank supported 19 per cent of all equity deals in the South West and 11 per cent of total investment value.

Its £200m South West Investment Fund, launched in 2023 to boost the flow of capital to new and growing businesses, has helped fund more than 50 equity deals to date with some £37m of investment.

The number of South West spin-out businesses supported by the bank has also grown from less than five per cent between 2016 and 2020, to more than 25 per cent in the last five years.

This includes University of Bristol spin-out QLM Technology in Torbay which received £1m from the South West Investment Fund as part of a £3.5m round last year to support the development and commercial scaling of its advanced methane monitoring technology.

AI firms capture record investment

Nationally, the Small Business Equity Tracker showed that AI continues to reshape the UK’s startup economy, attracting a record share of investment in 2025 and driving larger deals.

AI companies accounted for 44 per cent of total equity investment into smaller businesses in 2025, the highest share on record. AI also represented more than a quarter (26 per cent) of all deals, nearly doubling its share since 2022. Investment in AI-related deals rose by 48 per cent year-on-year, highlighting strong investor appetite despite a broader market slowdown.

Investors also concentrated capital into fewer, larger transactions in 2025 with the UK’s top 10 fundraisings accounting for nearly a quarter (23 per cent) of all investment, the highest level since 2020. Equity investment into UK smaller businesses fell slightly, by four per cent to £12.3bn last year, however, investment remained above pre- pandemic levels.

While national growth-stage investment proved resilient, early-stage deals at seed and venture stages were lower. The digital and technologies sector remained the largest recipient of equity investment, while advanced manufacturing saw strong growth in investment value across the year. Meanwhile, investment in financial services and life sciences declined in 2025.